Still think temp agencies are just for finding administrative assistants? Think again. Interim executives may be just the solution for your company's HR woes.
When a well-known movie director walked into the offices of Walnut Creek, Calif.-based CFOs 2 Go, a specialty, senior financial management staffing and consulting firm, he was carrying a heavy weight on his shoulders. His company -- which included more than 30 separate divisions -- was in need of major revamping. For assistance, he turned to Bob Weise, managing CFO at the interim-staffing company.
"His company was going through a major reorganization and needed someone to come in and act as an interim CFO," recalls Weise, whose firm deals primarily in the placement of accounting professionals. "We aided in the completion of a financial reorganization by finding them an interim CFO, firing all of the company's ongoing staff, and replacing them with about eight temporary employees. In addition, there was a great deal of retroactive accounting work to do and tax returns to file. Within about a year, everything at his company was on the straight and narrow and running smoothly."
Weise's anecdote is not unusual. These days, temporary executives are in high demand by companies in all situations -- from those that are battling a tight labor market to those that are looking for seasonal workers or enlisting help in filing an initial public offering.
The Free Agent Trend
In the early 1980s, there were fewer than 600,000 Americans working in temporary jobs. By 1994, according to the Bureau of Labor Statistics, that figure had risen to 2.25 million, and the Labor Department predicts that number will grow to more than 3.6 million by 2005. In fact, one in every five workers is now classified as "outside the traditional labor force."
Ed Sarpolus, vice president of EPIC-MRA, a Lansing, Mich. marketing research and consulting firm, predicts that free agents or contract workers will comprise nearly 50 percent of the general workforce in the new millennium.
Despite popular belief, Sarpolus says, most of these free-agent workers will not start their own business ventures, but rather work for themselves within the auspices of another company. "People want control of their careers, but they still want an employer," he explains. "They need an 'agent' to help them find jobs and manage the other human resource issues around being a free-agent worker."
Free agents have come a long way since the days when the words "temporary worker" brought to mind visions of typists and receptionists working in unfamiliar offices. Today, high-level professionals like CEOs, CFOs, upper-level managers, attorneys and accountants are opting for the temp lifestyle.
"At the executive level, many individuals are choosing temporary work as an employment option," says Tim Brogan, senior manager of public information for the National Association of Temporary and Staffing Services in Alexandria, Va. "They're able to select their own work schedule, choose among a variety of assignments, and get paid for the extra hours that they put in. At the same time, companies get the skills they need to keep fully staffed during busy times."
These temps -- especially those in high-level, executive positions -- are cashing in on the benefits offered by this work style. According to NATSS, upper-level executives choose a temporary work arrangement for a variety of reasons, including:
According to Brogan, a full one-third of temporary executives prefer their alternative arrangements over traditional employment, and about 43 percent cite "time for family" as an important factor in their career decisions. Experienced and mature executives and professionals often prefer to work more flexible hours -- they enjoy the privilege of being able to put in long days when necessary, then take long weekends, or work shorter hours during periods when the pressure eases. In addition, one-third considers diversity and challenge of assignments to be "very important."
Furthermore, executive temping is popular because workers know that cradle-to-grave job security is obsolete, which makes contract work a good employment source for career changers, unemployed executives and anyone interested in a more flexible work schedule.
"Corporate America reorganized itself and did away with its middle management ranks, leaving less opportunity for both recent graduates and seasoned executives," says Weise. "And, in today's business world, there's an enormous amount of consolidation going on, leaving a lot less opportunities in terms of [upper-level positions]. And thanks to the Technology Revolution, there's a plethora of small, emerging businesses that are employing executive temp and interim workers."
Last, but certainly not least, candidates who decide to make temping a permanent pursuit often find that their annual earnings exceed what they'd earn working full time, depending on their specialty. A Bureau of Labor Statistics analysis of compensation in the temporary industry found that a typical white-collar temp earns $24.11 an hour, or the equivalent of more than $50,000 per year, if temping full time. For temporary senior executives, turnaround specialists and top computer programmers, annual earnings typically reach six figures.
The "White Collar" Temps
Temporary staffing firms are stepping up to the plate by providing a far broader range of services than they have in the past. While continuing to build on traditional temporary help to meet fluctuating demand and providing expertise in labor and employment law compliance, staffing services are adding a new dimension: complete service solutions and staffers at every level in the organization.
According to the NATSS, while the vast majority of temporary workers fit within office, clerical and industrial classifications, a fast-growing slice of temporary and contract work includes technical, professional and managerial employees, including high-level executives. Altogether, people in these classifications account for more than 20 percent of total revenues within the temporary and contracting industry.
Overall, it's this so-called "professional" sector that's grown the most rapidly on the temporary-help payroll. Wages paid to temporary professionals have increased eightfold since 1991, reaching nearly $2.8 billion in 1998. This sector includes accountants, attorneys, paralegals and sales and marketing professionals, with jobs ranging all the way up to CEO, according to Brogan.
Why Companies Are Hiring Temps
In years past, higher paid, highly skilled professionals, managers and decision-making executives tended to be long-term employees. Today, however, companies are increasingly looking to contract managers to turn around a money-losing division, start a brand new operation, or oversee a major project. Employers who need a variety of professional, managerial and technical workers to perform highly skilled work on a project or ongoing basis, are using temps more and more. For example, a business seeking to modify its computer systems to be year-2000-compliant can retain a staffing firm with expertise in information technology to analyze the problem, assign the right employees to the project, and be accountable for its successful completion.
In fact, a poll of 416 vice presidents and human resources directors shows that 36 percent use white-collar temps for accounting, legal, marketing, human resources, information systems and administrative functions, reports McKendrick & Associates, which conducted a study for Olsten Corp., a Melville, N.Y.-based staffing service.
Many companies -- especially those with business demands that are cyclical in nature -- cite labor force flexibility as a top reason for employing contingent and temporary workers. Temporary staffing allows them to add professional staff during peak periods or for special projects, rather than carrying the cost year-round.
A merger or acquisition is another scenario that spurs companies to hire interim executives. Such was the case at United Distillers & Vintners, which underwent a merger with two companies, Heublein and Paddington, both well-known entities in the wine and distilled-spirits industries. Top management didn't know what their permanent staffing needs would be after the merger, and the majority of their time was spent trying to integrate the three brands. To solve the problem, the company hired interim staffing agency Paladin Staffing Services to find temporary brand managers who could oversee the individual brands until these major staffing and brand issues were resolved.
Hiring temporary executives can save companies money -- perhaps one of the most compelling arguments for using them. Instead of undergoing the expensive and lengthy search for someone to fill a vacant position, companies can turn to temporary-employment agencies and have a qualified person at work the next day. Depending on the position and the temporary agency, a temporary worker can cost a company from 30 to 50 percent less than a full-time employee because the company pays no benefits to the temporary worker. Hourly rates for interim executives run anywhere from $50-200 per hour.
Besides the obvious benefits that employers get from using temporary executives, both parties get a chance to test each other out before agreeing to any long-term commitments. For this reason, an increasing number of companies use contract companies to fill critical positions, but only on a probationary basis. In such a situation, the employer and staffing company agree that if a contract employee performs well during a specified period of time, the employer will make an offer of full-time employment. However, if the contract employee doesn't fit in with the corporate culture or the requirements of the position, the contract agency will simply send in another qualified candidate and repeat the process until a good fit is found.
What Lies Ahead?
In today's sparse labor market, companies face an increasing number of challenges when it comes to attracting ample workers with the right skills. In response to this challenge, businesses are turning to temporary workers and executives in record numbers. In addition to helping satisfy businesses' demand for workers to supplement their regular work force and to meet temporary skill shortages and labor shortfalls, staffing firms that serve the temp niche are also helping businesses fill permanent positions through a wide range of temp-to-hire arrangements.
And, with the cost of recruiting and training new employees rising steadily, more companies are hiring professional temps full time, rather than taking chances on unproven performers. Not only can companies preview candidates, but job hunters can determine if they really want to work there, reducing turnover later.
"[Our] study points to a major shift in the nature of work in this country," Sarpolus adds. "I believe that the 'traditional' worker of the next millennium will be a free agent, and this will not just apply to technology experts. Managers, accountants, scientists, lawyers -- whatever the profession -- all these workers will embrace free agency."
According to NATSS, the trend towards using professional, executive temps on a regular basis is expected to continue. "The tight labor market has created a recruiting challenge for staffing companies, as well as for all employers," says Brogan. "Firms around the country are reporting that they have more orders than they have people to fill those orders. Demand is outstripping supply, leaving more demand than staffing companies can provide."
Weise adds: "I don't see that demand going anywhere but up. Competition from international companies requires staffing to be lean, so when the ebbs and flows occur, companies need extra people on staff. For example, we get calls all the time from companies that need help with their IPOs. Then, when their business strategy changes and they want an M&A professional, they call on us to find an executive who can go in and help them consolidate into another firm. Overall, by going through such alternatives, companies are ending up with the fastest, cheapest and most effective alternative available."
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