Arkadiusz Gut Published: 11.08.2020
Author:Arkadiusz Gut
Arkadiusz Gut
Arkadiusz Gut
11.08.2020

Flexible forms of employment – a step towards budget optimization

Flexible forms of employment – a step towards budget optimization

Changes in the market situation cause companies to face new challenges on a regular basis. In the period of economic growth, it is necessary to quickly and effectively increase the production capacity, i.e. hire and train new employees. During the slowdown and decline in production, solutions are needed to adjust the state and structure of employment to current needs. The current situation, caused by the coronavirus pandemic, has shown how important it is to be able to react immediately to unexpected changes on the market. Companies are increasingly often and more willingly looking for alternative forms of employment, namely flexible ones that enable a quick adaptation to fluctuations of economic cycles. Forms that will allow to optimize the budget while maintaining an appropriate level of work efficiency.

One way of building a safety buffer in case of economic fluctuations is temporary work. In Poland, the model of temporary work developed with the emergence of international corporations in the mid-1990s. Currently, this solution is also used in small and medium-sized enterprises, which are much more sensitive to market changes. How can cooperation with a temporary work agency influence budget optimization?

Elimination of recruitment and HR and payroll administration costs

The operating costs of the internal HR department increase with the growth of the company. A systematic increase of employment forces entrepreneurs to increase the number of back office employees responsible for recruitment, HR and payroll services. When deciding to cooperate with an external company in the field of employee leasing, the client eliminates the costs of employing additional employees. It is the agency that is responsible for the efficiency of the recruitment process, bears the costs of the recruitment campaign and reaching the candidates. The agency is also responsible for keeping HR documentation and archiving documents. All obligations and costs resulting from concluding a temporary employment contract, i.e. calculating and paying salaries, calculating and paying taxes, paying social and health insurance contributions, are borne by the agency which posts the employee to work for the client. Without a doubt, this solution relieves the client’s internal structures, frees up staff resources and saves time. Additionally, the ability to calculate all variable labor costs (sickness absence, days off) into the cost of the service allows for effective planning of the company’s expenses.

Change from fixed labour costs to variable costs

The optimization of labour costs through the introduction of temporary work results not only from the reduction of HR and payroll obligations incumbent on the employer and the elimination of expenditure on recruitment activities. Employee leasing is also a possibility of a different classification of costs connected with providing work. Hiring employees on a permanent basis is a permanent expense that must be included in the company’s budget. The cost of work in this case is not very flexible and it is difficult to rationalize it quickly in the period of declining production. By deciding to hire employees based on the service of temporary work, the company gains the opportunity to react ad hoc to economic fluctuations. Short notice periods for temporary employment contracts, the flexibility of employees and their mobility are the main factors influencing the possibility of an optimal cost structure. The introduction of temporary work, as a variable cost, allows for dynamic adjustment of the state of employment to changes taking place on the market.

Reduction of overtime costs

In a period of high growth it is necessary to increase the production capacity. Often, in order to realize the growing number of tasks it is necessary to introduce overtime for full-time employees. However, such a solution is associated with a significant increase in labor costs, as well as a decrease in efficiency and quality of work in the long run. By deciding to use leased employees, the company does not only gain motivated employees who efficiently carry out the commissioned tasks, but also optimizes the labor costs by reducing overtime.

Temporary work service is a solution that allows you to adjust the state and structure of employment to the changing economic situation and respond flexibly to changes taking place on the market. Cost optimization through employee leasing has several dimensions. It gives the possibility to realize production challenges without generating overtime costs or additional financial outlays on recruitment activities and administrative and human resources services. It allows to rationalize labor costs in the period of declining production. It builds the competitiveness of the company on the market and provides a safety buffer for unforeseen situations.

Flexible forms of employment – a step towards budget optimization

In most cases, such solutions are also beneficial for employees, to whom the agency provides continuity of employment by delegating to industries which have increased staffing needs in the crisis. The employee retains employment without worrying about lack of work, therefore such solutions are beneficial for all parties, also in difficult conditions on the labour market during the crisis.

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