Click here to read our new white paper and find out more about the layered approach to staffing.
In case it's not obvious by now, the traditional model of staffing for hourly work is broken. For years, businesses have had payrolls composed mainly of permanent employees, with extra workers brought in from temp agencies only during periods of peak demand. Yet in volatile economic times, with workers demanding more flexibility, this two-pronged approach no longer fills the need for labor in the most efficient way.
Fortunately, there's an alternative. A three-tiered approach allows businesses to deploy workers exactly when and where they're required, without having to juggle agency contracts or constantly train new workers. It's the subject of our new white paper.
Right now, these are the needs that we hear about the most from businesses struggling with staffing:
The current approach to staffing doesn't go far enough to fulfill these needs. It relies on inexperienced workers who come in on a short-term basis to service demand, does little to reduce unit labor costs, and doesn't offer enough options to experienced professionals who want steady work on a consistent basis.
A layered approach to payrolls offers much more support for businesses' bottom lines. The key to this new approach is a middle layer of shifts in between the ones for permanent employees and the most demand-sensitive shifts. This recurring layer of shifts is staffed by a pool of experienced workers on flexible schedules who can fill in for permanent employees. In practice, the transformation from two layers to three layers looks like this:
.png)
These are actual staffing numbers from a last-mile delivery business using the Instawork platform. It uses Instawork Pros every month, not just during periods of peak demand, and the same Pros come back consistently to work. Hundreds of business across the United States and Canada are doing the same – but why?
Because there are always shifts available for workers on flexible schedules, the same workers can keep returning to the workplace, building experience and knowledge. They can cover for permanent employees who are absent because of illness or vacation, reducing downtime. There's no need for overtime, since these workers can always step in. And when it's time to hire more permanent employees, these workers are first in line, tested and trusted, representing a huge savings in recruitment costs.
The layered approach also helps with retention. If a permanent employee no longer wants to work a fixed schedule, there's no reason for the business to lose their expertise. Instead, the employee can switch to working on a flexible basis, picking up the recurring shifts at times of their choosing. When a permanent position opens up, they can switch back again.
We've heard about the benefits of the layers approach from many business partners, some of whom are featured in the white paper. Here are some examples of what they've said:
Warehouse manager: "People will message me and say, 'I can't work tomorrow, so I'm going to let my shift go to somebody else.' Coverage is not an issue. It's very rare we have no shows."
Hotel supervisor: “If there are any Pros who are available, they usually send me their schedule for the week, and I post the shifts. It's so easy. I know I can request it today, and I will have someone here the very next day, with so many options to choose from."
Food manufacturer CEO: "They got to know the job, and I was protected in case there was a downturn. I didn't have to worry that I was going to be stuck with a whole pile of employees that I couldn't keep. It turned out that the business stayed, and then we ended up bringing a few of them on full time, which was great."
All of these decision-makers use workers with flexible schedules on a recurring basis. They've eliminated downtime and overtime, and they've created a ready-made labor pool for recruiting permanent hires as well.
Using workers on flexible schedules for a recurring layer of shifts may seem like an alien concept, but its time has come. In the past couple of years, hundreds of businesses in service-producing and goods-producing industries alike have had to forgo revenue because of staffing issues. Recruitment and retention are still extremely costly in today's tight labor market. With the layered approach, businesses can leverage new options in the labor market to tackle these challenges.
Occasionally we hear businesses complain that temporary workers are more expensive or less productive than their permanent employees. Yet as the white paper shows, these traditional objections don't hold much water anymore. The difference between the hourly cost of workers like Instawork Pros and the fully-loaded hourly cost of permanent employees – including wages, benefits, and recruiting – is vanishing fast in a variety of roles. Meanwhile, satisfaction with the quality of workers on flexible schedules is rising.
We hope that this white paper spurs you to think about staffing in a new way that raises the return on your investment in labor. Next month, we'll be hosting a webinar to go into more detail and field questions about the layered approach. We hope to see you there!
Click here to read our new white paper and find out more about the layered approach to staffing.
To receive future briefings and data insights from our Economic Research team, please subscribe below. Follow Daniel Altman on Twitter at @AltmanEcon or on LinkedIn.
