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The Benefits of On-hire Worker Services

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This memo was drafted by FCB Group on 13 June 2013
Category: Business Management Sub-category: Employment

The nature of the Australian economy and workforce continues to change over time and adapt to changing market influences.

However, one trend which continues is the use of on-hire workers by businesses as part of their overall staffing strategy and there is good reason for this trend.

This Guidance Note has been developed as a timely reminder of the main benefits which business can expect to flow from the use of on-hire employees.

The top 5 reasons/benefits of utilising on-hire workers are:

1. Addressing Fluctuations in Business Need:
The needs of an organisation change frequently and often unexpectedly. The use of on-hire employees allows businesses to utilise highly specialised employees at relatively short notice.
Common causes of fluctuating business needs which may give rise to on-hire engagement includes:

a) employee absences such as illness, holidays or parental leave; and

b) demand fluctuations, whether unexpected or temporary, due to seasonal and other factors.
The inability to access quality employees to address such short term demand requirements would otherwise jeopardise a business’ operational capacity and overall profitability.

2. Managing Risk:
Regulatory compliance and the associated liability which may arise from non-compliance is a very real concern for many businesses which will inevitably impact upon overall staffing strategy.
Although businesses may not be able to completely offset and remove all risk associated with staffing, businesses often utilise the on-hire worker services as an effective vehicle through which to minimise their overall risk exposure.

On-hire firms work closely with host organisations in a number of key ways to assist in the management of risk including:

a) managing the risk of unfair dismissal and adverse action claims by professionally managing the on-hire employment relationship – many direct hire employers are unable to effectively manage the risks of high turnover, short term employment arrangements such as casual and fixed term employment;

b)managing work health and safety risks by taking a cooperative approach to the identification of gaps in work health and safety systems and introducing new approaches to old problems when it comes to risk assessment and risk control;

c) minimising the risk of direct hire employers having to offer full time employment under award obligations, given on-hire firms are able to assign on-hire employees to alternative assignments and maintaining a degree of certainty in their employment experience despite employment remaining casual employment in many circumstances; and

d) ensuring the correct and timely payment of all wages and conditions – on-hire firms are professional employers and maintain the back end systems capable of managing dynamic short term workforces.

3. Addition of Specialised Skills:
It is indeed a myth that on-hire roles are of lesser importance, or that those performing the roles are of lower calibre. Research has indicated that an ever increasing number of highly specialised workers are choosing the on-hire industry as an employment avenue of choice given the benefits which the industry provides.

In fact the placement of on-hire workers is often within roles which require highly specialised skills, for short-term projects, or as a means of adding to the professional capabilities of a company’s existing workforce.

Because of the highly specialised nature of the industry, the use of on-hire workers has become an established long-term staffing strategy of many leading businesses.

4. Direct Cost Savings
All businesses are well aware of the direct and indirect costs associated with the recruitment and on-boarding of staff.

The use of on-hire workers can be frequently cheaper than a direct recruitment process whilst offering skilled solutions to a business’ immediate requirements.

In this respect many businesses have been successful in utilising the on-hire industry to their own cost advantage in the following ways:

a) removal of significant administration processes and associated costs;

b) maintaining core staffing at a level to address normal production thereby reducing excess staffing costs on an ongoing basis;

c) reducing turnover as on-hire workers obtain a diversity of working opportunities and are less likely to move to new roles;

d) reduction of significant overtime costs arising from their core staff base;

e) significantly reducing the need for internal training and development given the highly specialised nature of the on-hire workers placed; and

f) improved quality and productivity arising from the experience and specialism’s of on-hire workers.
Reduction in Administration:

The use of on-hire workers avoids the immediate time and administration costs associated with direct recruitment and significant reductions can be achieved throughout the period of the engagement.

Clearly the direct costs and managerial time associated with advertising, screening, and conducting interviews is removed or significantly reduced, however, businesses will also experience a significant contraction in other business areas including on-boarding, training, payroll administration, and performance management.

This reduction in administration is further evidence of the suitability of the on-hire industry as a long-term staffing solution.

Regardless of the various internal justifications it is clear that the use of on-hire workers will deliver lasting and significant benefits to businesses across all industries.

This memo was drafted by FCB Group on 13 June 2013

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