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From Santa to CEO—Temps Play All Roles

April 1, 1996
Related Topics: Contingent Staffing, Featured Article
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The next time you bump into Barney, the Easter Bunny or Santa Claus, think of Bob Rabatin, division manager for Children's Activities and Entertainment Company in Glenshaw, Pennsylvania. Behind the purple scales, wiggly ears or white beard could be a specialty contingent he hired for your one-day corporate event. Rabatin isn't clowning around, although he's done his share of playing Bobo, the clown. These days, he's searching for companies and organizations in need of short-term hams. "We spend much more time on finding clients. The performers come to us," he says. Among his clients are corporations, law firms, country clubs, hospitals and shopping malls.

Indeed, whether for whimsy or something as traumatic as a plant closure, Corporate America has made a discovery: Hiring specialty temps may be beneficial to your health. And we don't just mean the one-ringy-dingy phone operators or the swift clerk-typists of yesteryear. Because of increased downsizings, burdensome legal paperwork, global competition and rapidly changing technology, companies increasingly are filling their skills gaps with short- and long-term temps, often with higher-end titles. Although clerical workers account for nearly 40% of the total U.S. temporary payroll, today's growing army of contingents includes CEOs, human resources directors, computer systems analysts, accountants, doctors and nurses. Years ago, remember how the word temp carried a stigma? It connoted failure to find full-time, permanent employment. No more. Many individuals say they prefer to work on a part-time or short-term basis. And how they love to brag about their four-day weekends, vacations, flexibility and simpler life. For most, however, temporary employment is a bridge between jobs, an opportunity to upgrade one's skills, a chance to swing out of retirement or bag some bucks on the side—to save for that yacht or second honeymoon in Bora Bora. Clearly, companies and HR can benefit from this upturn in people resources.

Don't be afraid. Temp execs don't bite.
Although contingent employment relationships have existed in the workplace for a long time, companies today are more aware and open to their usefulness—attribute that to a shaky economy and globally competitive marketplace. But here's the new phenomenon in business: using short-term employees in the executive suites. And the trend is expected to continue. In fact, professionals, technical workers and health-care personnel accounted for 25% of the temporary staffing industry payroll in the second quarter of 1995. In terms of the overall industry, it's still going very strong, according to a survey conducted last year for the National Association of Temporary and Staffing Services (NATSS). All three measurements of industry performance—payroll, employment and revenue—were up in the second quarter of 1995. During that period, temporary employment generated a 4.8% increase in payroll from the first quarter of the same year. Average daily employment in the second quarter (two million temps) also increased about 3%, while revenue totaled $9.57 billion—a 4% increase from the first quarter of 1995.

So if you're wondering whether your company can benefit from hiring this growing cadre of qualified managers, techno-savvies, health professionals—even CEOs—wonder, no more. The question isn't if you should hire these temps, but which ones, how and why? Say your company makes electronic fuel-injection systems for natural gas and propane-powered vehicles. You need a quarterback to run a new manufacturing project because your 100 managers and staff already are up to their ears in the day-to-day operations. Your company needs someone who can lead the project from beginning to end—on deadline—and deliver stellar results. Lloyd Austen, president of GFI Control Systems in Canada, reportedly faced such a dilemma. So he hired a contract executive, formerly with one of Canada's largest manufacturers of auto parts. The executive came, oversaw all aspects of the project from engineering and dealing with suppliers to meeting automakers—and left after four months. Was it costly? Yes, two or three times the cost of a regular executive salary, but well worth every dollar to a company that expected immediate quality performance for a lean-and-mean organization.

GFI's experience is typical of what's happening more and more in corporate Canada and the United States. In fact, some executives are banding together to form their own virtual CEO office to take advantage of the market. One of them is The Osborne Group—a professional practice of 21 contract executives operating in the Greater Toronto area in Ontario, Canada. Established in 1992, the firm was co-founded by John Stewardson, an HR professional for more than 30 years. He and his partner, he says, wanted to capitalize on the demand for short-term, qualified executives on an as-needed basis. A recent survey, he adds, indicated there were approximately 20,000 unemployed Canadian middle and senior managers either in interim jobs or seeking contract positions.

"Typically, the CEO-level assignments are as a mentor to a business owner or president," says Stewardson. But if a growing company needs a hands-on CFO or an HR executive, The Osborne Group provides that expertise as well. For example, one of its senior executives is the chief financial officer at a health-care company three days a week. Another is in the same post at a stationary supply company three days of the week. And Stewardson serves as director of human resources at a vehicle rental place two days a week and holds the same position at another company one and a half days a week.

These experiences, among others, are documented on Osborne's Web site. Osborne principals have conducted market research for a variety of industries as diverse as real estate, fashion and information technology. Some have been assigned to review benefit plans to lower costs and generate more tailored employee benefits. Others have sourced acquisitions for venture capital firms, conducted training in occupational health and safety or served as a part-time CFO developing effective stakeholder relations and raising capital. The list goes on.

Stewardson says The Osborne Group—like other contingent staffing organizations—must respond to two sets of clients: those who want to join as principals, and companies that want to benefit from the group's executive expertise. In selecting principals, Osborne looks for executives with a unique perspective. "We have to be sure the [individual's] mindset shifts from being an employee to an independent contractor," says Stewardson. Such executives need to come with specific technical expertise, flexibility, time management skills and sensitivity to people issues. Before executives are admitted into the group, they must be interviewed by four different principals. "We try to be careful in our upfront selection," he says. Having people skills, Stewardson notes, is the most important criterion. Why? Because temporary executives may have to oversee some sticky situations, such as an affirmative action audit or the downsizing of an entire department or company. But by the time an executive arrives for his or her tour of duty, Osborne principals will already have met several times with the company's senior management team. "It's nice if you can get a fix on the culture [beforehand]."

In terms of working with a client's HR department, Stewardson says he usually avoids it. Not that he belittles human resources. Most of Osborne's clients are small- to medium-sized companies in which HR plays more of an administrative and support function. Nevertheless, it behooves HR professionals not to be threatened by temporary executives who may walk in several levels above themselves. If they can help, welcome them. The bottom line is that companies increasingly need to hire top-skilled managers to fill the gaps on special projects or under extraordinary circumstances. HR professionals, says Stewardson, need to stop thinking of hiring only full-time employees or executives. "Some raise the loyalty thing. But this isn't the real issue. They don't see [some of the work] in terms of projects. [For the most part,] HR hasn't been making use of this resource the way it should."

HR joins the ranks of specialty contingents.
If you're still not convinced about the merits of executive temps, look to your colleagues who've become living examples themselves. HR Only is a Southern California-based agency focused exclusively on HR staffing since its founding in 1989. With offices in Los Angeles and Garden Grove, California, HR Only recruits HR professionals with prior human resources experience. It also accepts new graduates of HR academic programs for possible entry-level positions. To determine the extent of a candidate's experience, it administers an HR skills inventory covering every HR specialty and activities within each specialty, says Pete Gray, general manager of the Garden Grove office. Each candidate also undergoes an intensive interview with the staff, he adds. The interview not only confirms the candidates' HR knowledge, but also their ability to articulate their expertise. "We run the gamut from consultants to HR directors who actually run entire departments or handle plant closures. Case in point: One East Coast-based company wanted to close its factory in California. Rather than put its internal HR through the trauma of implementing the terminations, it contacted HR Only to implement the layoffs while its internal staff was temporarily transferred to another site. "No HR wants to be on that end. We're supposed to be on the helping side of business, but downsizing is a fact of life. So we sent in [our] team of four HR specialists who could assist in the outplacement," says Gray. "They had to do everything—figure out severance packages, advise employees about early retirement and contract with outplacement firms. The company completed its plant closure without major problems. And the HR temps walked away with a valuable experience to add to their resumes.

In recent years, HR professionals certainly have seen their jobs become more challenging and complicated. Just try keeping up with the latest legislative acronyms. That's a job in itself. HR contingents, therefore, can add value and expertise to a department lacking the necessary resources. They can assist as compensation specialists, HRIS specialists, recruiters and diversity trainers. But whether Gray is recruiting for HR Only, or a company is considering one of his managers, each party looks for the same thing. "A successful interim HR person is someone who can go into any environment and practice his or her profession," says Gray. On-call HR professionals also can help tackle the crushing workload, says one of the agency's vice presidents. Let's face it, on-call professionals make sense because sometimes one company can't possibly handle everything on its own.

Gray says that his company's business is up 80% from the previous year. The recession in Southern California, he believes, is taking a turn for the better. "We're getting more regular full-time orders in addition to temporary ones. More of our interim people are going from temp to hire," he says.

Although many specialty temps say they enjoy their flexibility, most still hope to land a full-time job. In a nationwide study of former temporary workers, NATSS confirmed what many in HR already know—that temporary employment can and often does lead to permanent, full-time employment. The study, conducted by an outside market research firm, found that 73% of former temporary workers now are working at permanent jobs. And more than one-half or 58% stated that they felt their experiences as a temp helped their employability. No doubt, the temporary positions also boosted the HR contingents' skill sets in such areas as computers and communications. For example, in the manufacturing or high-tech industries, companies constantly are in search of qualified, bilingual HR professionals who can relate to its diverse workforce and clientele. HR Only, Gray says, networks with various ethnic HR associations, such as the Personnel Management Association of Aztlan—a Southern California-based group of Latino HR professionals—to diversify its ranks. "Spanish is still the number one choice [for bilingual HR professionals], but we're getting more frequent requests for Japanese-, Korean- and Vietnamese-speaking people. As our population becomes more diverse, HR has to reach out," says Gray.

In addition to language skills, today's HR temps are expected to be up to speed on various software programs. Years ago, having basic word processing skills was enough. Today, you're ahead of the game if you can claim expertise with various operating systems, use a variety of HRIS software programs and access information online. If not, agencies such as HR Only will help identify local colleges and professional association seminars or workshops to upgrade your skills.

"Weigh the costs in terms of time better spent and headaches spared. Imagine how much better you'll sleep—liberated from workers' compensation."

Now, once you have found a great candidate, you're bound to ask: Wouldn't it have been cheaper to have found the individual on our own—rather than work with a temp agency? Probably so. But weigh the costs in terms of time better spent and headaches spared. Imagine how much better you'll sleep knowing you're liberated from workers' compensation, wrongful termination complaints and unemployment compensation after the assignment is over. Many of these executive temp agencies assume the responsibility of the employer. Consider the advantage of being a client for a change.

In fact, according to a Conference Board survey of companies, the most common form of contingent labor is short-term temporary workers supplied by a staffing company—about 90%. The major reasons for hiring contingents, the survey revealed, were to provide labor flexibility to meet demand fluctuations; acquire specific expertise; control head counts due to downsizing; fill in for absent employees; and buffer core workers against job losses. Some companies also have relied on contingents because they're expanding overseas.

Companies reward contingents with promotions and benefits.
Dallas-based Mary Kay Cosmetics is one of the companies using short-term temps and long-term independent contractors. Timothy Wentworth, Mary Kay's senior vice president of global human resources, says the company's growth in contingents primarily will occur overseas. In the United States, the need for short-term temporary workers is expected to remain relatively stable. Most of these temps are concentrated in manufacturing and distribution operations. Although seasonal peaks and valleys occur, the factory operates year-round and the temp load varies little from month to month. Seasonal and limited-edition products are manufactured during the slow times and warehoused for distribution in the busy seasons.

But the higher-level contingents are the sales consultants who build the company's clientele. These individuals may advance to the level of independent contractor and own their own businesses. For example, over the last 20 years, Lady Carol Campbell of Irvine, California has worked her way up from her position as a direct sales consultant to senior director—one of 6,000 upper-level independent contractors with myriad sales consultants working under her leadership. Campbell was a legal secretary and single parent raising two children when she began selling Mary Kay's cosmetics. "It was the only job with a big enough income to raise my kids," she says. Now married, her hefty income offsets her husband's earnings diminished by a spate of recent downsizings.

Campbell says she enjoys working as an independent contractor because of the opportunity to be involved with other women in a positive atmosphere. "I like to help women find the best in themselves and translate that into a good income. We're not dealing with the dowdy housewife syndrome. We're working with [today's] professional women," she says. Many women in the company, she explains, are earning between $50,000 and $100,000 a year and drawing benefits, such as a retirement plan, life and health insurance and periodic bonuses.

As president of her own company [under the Mary Kay umbrella], Campbell has the freedom to work when she wants and as much as she wants. "I'm embarrassed to say, but I work about 20 hours a week," she says, while recently dashing off to a Saturday afternoon tea.

The company is an exemplary employer too. According to Helen Axel, senior research fellow at The Conference Board in New York City, Mary Kay employees weathered a leveraged buyout in 1985 because of its supportive HR policies. Layoffs were averted. And during the subsequent shaky period, Mary Kay Cosmetics formed a temporary agency within the company and made a percentage of its employees available to another firm that had a large, short-term need for contingent workers. Since that time, Mary Kay has enjoyed remarkable growth and will expand its contingent workforce, says Axel. Contingent workers, who 10 years ago accounted for less than 6% of the company's workforce, are expected to grow to more than 15% of all workers by the end of the decade.

Meeting that goal still requires prudence, however. Mary Kay Cosmetics sets hiring specifications for agencies that supply its temporary workers, according to Axel. It has recently added background checks to that list of requirements to eliminate those who have had problems with law enforcement agencies. Because many temps at Mary Kay stay for four to six months, it pays for the company to be more selective on the way in, says Wentworth. The company also expects to move toward using only one or two providers to ensure its selectivity.

As the temporary staffing industry itself becomes more competitive—and we know it will—each agency will be demarcated by the quality of its benefits package. And rightfully so. To attract individuals with high-level computer skills, for example, some agencies are beginning to offer more attractive benefits. That should be good news for companies restricted by dwindling resources. But according to Cambridge, Massachusetts-based MacTemps Inc.—a placement agency for computer specialists—only 64% of a group of HR managers surveyed in nine geographical areas last year knew whether or not their temps were receiving benefits from the agencies they employed. But the respondents expressed the view—by a ratio of almost two to one—that an agency's benefits policies would make a difference to them in choosing an agency. Asked to rate the benefits they considered most important, they listed: health insurance, disability insurance, child-care assistance, vacation pay, skills training, dental insurance, life insurance, holiday pay, a retirement plan and workers' compensation. Health insurance and skills training topped the list by far. Oddly enough, retirement plans rated the lowest in terms of priorities.

But that doesn't stop MacTemps from delivering a comprehensive package for its employees. Founded in 1987 by John H. Chuang—then a Harvard University undergraduate—MacTemps is ensconced in the ranks of the nation's fastest-growing companies. It places Macintosh and PC/Windows specialists and high-end computer graphics talent in short- and long-term assignments. But when the company first started out, Chuang didn't offer benefits. He added them in 1993—becoming the first national temp agency to offer its contractors comprehensive benefits, including medical insurance and a 401(k) plan. This is how it works: Those employees who have worked 1,000 hours a year qualify for the 401(k) plan. At 1,500 hours, they receive other benefits, including a comprehensive health plan with no deductible, the cost of which they split with MacTemps (about $90 a month each for a single worker). The plan is the same offered to management and staff. "We wanted to redefine the staffing industry, not replicate existing practices. [Our] benefits program is a major step in that direction," Chuang has been quoted as saying. What all of this means for HR is that when you hire short- or long-term computer specialists—for information systems or graphics—you won't have to worry about their pre-screened qualifications or their benefits. All you'll have to figure out is how best to use them once they arrive in your corporate lobby.

Follow the lead of those who've benefited.
In the case of hospitals, contingency workers always have been a part of the medical workforce. Because the hospital census fluctuates day-to-day, additional nurses always have been called in on an as-needed basis, says Margaret Hambleton, director of HR at the Good Samaritan Hospital in Los Angeles. But now—with downsizings, cutbacks in benefits, pressure from insurance carriers to lower their costs—hospitals increasingly are pumping new blood in areas beyond their nursing staff." Our 400 contingents [are comprised of] daily-paid employees, temporary workers to fill short-term assignments and registry personnel [such as nurses]," she says. The Good Samaritan, she explains, has established an information bank that rates each position in the hospital so any position now can be filled immediately by a contingent. "This is typical in pharmacy, physical therapy, home health, speech pathology and even MIS," she says.

The driving force for using contingents, she says, is to increase efficiency. "We don't want people sitting idly. We want them working," Hambleton explains. Five years ago, she recalls, nurses would often wait for patients to be admitted. Today, nurses are brought in as the patient population increases. "We can get [contingents] in an hour," she says. Per diem staff usually are called first. But in cases of extreme emergency, the hospital calls those who actually are paid to stay by their phones—allowing them to respond within 20 minutes. Some of the employees who were laid off in a downsizing several years ago, she says, are part of the hospital's current per diem staff. Her goal as HR? "To increase our efficiency and have as much staff as we need at the time." And the downside in terms of quality health care? Hambleton says that HR's only safeguard under these circumstances is to carefully monitor the competency of the registry. The Good Samaritan, she says, usually will assign the more difficult cases to its full-time and most technically advanced staff. Those cases requiring less care will be assigned to pre-screened professionals from the medical registries. And they're under pressure too, says Hambleton. Because the Good Samaritan is a tertiary hospital (that means it's equipped with sophisticated medical equipment), it requires professionals to have up-to-date technological skills as well as bilingual ability to serve the diverse population in Los Angeles. "Registries see the need to enhance their skill sets too."

Clearly, the Good Samaritan and companies in other industries will continue to use a temporary workforce. And specialty contingent employment, especially, will remain a part of business life well into the next century. While some rely on it as a panacea, thoughtful executives and HR must understand its limitations, warns Axel. "For companies looking for a high-quality, committed workforce, excessive use may work to one's detriment. But with well-defined objectives and careful planning, prudent use can offer employers a cost-effective way to increase labor-force flexibility," she says. In today's business world, temps no longer are temporary. They've progressively earned a permanent place at every level of the corporate structure—even at the very, very top.

Personnel Journal, April 1996, Vol. 75, No. 4, pp. 34-44.

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