Measuring the ROI of Temporary Staffing

So your current staff can’t quite meet your business needs. Maybe demand has increased, or maybe you’ve lost some employees recently. You’re wondering whether it makes sense to hire temporary staff to fill the gap.

Temporary staffing makes a lot of sense in some situations. It can help you avoid hasty decisions on long-term hiring or meet temporary demands without making long-term commitments. But to justify it in the budget, you need an estimate of the ROI. That means looking at all the ways this solution can save your company money.

How a Temporary Staffing Agency Saves You Money

1. Your business can get productive faster.

With temporary staff on hand, you don’t need to wait to do the work your regular staff can’t handle. That means you can also sell and produce more in the same amount of time.

2. You don’t need to pay full benefits.

U.S. Bureau of Labor Statistics research shows that the average amount employers pay for private industry employee benefits is $13.20 per hour. You can likely cut that number down by hiring temporary employees, though — temps often work without the full suite of benefits offered to long-term staff. If you’re working with a temporary staffing agency, you may not need to worry about benefits at all, as the agency will handle that itself.

3. You avoid bad hires.

Don’t underestimate the risk or cost of a bad long-term hire. Research suggests that a single bad hire costs a company approximately $17,000 in lost productivity, operational inefficiencies, customer impacts, recruiting, training, onboarding, and other expenses. With a temporary staffing agency helping out, you can either spend more time vetting candidates for long-term roles or use a temp-to-hire model to test out candidates.

4. You reap the rewards of staffing expertise. 

Staffing agencies are in the business of hiring, which means they have an incredible wealth of staffing and hiring expertise. Their recruiting and screening processes are likely a lot more efficient and effective at finding the right candidate than doing the work yourself.

5. You can scale quickly as needed. 

Long-term hires lock you into a certain number of employees, but temporary staffing doesn’t. You can bring in more or fewer temps as needed based on your changing workforce needs.

6. You avoid overworking your internal employees.

Asking employees to dramatically increase their workloads is rarely a good way to get through peak seasons or increased business demands. It doesn’t take long for employees to become burnt out, which leads to reduced productivity and more turnover. With temporary staff on hand, you can keep internal employees’ workloads manageable and avoid these major long-term costs.

How to Calculate the ROI of Temporary Staffing

Your company’s ROI from temporary staffing depends on a lot of different factors. We’ll take you through the calculation here.

First, tally up the costs of temporary staffing. These include:

• Hiring expenses, including staffing agency recruiting fees and any advertising costs.
• The wages you’ll pay your temporary workers and any ongoing fees you’ll pay the staffing agency.
• The cost to train and onboard workers for temp positions.
• Any additional operational costs related to hiring temps, such as additional equipment, workplace setup, and utility usage.

Now we’ll look at the fun part: estimating the revenue brought in by your temporary employees. That includes:

• Any direct revenue generated by the temps during the employment period.
• Any value added to projects by the temps during the employment period.
• If not hiring temps would have meant hiring long-term employees instead, add the amount you saved on benefits and long-term employment costs.
• If not hiring temps would have meant relying on overtime or increased employee workloads, estimate the productivity gained by avoiding overwork, burnout-related productivity losses, and turnover for your internal team. It might be hard to come up with a number, but give it a guess.

Now subtract your costs from your revenue to get your net profit from hiring temporary staff. From there, divide your net profit amount by the costs you invested and multiply the result by 100%. The resulting number is the ROI you can show your boss. For instance, if you calculate that it costs your business $10,000 to hire a temporary employee and they bring in $30,000 of venue, your ROI is (30,000 - 10,000) / 10,000 * 100% = 200%.

Need Temporary Staff With a Great ROI?

LG Resources is a staffing agency that takes pride in helping businesses save and succeed. We use our well-honed recruiting and vetting processes to find you the best possible candidates for reasonable fees.

Our company hires for a wide variety of positions and industries, including warehouse, light industrial, and HR professional roles. Request an employee from us today to fulfill your staffing needs with an excellent ROI.