Matthew Sanders, Chief Executive of de Poel – the number one purchaser of temporary agency labour in the UK – outlines his top tips on how to keep hire costs down.
With Christmas upon us, and the demand for temporary agency workers in the UK soaring, the cost a company faces in order to supplement its workforce is potentially huge. Still one of the UK’s largest unregulated industries, temporary recruitment leaves businesses open to exploitation and vulnerable to the impact of high agency margins and expensive operational costs.
Ensure access to critical management information
The truth is that use of temporary agency labour is never going to be altogether avoidable. At a time when finances are stretched, the best way to reduce spend in this area is to control it. The only way to control spend is to analyse it. According to the OGC, spend analysis is not only crucial in managing expenditure, but also in obtaining the best out of a supply base.
For the best analysis, not to mention accurate results, it is critical that companies gain access to management information. This may include:
- The total number of hours worked (each week, month and year) by temporary workers
- The rates paid for each individual job category
- The total cost of temporary agency labour (each week, month and year)…
- …by job category
- …by location or cost centre
- …per temporary worker
Increasing control over agency costs
- For the Metropolitan Support Trust – a company specialising in the care, housing and support of vulnerable individuals – access to this kind of management information was critical in strengthening their financial position during the credit crunch.
It also plays a major part in helping companies across sectors effectively plan and budget for their temporary agency recruitment for the year ahead. If you want to keep costs high, there is no better way to do it than to work with a multitude of unregulated agencies charging all sorts of rates.
Not only are the agencies aware that the demand for their services exceeds supply, allowing them to charge extortionate amounts for supplying workers, but in the past, they have actually been known to work together to keep costs high among their clients. Aside from being an illegal practice, this makes temporary recruitment extremely expensive for victim companies.
To avoid high charges and potential price-fixing cartels, businesses are advised to delve into a managed ‘panel’ of agencies for their temporary workers, where pay-rates and margins are standardised to their optimum level and agencies are audited prior to partnerships. Formal service level agreements, implemented by those managing the panel, mean agencies are obliged to work within fair terms and conditions for the duration of their contract.
As an added benefit, these measures also help to improve supplier quality of service by encouraging loyalty and ensuring suppliers compete on performance rather than on price.
- Indeed, employment of this kind of solution for Sainsbury’s granted them cost savings of over £2.5m on their contingent workforce and helped them to secure superior levels of customer service from their suppliers.
Use a timesheet and invoice-processing system
One of the most valuable opportunities for keeping costs down is to use some kind of timesheet and invoice-processing system. Replacing the old, time-consuming and laborious process of scribbling down hours and payments on to paper, it reduces the heavy administrative burden typically associated with recruiting temporary agency staff, which is often overlooked.
Quick, efficient and simple to use, the most obvious advantage of a timesheet and invoice-processing a system is that it saves time and manpower on entering and approving workers’ hours (a weekly process for each temporary candidate employed) by allowing speedy, online entry and authorisation. With corrections easily made, it also caters for human error – a costly process for businesses employing a large of number of temporary staff.
And yet, perhaps the system’s best feature is its ability to create, consolidate and transmit invoices – the cost of one manual invoice estimated at around £50.06p by the Chartered Institute of Purchasing and Supply (CIPS) taking into account time, postage, phone calls, wages and everything else involved in its creation.
- For companies such as Carlsberg, who processed as many as 15,000 invoices per year before employing a timesheet and invoice-processing system (and just 52 after), it is easy to see how costs can mount up without one.
For more information on de Poel, email Alison Harter, Sales Director.