What can a corporate Human Resources administrator, manager, executive do right now to make the company more competitive AND simultaneously address the jobless recovery? The latter, addressing the jobless recovery, is not philanthropic. It is a side-effect of higher performing organizations.
If you haven’t done so already, it will be helpful to develop an understanding of the relationship between fixed costs and variable costs, and understand how fixed costs seriously limit your company’s ability to respond to changes in customer demand. In short, higher levels of variable costs and lower levels of fixed cost make your company more responsive.
If you accept that basic principle, then as an H.R. administrator, manager, executive, you are ready to lead your company to higher performance.
To do that, you need to eliminate all impediments that prevent company managers’ access to a dynamic talent pool that can respond to changes in production levels of your company’s product or service. Your company needs a part-time work force whose hours can ebb and flow as needed. You also need policies and procedures to quickly bring-in contractors and temporary staff into all levels of the company.
Here’s what you can do right now:
- Separate recruiting fees from the on-going billable rate of contractors. This is controversial, but imperative. As long as you allow recruiters to take a cut of contractors’ billable rates, their fees are hidden, your costs are higher and you have less flexibility. At current industry practices, it is not practical to rely on temporary staff and contractors as a large proportion of the company work force. Making these changes will lower the on-going cost of temporary personnel and contractors, will increase your flexibility and will open-up access to a vast market of talent.
- After you have separated recruiting fees separated from contractor billable rates, establish relationships with recruiters whom you trust and who deliver the results you need. Pay for their results, the whole nut. Don’t bury recruiting fees in contractors’ billable rates.
- Eliminate from recruiting contracts any restrictions about when contractors can be hired-in as permanent employees of your company. No 1-year waiting periods or any other restrictions. Do not allow your recruiter to be a gate keeper to your company’s supply of talent. This should be no problem when you ensure recruiters are paid directly for their services, rather than allowing them to take a cut of contractors’ billable rates.
- Establish corp-to-corp relationships with companies where contractors can work without paying a “gate keeper” as part of their billable rate. This will ensure contractors have all the administrative support (invoicing, payroll, liability insurance) and benefits (health insurance, retirement savings plan) that they need, without burdening your own company. The cost of these corp-to-corp supplier relationships should be very low for all parties and should only cover administrative costs of providing these essentials to contractors.
- Persuade managers throughout the company to move toward a higher mix of part-time and temporary employees and a lower mix of permanent full-time employees.
- These changes affect your on-boarding process. Ask the security department and IT department to review and clarify, policies and procedures so that part-time, temporary and contract personnel can brought-in quickly and take-on more roles in the company, without compromising security.
- Ensure managers know, it is “OK” for part-time employees to work at other employers at the same time. By doing this, you have the same access to your talent, without paying 100%. Usually, part-timers and contractors will increase their hours when the situation warrants. They want to keep you happy and that’s the whole point of part-time work; be able to respond to need.
- Allow part-time employees to work through an external corporation so they have a solution for business administration, medical insurance, retirement savings. Flexibility is negated when contractors are forced into becoming contract W-2 employees of your company.
- Persuade managers to be less directive about “how” work should be done and far more clear (including diagrams and documentation) about what needs to get done. This makes it reduces orientation time. It helps people step into roles faster and self-organize. Make sure these diagrams and documentation are published on the company intranet and accessible to all.
When this is done, you will find yourself in the middle of a dynamic market for talent. Your internal managers will be delighted by the speed at which they can get talent just-in-time and respond to changes in operating conditions. Your part-time, temporary and contract staff will be delighted by having the flexibility and benefits they need, without having to deal with recruiters as gate keepers who take a cut of their billable rate. Of course, billable rates will be lower since recruiters will not be taking a cut, but the value proposition for both you and the contractor is better, much clearer and sustainable over the long term.
And as a consequence of all these actions, you will have moved your company beyond the jobless recovery.