It’s amazing that in a matter of weeks, we can go from the strongest economy in history to a crippling halt with fear and uncertainty spreading through our day to day lives. As companies scramble from a myriad of concerns: the health of workers and staff, the health of customers, business impact, and financial ramifications, we have a hope that normalcy will return sooner than later. Companies are all going to be faced with the realities of a staffing shift; goals and strategies, objectives, FTE changes, headcount limits, project completion, and new budget restrictions. Not only do companies have to ramp up or down, but they also have to do so with an ever-complex legal climate taking into consideration AB5 independent contractor issues, Federal WARN and State Mini WARN Acts (While Governor Newsom did issue an executive order relieving companies of the notice requirements of the CA Mini-WARN Act, there still remains Notice compliance concerns), not to mention the pending state and federal legislation changing almost daily due to COVID-19.
During this time, companies will have to grapple with down-sizing, re-tooling their workforce and planning for growth when the good news comes, or we may be in limbo, wondering what the economy will do or what our customers and partners will demand from us. During these times, companies will need to have flexibility in their staffing strategy.
An extended workforce allows flexibility in several different strategies:
1. Quick hiring of retirees and alumni employees. As layoffs occur and the unemployment rate increases, you will be able to save money and time by using alumni workers and retirees to fill temporary and project roles.
a. Make sure you have a repository of former workers that are a good fit for your organization.
2. Start using your ATS to bring in new talent. With the shift in unemployment, there will be more talent available. Have your ATS and job posting ready to go when hiring changes and attract the best talent possible for whatever projects you have coming up.
a. For us attracting PHP developers has traditionally been a supply-side problem. With the shift in unemployment, there will probably be an increase in available PHP developers.
3. Project, seasonal, and remote work is used by all companies. Times like these help us realize why remote work strategies are important. By using a payrolling company, you can easily benefit from this echo system of talent without the overhead and payroll-related compliance liability. Hire in any country or state without having to know anything more than the deliverable of the worker.
a. Extended workforce models are industry agnostic. We do suggest a formal written policy around your extended workforce. Your vendors should be able to provide a template if you don’t have one in place.
4. Cost savings might be the most important objective after normalcy returns. Contracting recruiters and payrolling the talent the recruiter identifies is a valuable, cost-effective way to reduce the overhead of traditional staffing agency hiring. Often-times payrolling rates are 50% to 75% less than recruited rates. Even the cost of a recruiter, a company can net at least 25% savings.
Payrolling or employer of record services allow compliant flexibility:
1. Hiring usually takes a matter of hours, allowing you to bypass traditional internal companies’ policies for FTE’s like headcount, approvals, etc.
2. An extended workforce has the flexibility of being started and ended as needed. You don’t have to worry about onboarding, off-boarding, severance, etc. since the nature of an extended workforce is temporary or as-needed.
3. Reduce in-house administration significantly since the extended workforce is employed by a different legal entity. The vendor takes care of all HR, payroll, and benefits.
4. Lastly, is the reduced risk and liability. Unemployment insurance costs are certain to increase for all companies that have layoffs, but you can help mitigate the increase by allowing the vendor to take on the liability for your extended workforce.
As we work through this time together as people, we look to a day when things will be back to normal or better yet, back to a better normal. If we can help you with any of your hiring needs, please ask. Our goal has always been to make it simple for you to access and utilize talent. If we can help in any way, please let us know.