Does everyone have their seat belts on? We are in for a wild ride!
Just 3 months into the year and seemingly everything has been turned upside down. It would be a huge understatement to say that macroeconomic and geopolitical conditions are unpredictable. How do we read these tea leaves:
- Consumer spending is still trending upwards – Real GDP increased at an annual rate of 7.0 percent in the fourth quarter of 2021, driven by pent-up consumer demand for face-to-face services, and national wage growth trends.
- Strong Labor Market – Job openings are still at a record high, with 11.3 million open jobs reported in January 2022. These vacancies are 60% higher than pre-pandemic levels, and far surpasses the number of unemployed people. “The labor market still has the chance to gracefully slow down with demand cooling but not necessarily crashing.” Nick Bunker, Economic Research Director of Indeed Hiring Lab, said, “But so far the data on openings and turnover don’t show that trend beginning. The labor market continues to power ahead.”
- Inflation went up 7.9% from the previous year
- Gas prices rose 38%
- Supply chain constraints. i.e. Foxconn halts production due to regional COVID lockdown in China
- The Federal Reserves announce a .25% rate increase for the first time since 2018
- International military conflicts (Russia’s invasion of Ukraine)
In the face of these volatile factors, how do companies manage their hiring needs?
One strategy is to balance direct hiring with contingent hiring. Many companies have dozens of open positions that they have struggled to fill. Some of those roles can be considered for contingent hiring which would give the employer the flexibility to quickly pivot if business conditions dictate a change in direction.
Here are some examples of how contingent hiring can help:
Since contingent workers are traditionally employed through staffing firms, planning a portion of the vacancies to be filled as “contract” or “contract-to-hire” gives businesses the flexibility to add more workers for high-demand periods and make adjustments if demand decreases.
Given that the risk to bring in contingent workers is minimal, the interviewing process could be less arduous since full consensus is not needed from all of the company’s stakeholders. This allows onboarding new hires to be fast-tracked and buys the company time to evaluate the workers’ technical competencies and cultural fit before offering long-term employment.
Hiring contingent workers is not limited to short-term assignments. Companies can strategically plan to have the contract periods be 3 months, 6 months, or 12 months long (and even beyond) to align with present and future business conditions.
MITIGATE ATTRITION COSTS
Separating from employees is just as costly as onboarding one. When businesses lay off workers, they have to provide them with their final paychecks, remaining PTO balance, 401(k) distribution, severance pay, etc. By using a staffing firm to engage contract workers, attrition costs could be minimized, if not avoided completely.
OUTSOURCE EMPLOYMENT ADMINISTRATION
Businesses who utilize staffing firms to facilitate their contingent hiring are alleviated of the traditional employer administrative tasks such as withholding taxes, processing payroll, and enrollment of benefits and retirement plans. This can unburden HR departments, saving time and money.
Working with a niche technical staffing firm can help execute a balanced strategy of managing present and future business conditions. SoloPoint Solutions has the experience and resources to provide businesses contingent engineering talents to meet their operational needs, and the flexibility to pivot during periods of economic disruption. To learn more about SoloPoint’s services, contact us today!