The Current State of Temp Staffing Practices
Temporary staffing is not a new concept. In fact, a large percentages of businesses currently utilize temporary staffing in some fashion, whether for staff augmentation in departments like IT and accounting or to manage seasonality with direct shop floor manufacturing labor. Regardless of specialization, the temporary staffing process typically follows a standard model: businesses contact a staffing firm, enter into an agreement for a certain number of contract employees for a defined period of time, the contractors perform their work on site for the duration of the contract, and the staffing firm manages the social costs for the contract employee.
Major Inefficiencies in the Current Model
More often than not, businesses benefit from the staffing arrangements through onboarding/training/exit cost avoidance and more flexible labor capacity. However, traditional temporary staffing models for manufacturing labor still present major inefficiencies for companies related to three core issues: 1) “fixed” period costs, 2) productivity, and 3) availability and choice.
1) Fixed period costs – Since temporary staffing models are based on pre-determined time intervals, businesses essentially commit a fixed cost to augment labor which is not necessarily in concert with sales volume. Businesses often encounter a revenue-cost mismatch that impacts profitability or constricts growth since the planning horizons are still too long in duration to create more precise alignment.
2) Productivity – Due to the fixed cost nature of the temporary staff, businesses own the burden of ensuring that labor is used efficiently. This requires high levels of supervision and personnel management. Learning curves and inexperience lead to a lag in value realization and the per unit cost structure inflates.
3) Availability and Choice – Traditional temporary staffing firms pull from a finite pool of labor that can become constrained on availability. Businesses looking to scale quickly and drastically in the short run may end up short in meeting their needs. In addition, businesses have limited ability to select the specific individual they want to perform the work.
The New Paradigm
Veryable’s new on-demand labor model addresses these three challenges by allowing manufacturing businesses to bid work in hourly increments, compensate Veryable staff through output based “piece work”, and select the specific individual they want from a large pool of available resources. This new model will equip Veryable customers with an innovative way to manage manufacturing and warehousing costs, taking productivity concerns off the table, and unshackle them to grow their business with minimal burden.