Temporary Employment Services

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Temporary Employment Services

Temporary employment services (often referred to as temporary employment agencies or firms) offer client companies the services of temporary employees who possess specific skills. This arrangement can provide a client company with needed help during peak demand periods, staffing shortages, or the vacations of regular employees, without requiring the time, expense, and long-term commitment of hiring a new employee. Temporary employment firms typically undertake hiring and firing decisions, issue paychecks, withhold payroll taxes, and make contributions for unemployment insurance, workers' compensation, and Social Security for the employees serving in their client's places of business. Client companies simply describe their staffing needs and time frame, then pay a set hourly rate to the temporary employment agency for the services of a "temp." The business scenarios in which temporary staff can be useful are virtually endless, noted Arkansas Business. "A large staffing service can bring in any number of temporaries to work days, nights, weekends, or holidaysand not just to perform low-skill tasks. Specialized temporary services can routinely handle specific, time-sensitive and highly skilled projects. In fact, very often temporary workers are so qualified, employers end up adding them to the full-time staff, saving the high cost of hiring and training. Additionally, a temporary employee allows you to judge whether you need a full-time person for a particular job or if ongoing temporaries can complete the tasks."

The use of temporary employment grew rapidly in the 1980s and early 1990s during the trend toward business downsizing and restructuring, in which many companies reduced the size of their core work forces. Companies began to substitute temporary for permanent employees for cost savings in payroll administration and fringe benefits, and to gain greater flexibility in the face of changing business conditions. After a slowdown in 2000 because of the tech bubble and in 2001 because of the recession, "the temp industry is thriving again, placing day laborers, secretaries, accountants and engineers in projects that last from a few days to six months or more," according to H. Lee Murphy writing in Crain's Chicago Business. And, although in the past, most temporary employment services specialized in providing general secretarial and clerical help to client companies, this is changing. Use of temporary workers has expanded in the manufacturing sectorcoinciding with the advent of "just-in-time" production systemsand in professional occupations, such as accountants, lawyers, and engineers. Growth in these areas enabled the temporary staffing industry to register annual double-digit gains in revenue throughout the 1990s and again after the 2001 recession. According to an estimate by the American Staffing Association, reported on in a Fairfield County Business Journal article in early 2006, there are an estimated 2.5 million people per day employed by staffing companies. This figure represents nearly 2 percent of the entire U.S. workforce.

Changes in the nature of the work forcesuch as an increase in the number of working mothershave contributed to the popularity of temporary employment arrangements. Part-time workers who are employed as "temps" enjoy a great deal of flexibility in setting schedules and choosing assignments. For example, a mother with young children in school might opt to work fairly consistently during the school year, but not at all during the summer months. Some professional workers use temporary assignments as a way to add variety to their jobs, while recent college graduates might view temp work as a stepping stone to permanent employment. But even though temporary employment offers advantages for some workers, many otherswho have been laid off or are unable to find permanent positionswork as temps out of necessity rather than preference.

The economic and demographic forces that have stimulated growth in the temporary staffing industry as an alternative to hiring permanent employees are not likely to change in the near future. These forces include the shift from production of goods to processing of information; employer reluctance to add permanent staff in the face of economic uncertainly and volatility; technological changes that require special expertise to deploy and operate; a desire to avoid seemingly ever more expensive benefit packages, and the availability of capable individuals who either must, or prefer to enter the temporary labor market.

Nonetheless, there are potential drawbacks associated with going the "temp service" route that must be weighed. One factor commonly cited is the greater allocation of time and resources to training that may be necessary if a company receives several different temp workers in succession for one job. Another criticism that is sometimes raised in conjunction with reliance on temp services is that some temporary staffers do not feel a connection to the company for which they are working, which can have a deleterious impact on effort and effectiveness. Companies can do much to address these potential problem areas, however, by establishing and maintaining a program that continually monitors and reviews the contributions of temp workers.


Temporary employment services are a particularly attractive option for small businesses, which often need help on a limited basis but lack the resources to recruit, screen, and pay new, full-time employees. A small business considering the services of a temporary employment agency should first consider several factors:

Gauge need. Business owners should examine production schedules, composition of employee benefits (number of sick days and vacation days, etc.), and seasonal workloads when weighing whether to pursue temporary staff. Shortcomings in specific areas of business knowledge should be factored in as well. Another key factor that should be weighed is less quantifiable but even more important: quality of customer service. "Check the quality of the work not just during the times when employees are covering for another worker, but on a regular basis," said Don Owens in Sacramento Business Journal. "Judge the way employees react when asked to do more from each other and from managers. Most importantly, look at how employees treat people outside the companyfrom the vendors and suppliers to the customers themselves. Are they harried, short and tense?" If so, temporary additions to the workforce may be in order.

Put an effective screening process in place. It is important to understand the temporary services firm's screening process for temporary employees. Though minimal screening is acceptable for low-level jobs, the process should include more sophisticated screening methodssuch as personal interviews, computer testing, or psychological evaluationsfor positions requiring specialized skills. Existing employee job descriptions can be used to determine temp staffers' suitability for jobs and to measure their performance once they have begun work.

Evaluate potential temporary staffing services. Experts urge business owners to seek out recommendations for temp services from other members of the business community. Once you have targeted specific services for consideration, conduct extensive interviews with management to explain your company's needs and determine their ability to meet those needs. "The natural inclination is to look for the lowest rate," observed Arkansas Business. "Yet quality of service is just as important. A firm that carefully screens and evaluates the skills of all its temporaries will provide you with workers who do the job right the first time."

Establish partnership with the temp service. The temporary services firm your company selects should be able to evaluate the client company's project requirements, time frame, budget, and working environment, and provide temporary employee who have the appropriate skills, availability, and personality to meet its client's needs. Ideally, the temp services firm should be flexible in accepting last-minute requests for temps or in changing temps in the middle of a project if the first one does not work out. Payment rates should be negotiable, based on the skill level required and the quantity of work.

Make you workplace one in which temporary workers can succeed. Companies should make sure that temporary workers are made to feel welcome upon arrival, and that they receive solid training. Do not abandon temporary workers to "sink or swim" on their own.

Monitor temporary staffing initiatives. Put programs in place to monitor and review temp staff performance and determine the impact of the temp service on bottom-line financial performance and customer service.

see also Employee Leasing Programs


Butterfield, L.J. "Temp Workers Fill Labor Pool." Fairfield County Business Journal. 23 January 2003.

Lee, Mie-Yun. "Temp Choices Put Longtime Mark on Firms." Crain's Cleveland Business. 9 September 1996.

Murphy, A. Lee. "Temps Are Back, and Cheaper: Using an agency also can be a time-saver." Crain's Chicago Business. 14 February 2005.

Owens, Don L. "Employees Know if You Need Temporary Staffing." Sacramento Business Journal. 11 February 2000.

"Staffing Industry Economic Analysis." American Staffing Association. Available from http://www.americanstaffing.net/statistics/economic.cfm. Retrieved on 15 May 2006.

"Temporary Employees Take Up Slack, Save the Day with a Variety of Skills." Arkansas Business. 27 December 1999.

                              Hillstrom, Northern Lights

                              updated by Magee, ECDI