If you operate in an industry where work is cyclical or your business executes projects requiring specific skillsets, retaining a full-time permanent staff can be a crippling cost. To fix this problem, increasing numbers of these kinds of businesses are turning to a just-in-time model of staffing according to Hermie Abraham, a Toronto-based employment law lawyer.
“Labour costs tends to be the largest business expense,” Abraham says. “A just-in-time model reduces labour costs by hiring a contingent workforce.” The practice of hiring when the need arises rather than having a full-time permanent staff has grown particularly quickly since the global economic recession in 2008, she says.
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The benefits of just-in-time staffing extend beyond cost savings. Not being tied to permanent employees means you can use the best possible talent for a particular task or project, and the ubiquity of the Internet allows you to access that talent regardless of where it is. “You can find a contract worker who might be based in Bouctouche, New Brunswick who might be able to supply services in another part of Canada,” says Abraham. “It’s not at all based in the big centres, it’s based on need.”
But running a business without a permanent staff does carry risks. Here are three questions you need to be asking about your just-in-time workforce.
Can you meet your needs?
Knowing when your business will require a large headcount and when you can afford to shrink down to the bare minimum is crucial to making a contingent staffing system work. “The biggest risk is having a need and not having the workforce to be able to accompany that need,” says Abraham.
Closely track the amount of work your business has coming through the door at various times of year or in different industry cycles and adjust your workforce accordingly, suggests Abraham. “Understand the demands of your business, and when you need to scale up or scale down,” she advises. “Ensure that you have an available pool of skilled workers who will be able to meet these ebbs and flows in the business.”
What does the future hold?
Contingent staffing systems are by their nature low commitment for both employer and employee. While a steady paycheque doesn’t buy loyalty on it’s own, permanent employees tend to have a greater affinity with their employer than temporary workers. “When you have a contingent workforce who comes and goes and has many other employers who they’re working with, you’re not going to get that same level of loyalty,” Abraham says.
Loyalty is set to become even more important as competition for skilled talent intensifies in the near future. The number of people about to enter the labour pool is set to drop below the number about to exit it over the next decade according to Statistics Canada, meaning every business will have a harder time finding the right people to fulfill their clients’ needs. “You need to have a strong employee base, so that when there is a shortage of labour, you will have a good complement in your workforce that is committed and will be able to help you move forward with your goals,” Abraham says.
That employee base will also likely be less up to the task than their predecessors because young workers don’t have the stability necessary to expand their skill set. “The millennial generation are really having a hard time finding that permanent job that can grow and develop in,” Abraham says.
Are you properly characterizing the legal relationship?
A new type of workforce requires a new compliance regimen, and you need to take the time to review employment regulations and legal requirements around contingent employment.
“Ahead of time, make sure you have a contract that clearly articulates the relationship that you have,” Abraham says. That contract should cover how this contingent staffer is going to work, when they’re going to work, what they’re going to be paid, and what the task or job includes and excludes.
It’s not enough to just have the piece of paper, however: temporary workers must behave like temporary workers. “Make sure that your practices also reflect that they are a contract worker and not an employee,” Abraham says.
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