Top Reasons Public Sector Uses Temporary Workers

As the outside recruiter and business development representative for Peak Performers, I spend a lot of time at recruiting events and vendor fairs. At these events, I am often asked by people why public sector entities (state agencies, federal government, city and municipalities, transit authorities, and education organizations) use staffing agencies. There’s actually a lot of answers to this question. Here are some reasons the public sector has increasingly grown to rely on a temporary and contingent workforce to run their operations.

They Can’t Find People with the Right Skill Sets

First and foremost, professional staffing agencies exist to fill a need and that need is very often for roles that the client themselves cannot find the right people for. A large state agency has many things to do besides recruit. Staffing agencies spend most of their time doing primarily that. They are also exposed to a wider pool of qualified candidates because they regularly advertise jobs, attend recruiting events, and build up a robust referral network. The sheer activity of recruiting naturally pulls in more candidates than they can use, and many of those candidates may be fits for other jobs the recruiting firm has.

It’s also important to note that public sector entities generally have a more complicated application process which discourages many job seekers. Job seekers who do make it through their process also typically wait longer to hear back from the employer. In this lag time, they are more likely to find another job and move on. Staffing agencies offer a lower barrier to entry and move faster to recruit and onboard candidates than the public sector can.

They Don’t Have the Budget for a Full Time Employee

Agencies often have a strictly allocated budget that dictates not only how much they can spend but how they can spend it. This budget has separate amounts allocated for full time employees versus temporary employees. Budget for temporary personnel may even come out of a miscellaneous budget area where there are extra funds. Budget for temporary personnel may be project-based as well and have not only a fixed amount of dollars but a fixed amount of time.

While on the surface it may seem cheaper to hire a full-time employee from the start, many clients find this is not the case. So why would you pay a company to recruit and hire for you at a markup when you could have done it yourself?

First off, the cost of employees are usually the single largest cost for every organization–and what you pay them is only the beginning of that cost. The Bureau of Labor Statistics estimates that the cost of any employee’s benefits package 31% of their total cost to the employer. That means that if you pay an employee $34.50 per hour, the true cost of that employee is $50 per hour. Given this cost, it actually makes decent economic sense to pay a staffing company a markup fee.

This also doesn’t factor in the unseen costs that go into hiring: the cost of staff time to recruit and interview candidates, the cost of training employees, and the cost of making a bad hire. The Center for American Studies estimates the average turnover cost to be around 50% of the annual salary. In other words, if you pay an employee $34.50 an hour (about $71,760 annually) you pay on average $35,880 for a bad hire. Ouch.

“Try Before You Buy”

Recruiting is expensive. The cost of making a bad hire is also expensive. When an employee is let go shortly after starting, organizations eat the time and cost of recruiting, interviewing, onboarding, and training said employee. (That’s not accounting for intangible costs if the employee hurt the organization, damaged morale, or hampered productivity.) Then the recruiters have to start over with no guarantee the next person will be better.

For this reason, many organizations have embraced “try before you buy” hiring, also known as temp-to-perm hiring. In this approach, the client brings on the new employee on a temporary basis and hires them as a full time employee after a trial period. Meanwhile, all the aforementioned costs are incurred by the recruiting firm. Risks are minimized as well.

Many organizations will try out an employee using this method if they are unsure if their own intention is to hire them on full time. They have a “let’s wait and see” approach to determine if the project is important enough to justify the cost and if they really need that position filled for the long term.

All Work is Temporary

The Department of Labor recently estimated that 20% of all workers work on a temporary basis. Even without factoring in the “gig economy” that is now so pervasive, more workers are choosing to work on a temporary basis and more employers are seeking them out that way.

Even for full time workers, the increasing market trend is pointing towards the average worker staying in their job for 2-3 years. Thus, we might argue: all work is, in effect, temporary.

Similarly, organizations are structuring their personnel in order to most efficiently accommodate cycles in work. We often say “staff for the peaks, not the valleys.” What we mean by this is that there are usually cycles of work that are going to be lighter during certain parts of the year. We find what works best is that the customer maintains internal staff for the “valleys” of the year and then bring on temporary staff for the “peak” work times when they are busier than usual.

Sneak Peak: Featuring Darwin Hamilton

Welcome to the inaugural post of Sneak Peak, an on-going series highlighting the career path of one of our former associates – how they got started, what they’re doing now and what advice they have for current job seekers in Austin.

 

Our Peak recruiters ran into Darwin Hamilton recently at a local community meeting. In a city becoming synonymous with gentrification and displacement, Mr. Hamilton is a 5th generation Austinite. He is also an active volunteer, community leader and board member for several local civic organizations. Darwin was gracious enough to share a glimpse of his journey in his own words.

 

How did you first hear about Peak Performers?

In March of 1998, I was referred to Peak Performers by a case worker with Project RIO of the Texas Workforce Commission. He mentioned that with my skills and resume, Peak Performers might be able to offer temporary job placement with the State of Texas.  

What was your first assignment?

My first assignment was with the Crime Victims’ Compensation Program at the Office of the Attorney General as a Data Entry Operator assisting their accounting department with filing records and mail merging address labels for benefit letters to claimants.  My contract was originally for 90 days, but it kept being renewed. I used my time on that assignment to teach myself 10-Key by touch, update my knowledge of Microsoft software applications, and gain viable office skills and on the job work experience to meet minimum qualifications for Admin Tech classification positions the state had available with the Attorney General’s Office.

What are you doing now?

Today I’m a Senior Accountant III and interim lead of Accounting & Finance – Internal Operations Division of the State Office of Risk Management.  I began working for this agency in May of 1999 as an Accounting Clerk.  It is where I made my career and this May will be 18 years that I’ve spent working for the same agency.

What advice would you give to current job seekers?

The advice I would give current job seekers is to never give up hope, and to be confident in your capabilities and potential. Use every assignment opportunity to do your very best and build a rapport and social capital with some of the people you work with because those very people may one day advocate for your permanent employment with a state agency.

Thank you, Mr. Hamilton, for sharing part of your journey with us. We’re grateful for your presence and service in the community, and we wish you all the best in your continued career with the State of Texas.

Peak Performers is Austin’s preferred staffing and recruiting firm for contract jobs with State of Texas government agencies. As a non-profit, we also give job placement priority to candidates with a disability. To learn more about our company, please visit our website.

Cover photo is used by permission from Texas Advocates for Justice and Grassroots Leadership.
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