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By Nick Andriacchi, National Sales Executive and Advisor at Madison Resources


Angst continues among staffers as pay rates keep increasing while some companies are still resisting paying more for talent (wages are up 4.3% year-over-year). Some economists and business groups argue that when wages rise hiring decreases and cause prices to rise (last inflation number 5.4%). While there is some truth to all this, there also is a counter-force that allows for wages to rise without much inflation or reduction in staffing – it’s called Productivity.

The way I see it, there are 3 ways to cover the increase cost of talent in a growing economy.

1. Raise prices

If wage costs go up, businesses can try to pass them onto the consumer. Smaller employers with lower profits will be disproportionately affected by the (mandated or market driven) increase in wages as they have a harder time passing on those increases. An increase in price may drive loyal customers to look for business elsewhere.

2. Layoffs

With payroll being most organizations’ largest expense, businesses with tight compensation budgets may reduce the amount of scheduled working hours or resort to layoffs when faced with increased labor costs, curtailing job growth. Larger employers may choose to automate some positions. All of this can cause major morale problems within the organization which may affect their customers.

But what if instead layoffs or automating human duties, we automate the processes that enable people to work smarter and more efficiently in order to cover more ground in fewer steps.

3. Get Productive

Employers affected by wage increases don’t have to balloon their prices or layoff valuable employees to in an expanding economy. Identifying opportunities to improve efficiency and productivity will allow businesses to maintain a strong value proposition, which will help them keep a competitive advantage in their space.

Before committing to any measures that could ultimately degrade your brand’s reputation and value, consider these 3 strategies to improving productivity:

· Cross-train staff

In other words, get flexible with your employee roles and responsibilities. Cross-training offers employees the opportunity for growth by widening their professional skillset. As staffers, you are best equipped at finding talent that has the skill-set that can thrive in that environment.

Internally, a staffing company can benefit by crossing training non-revenue producing talent into the now vital recruiting and customer relationship role. There are funding companies, like my employer, that can fund increases in headcount. We also allow staffers to outsource non-revenue generating functions like payroll, billing, taxes collections and technology so the internal staff CAN focus sales, recruitment and customer retention.

· Calculate and anticipate customer demand

Knowing exactly how much talent you need at any given point in time is fundamental to reducing unnecessary overtime, prevent overstaffing, and keeping employees engaged—all factors that can help keep payroll costs down. If you want to protect your bottom line while increasing wages, staffers can assist there customers with labor forecasting.

· Offer shorter shifts at a premium

This strategy is all about aligning employee worktime with required workload.

For example, Vandelay Industries needs a team of 20 to work 8 hours Monday – Thursday, but only has enough work for 6 hours on Friday. Using a staffing company makes great sense in this situation. A strategy that can be used is instead of paying each employee a full 8 hours at a bill rate of $21.75 per hour ($174.00/emp.) on Friday, the staffer reduces the billable hours to 6 with a premium pay/bill rate of $3 more or $26.10 ($156.60/emp.).

Day’s Savings: $348

Their bottom line will improve and so will yours

The above example shows how your customer tangibly saves money – but by giving the customer some flexibly (less hours worked in exchange for a hire pay/bill rate), your company makes more money even at the same mark-up.

Example: Let’s say 20% of the bill rate represents the staffing company’s gross profit. When translated to dollar terms, the staffing company makes $.87 per hour more at a bill rate of $26.10.

Increased Day’s Profit: $104.40


Staffers – The Best Solution

An experienced staffer should be viewed as a solutions expert instead of someone that simply “schleps temps”.

By approaching your customers with a tailored solution that will ultimately make them more productive, provide structure and flexibility with staffing levels. It will change the way they view your service. They will no longer view the service you provide as a commodity but a true consultative partner. And that will translate into a stronger and profitable relationship for both parties.

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