Simple Suggestion to:

Avoiding Staffing Nightmares

Rajesh Kumar
Rajeshkmr7@gmail.com

INTRODUCTION 2 SCALABILITY IS NOT LINEARLY PROPORTIONATE 2 SEEDS OF DESTRUCTION (THE DUE DILIGENCE PROCESS) 3 STAFFING AGENCY QUESTIONS TO THE CLIENT 3 STAFFING AGENCY QUESTIONS TO FUTURE EMPLOYEES 3 CONTRACT 4 KNOW THE CATEGORY 5 DO YOU HAVE IT IN YOU? (STAFFING AGENCY INTROSPECTION) 6 CONCLUSION 6 ABOUT THE AUTHOR 6 ------------------------------------------------Introduction
OK! This one is going to be a long one. Just to set a perspective, land mines are the most effective means of weakening enemies. While 2 out of 50 bullets may strike pay dirt, each landmine is 100% effective. Landmines are planted to maim enemy soldiers. The reason is mighty simple. For every maimed fellow soldier, two get caught up in the rescue. Staffing contracts are quite like landmines. They dont kill companies, they just maim them blocking out precious avenues of growth and spiraling escalations that suck away the life blood of senior management personnel. A staffing contract gone bad destroys workforce morale, pulls down sales and cuts into the agency as well as principle employers credibility. So here is penny worth of advice to Staffing companies. Should you find it useful, share this and post your reviews. I love the accolades

Scalability is not linearly proportionate

The Peninsular airport was consequently rated "best in class" three years in a row. The toilets were clean, the queues non-existent and the security invisible. And then the Grand Alpine Airstrip which was some 100 kilometers away went bankrupt. The entire passenger from around the state flocked to Peninsular. The fortunes of Peninsular changed drastically! In the last three years, Peninsular has come in news for all the wrong reasons, including, ground traffic chaos creating near crash situations on the runway. Ask any high rise builder and he would tell you that after xx number of floors, digging the pit deeper just would not be enough, you need disproportionately higher quantities of steel and aggregates. You need linearly disproportionate amounts of resources. If, as a Staffing company, you want to scale up, you need not just business teams that can trawl the market; you need adequate number of HR and Finance support personnel, else, you will fail before you start.

Seeds of Destruction (The Due Diligence Process)

The seeds of destruction generally come embedded in the seed itself! The business team is normally cruising at break necks speeds when they are closing a good deal. The guys who have to finally deliver generally walk in once the deal is signed. This probably is one of the reasons why loads of deals are heavy on either the vendor or the client to begin with. Here are some questions that will probably help eliminate some of those issues.

Staffing Agency questions to the Client

1. How many other vendors have they worked with before on this assignment? 2. How often do they change vendors 3. Top five reasons why vendor rolls keep changing 4. What shall happen/who is responsible Scenarios a. If client fails to remit payments in time and salary payment timelines are not met b. If incentive amounts are not release as per pre-agreed timelines and this leads to churn or impacts client's business performance c. If business claims are not paid in time and this impacts operational efficacy of the client 5. Litigation arising out of client initiated firing of candidate for nonperformance 6. If there is a delay in remittance from the client and salaries are proactively paid out by the staffing company, is there a provision for reimbursement of Cost of Funds as well? 7. Will the client provide a Bank Collateral which can be redeemed in an event of inordinate delay in remittances?

Staffing Agency questions to future employees

For companies that have been in the market place for some time, their off roll employees are awesome feedback providers. The collective wisdom of these employees can be trusted beyond reasonable doubt. This workforce can be tapped into unofficially before a Staffing company actually signs on the dotted lines. Here are some questions to existing employees that would bring in interesting answers: 1. Do they get paid on time? 2. Are they aware of any issues between the parent client and the current staffing agency? 3. What problems are they facing from the client representatives? 4. Churn related questions: a. How high is the churn? b. Why do they leave? i. Salary Delays ii. Low Salaries iii. Forced Churn

No Incentive payouts Unholy working hours Forced Transfers to distant outlets/offices that lead to churn Where do those who leave find work? 1. Closer to home 2. Stores nearby 3. Competitor 4. They go for higher studies viii. Do those who leave come back again? c. How are they treated by the parent employer i. Like Coal being fired in a steam engine ii. Animals iii. People 5. What are the differences in salaries, perquisites and work timings between the employees rendering similar service on staffing rolls and those on Parent company rolls?

iv. v. vi. vii.

Contract
I will not bore you with the devil in the details idiom. But you know what, I rather record it than let you figure out some of the real important stuff that people forget to pen down and then live with the absolutely avoidable f@&k ups. Here are some questions: 1. Is this just payroll or managed services a. Payroll i. Client representatives provide the attendance ii. Staffing agency processes the payroll and sends this back to client finance team iii. Client Finance Team Credits salary at least 2 days before the scheduled salary payment date iv. Staffing agency credits salaries into employee accounts and sends pay slip by email and sends out an sms intimation. b. Managed Services i. Staffing agency responsible for maintaining minimum active workforce per days ii. Penalized for absenteeism over agreed benchmarks iii. Tracks performance and calculates incentives iv. Tracks, audits and co-guarantees the genuineness of expense claims v. Release claim reimbursements post receipt from the clients vi. Provides Business Reports etc to impact Clients business 2. Does the client strictly and proactively adhere to the Principles of Natural Justice that govern employment laws? a. No firing without warning and notice period b. In case of layoffs, severance to be paid c. Layoffs should not be passed on as performance related firing d. No firing in case of non-performance abetted by mismanagement: i. Salaries delayed and no money to reach place of work

ii. Reimbursement not paid hence, business related activities could not be undertaken iii. Abandoning of work due to consistent delay in salaries 3. Does the client proactively abide by the Appointment terms in letter AND SPIRIT? 4. What is the tenure of the staffing contract? a. A short term marketing activity b. Annual c. Three years long term 5. What are the exit clauses? 6. Is there an absorption clause wherein, if an employee is moved into parent rolls, an amount is paid to the staffing company? 7. Is there a handover payout which covers additional costs incurred in case of change in staffing firm 8. Is there a performance linked exit clause? a. Minimum Workforce at work guarantee? b. Salary Payment Dates etc 9. Is the client trying to pass of a temping requirement as a monthly staffing requirement? a. Example: Some roles are seasonal in nature. Once the employees are successfully on-boarded, the client tweaks working days to match their seasonal requirements and the staffing agency is left to deal with Employee dissatisfaction 10. Terms of payment: a. Collect and Pay. Client finances the payroll upfront. b. Pay and Collect: The agency funds the payroll and collects from client.

Know the Category

We all want to do a good job. However, a staffing ramp up can go awry if we have not understood the segment of hire. The difficulty in ramping up should also be a factor in determining the cost of sourcing (recruiting) of talent for the client. There are two categories of hire which can give you sleepless nights or a bleeding book: 1. The High Churn Category a. Fleet on Street (FOS) b. FMCG c. Banking d. Insurance e. Store Workers f. Call Center Workers g. All those in the bottom of the pyramid salary brackets, example: the City Cab Drivers 2. The High Transaction Worker Categories a. Bank Back Office b. Background Check Companies c. Courier Boys

d. Mall Security Guards

Do you have it in you? (Staffing Agency Introspection)

The smell of big game numbs most of other senses. Sometimes, staffing agencies end up biting loads more than they can swallow! Here are some quick self checks that the staffing agency management can do: 1. Funding a. To manage the first two months delays in payments b. At least one month additional rolling funds to sustain operations, in case you are saddled by a client with a poor payment history. 2. Processes a. Payroll Process b. Business Accounts team that work for business! c. Applicant bank Managed through ATS d. A robust HR Process e. Claim/Reimbursements Management Software f. SMS Software g. Mail boxes h. Online Funds Transfer facility 3. People a. A low churn team that does NOT work more than 8 hours a day as a rule. However, most staffing company employees slog long hours and weekends to manage the transactions. Job hopping is almost always on top of their mind. Churn here can lead to spiraling escalations. b. Recruiters: Staffing companies require recruiters and not telecallers. 4. A Patient Senior Management a. To manage inherent inefficiencies that exist in people rendering high transaction services b. Managing clients who eat away all the timelines and puts unreasonable demands on you c. Manage escalations

Conclusion
Staffing is a low margin high volume business. You need to have the funding and the supply chain in place to grow fast; you also need the technology and management skills to provide innovative solutions to your clients. However, more than any of the above, you need to be passionate about people. The world is all for well funded staffing agencies with a listening ear to their employees.

About the author

I work for a mid-sized HR firm based out of India and provide simple, workable solutions to large volume hiring to our clients. For a free download of this article, you can contact me on rajeshkmr7@gmail.com You can download this document here: or paste the link below to your browser:
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