One of the most important decisions and investments you will make as a business owner is the hiring of new staff. Many factors contribute to who you add to your finance team and what value they bring to your company.
We cannot cover all of these varied points in a single blog post, but instead will examine the question of whether you should hire a temp or full time employee?
To help you answer this question, you need to look at the pros and cons of each type of employee.
As you look at the different options, you also need to be aware of the impact on your bottom line. What type of worker you hire makes a difference.
Here are some things to consider for each category of worker:
The advantage of hiring full-time employees
- Full-time employees often feel pride in their position in your business. They get satisfaction out of being part of a team and working somewhere they feel comfortable and have job security.
- The hourly wage for an employee is much less than that of the temp workers, assuming both workers work a standard 50-60 hour work week.
- You realize that you generally have workers that you trust and can always depend on when you need them. You can assign errands for all time which gives you an opportunity to carry out the jobs that are most important to you.
- You do not have to continually train new staff on how you like things done continually.
Disadvantages to hiring full-time employees
- Full-time employees will always expect benefits like holiday pay and maternity leave.
- They must always be paid a salary, regardless of whether your business is having a low period.
- You are in charge of your workers’ training and professional licensing requirements.
Temp jobs often arise if businesses need to cover for the long-term absence of employees, due to issues such as sickness or maternity leave. Short-term projects or busy periods, such as the end of the financial year, may create temp job opportunities as well.
Using a temp agency allows a company to respond quickly to peaks in demand, without having to go through a lengthy and time-consuming recruitment process.
Pros of hiring temp worker
- Lower labor costs. Hiring a full-time employee involves placing advertisements, carrying out background checks, training, and overtime costs. Hiring a temp worker eliminates the majority of these costs.
- Hiring even a single employee involves a lot of time and energy. But while hiring a temporary employee, the duty is usually shifted to a team of career professionals and recruiters.
- Full-time employees have to be provided benefits and perks. This entails an extra cost to the employer. Temporary workers, in most cases, are supplied by workforce agencies hence reduce benefits claims.
- Avoid unemployment claims. This can be avoided by recruiting temporary workers, whose claims are limited only for the duration of employment.
- If you hire a temp worker who is is not a good match, you don’t hire the worker again. You are not making a long-term commitment.
- You can hire a worker for a particular task at hand by contracting someone with specialized knowledge.
- Temporary workers are usually used on a “try before you buy” basis, which may offer the following benefits:
- You get high flexibility when you are unsure about filling your position with a full-time employee – a reality that is particularly useful in uncertain economic situations.
- You get the opportunity to assess a person from a specialized viewpoint for a prolong period. You likewise get the chance to evaluate social fit and character attributes, and how well the prospective employee’s values fit into your organization.
Disadvantages of hiring temp workers
- You may lack the same amount of control as you would with the full-time employee. They will regularly run their business their way.
- They usually do not have the same sense of company loyalty as a full-time employee and most of the time do not feel as they are a part of the business staff.
- Wages for temporary workers are usually 15-20% more than that of regular employees. This is because the staffing agency includes its fees into the worker’s salary.
- Permanent employees usually see temporary workers as nothing more than temps and are threatened by their presence. Temp workers are unlikely to attract much respect from the rest of the team.
- So which option is best for you?In general, if you need a stop gap solution, you’re best option is to get a temporary person. It’s not a long term commitment and buys you time to look for a permanent solution.
However, a common mistake for most startups is making a temporary person a “full-time” solution, especially in the case of building their finance and accounting teams. Startups focus mainly on building out their product and engineering teams and neglect the importance of a strong core of finance and accounting professionals.
They then become shocked when they find it difficult to create financial dashboards and presentations that will impress the VC crowd.
If you are serious business and want to raise money in the future, the best option is to find a finance professional or a full-time accountant. Ideally, you would have both. They grow your business and understand how to create the right dashboards and presentations that will impress. Most hired guns will come in, do what’s needed and get out. That’s not an ideal way to lay the groundwork for your financial and accounting processes.
If you’re business has gotten some traction and you’re ready to seek VC money in less than a year, you should definitely be looking for a full-time finance and accounting professional.
Sign up at Vested today to get started in the process of securing your business’ financial future.