What If You Could Reduce Costs by Hiring Better People?

September 8, 2014 | Staffing Blog

Most companies follow the same process when it comes time to outsource portions of their business. Whether they need marketing services, website development, a construction project or a staffing agency to supply temporary workers, they send out an RFP and wait for bids to come in. They review the bids and typically select the least expensive proposal that mostly fits their needs.

That process might work fine for a construction project or hiring a landscaping company but it is the best approach for hiring people? For just about any company, including warehousing and logistics, labor costs are in the top three expenses for the overall business. So it is logical that companies would want to look at how to keep costs down. The problem, though, is that businesses are looking solely at price and not at the total cost.

The procurement process of putting out an RFP and then picking a staffing agency based on the bottom-line price has become a common practice. Yet is it the best practice? Will you save in the short term only to find your long-term costs are much higher?

It’s time to rethink how your company selects a staffing agency. And it all comes down to one question: If you had better employees could you use less? Most companies easily respond with a “yes,” indicating that might be able to cut 10% or even 30% of their staff if they just had better people. Reducing your workforce by as much as 30% is a dramatic savings to the bottom line. And all it takes is hiring better workers.

So, how does that happen?

It means the procurement department needs to collaborate with operations. It means involving the managers and the people who supervise these temporary workers on a daily basis. What do they need? What kind of people and what kind of skill sets will get the job done efficiently and quickly?

Leaving operations out of the purchasing process means those making the decision look at the staffing agency’s markup. But that markup means very little if the business is 20% overstaffed.

Allegiance Staffing owner Tom Landry talks more about the procurement process in this video interview with DCVelocity.

The solution is reversing the process. Rather than soliciting for bids, selecting the five lowest bidders and hoping they can perform, switch your line of thinking. Pick the five staffing companies you feel are best capable of delivering exactly what your business needs are and then work with them to craft a deal and a price that suits both parties.

Yes, it’s a different way of thinking. But at Allegiance Staffing we truly believe this is a long-term strategy that will reduce overall spending and keep companies from filling the warehouse with too many workers just to achieve a lower hourly rate.