IDear Workforce-I Hire Temp or Get a Perm

February 24, 2000
QDear Workforce:

Currently I work for an organization that hires employees for project work. The projects can run form two weeks to several months. We currently use a mix of agency temps and company hires. I have been asked to evaluate the difference is costs between company hires and agencies.

We do not offer benefit coverage for hourly employees until they have been with the company one year. Another twist to our dilemma is the start dates for new hires are very fluid. Project times get pushed back sometimes for weeks to months.

Do you know if there are any statistics or formulas to determine hiring costs for this type of hiring? Most of the information I can find is for permanent hires or temp to perm.

--Carla Starck



Dear Carla:

There are a number of factors to consider when comparing costs for temporary vs. permanent employees -- company size, industry, demographics, project scope, position, etc.

Generally, the cost of temporary employees is higher; however, it is spread out over the duration of a project because hiring fees and benefits have been factored into the monthly charge.

In comparison, for permanent employees there is the up-front cost of hiring which is in the $4,300 range (average over all industries and company sizes). Beyond that, the monthly cost is lower for permanent employees, even when factoring in salary and benefits.

The longer the project, the more economical to hire permanent employees who will presumably become an even greater resource the longer they remain with the company.


SOURCE: Ceridian Employer Services, Minneapolis, February 4, 2000.

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