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How to Weigh the Costs of Full-time vs Temporary Employees

By Allegiance Staffing
August 12, 2019

Realizing you need to hire more staff can be a daunting idea. Maybe you had finally got into a good place with your labor cost percentage, or you simply know the staff you have has a great work ethic together and you worry about adding someone else into the mix. No matter what the case, it always comes down to if you truly can afford another full-time employee. This is why so many companies have turned to temporary staffing. Read more to find out the difference in cost between bringing on someone temporarily and bringing them on full time.

The Benefits of Temporary Staffing

There are quite a few upsides of bringing on temp workers to assist your full-time staff. Doing so will undoubtedly:

  • Provide protection in case of a fall in the economy.
  • Save you from the cost of bringing on an employee who doesn’t work out.
  • Give you extra help for short term projects.
  • Save you the money it costs to recruit and hire.
  • Allow you to make more profit during the peak seasons.

At the end of the day, temporary staff helps you save money and time. To fully get a grasp on that we will show you the difference between the costs in full-time employees and temporary ones.

Cost of Full-Time Employees

Many business owners or managers believe hiring temporary workers will end up being a costly endeavor. The truth is actually the opposite. Hiring full-time staff includes many more costs up front and then some less tangible costs that aren’t being considered. Standard full-time employee costs include:

Recruiting Costs. Creating and paying for ads, searching through responses, the interviewing process, and deciding on who to hire.
On-boarding Costs. Any costs associated with offering the position to the individual, giving them training during the probation period and then continued training moving forward.
Compensation Costs. Any administrative costs required by the business such as health/vacation benefits, payroll expenses, taxes, etc.
The Manager or Employer’s Time. Taking the time away to find the right employee is time away from getting regular work done. There is a lot that goes into this: prepping the interview, planning how to fit the new hire into the team, preparing the ad and job postings, getting a hold of recruitment documents, screening the applicants, setting up and conducting interviews, checking references, etc.
Loss in Daily Productivity. Once a new hire is brought on it takes them some time to get acclimated. This not only takes away from those training them, it means the team itself is moving slower with production. If the effect is great enough this can even result in a loss of customers due to a decrease in product and customer service quality.

Cost of Temporary Employees

The expenses for temporary employment are not quite as extensive as those above:
Recruiting. It may take a moment or two for an employer to look over a resume, but most of that work is done by the temporary staffing firm providing the candidates to the company.
Time Tracking and Processing of Invoices. The employer will have to process the employees time cards in some way and approve their invoices for payment.
Employee Wage. The company will be responsible for paying the temp’s wage, but they will not be responsible for processing and disbursing the check.
Staffing Firm Costs. Within the temp’s salary, there will be a mark up for the staffing firm in order to offset taxes and insurance costs which would already exist for full-time employee payment. Though this mark up is in the mix, the company will not have to cover payroll taxes and expenses like worker’s comp and benefits.

The Outcome

Employers may not consider the amount of expense a new full-time employee can cost them when considering temporary employees. When it comes down to it, the company is responsible for covering extra fees for full-timers, and the staffing agency is responsible for the fees of a temporary hire. This can ease a lot of strain in the hiring process if you are still feeling out your need or know you only have a need for a short period of time. For more information on how a staffing agency can make the process a more affordable one, reach out to Allegiance Staffing here.

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