Developing recruitment partnerships
By NEHRA, 9/19/2003
Despite the positive economic data and possibility of a recovery, few new jobs have been created as of yet and increased productivity has allowed corporations to remain lean. In order for firms to remain streamlined yet address specific needs, there is an increasing trend for companies to use individuals on a temporary or project basis instead of hiring additional personnel.
Because of the conditions of the labor market, these project-based individuals aren't able to get the high rates they were able to just two years ago. With the influx of former retirees, stay-at-home parents who need additional income, recently unemployed and economically hard-hit self-employed, competition for these positions is fierce. This has created a buyer's market in which corporations can get superior personnel at bargain basement prices.
While some individuals may refuse a lower than desired pay rate, there are many others who are willing and eager for the assignment, its financial rewards, and the excitement that goes along with it, despite the lower than usual compensation.
This trend towards lower project rates has been compounded by the highly intangible attributes of many of the individuals who perform these traditionally higher-paying tasks. Unlike a doctor, accountant or attorney, whose skills and credentials are fairly obvious, most people in corporate America have skills that are difficult to quantify or otherwise communicate in a relevant manner. Similarly, these credentials usually appear out of context, which further complicates matters.
For example, increasing sales through brand leveraging by $5 million annually would be a huge success for an executive in some industries. In others industries, it would be considered a total failure. This success or failure may have been caused directly by this individual, or it could have been caused by other factors that may be entirely unrelated to this person. This makes many of the relevant differences very hard to convey and, to some extent, commoditizes the services of these individuals.
The effect of this commoditization coupled with the currently large supply of this type of labor has resulted in the reduction of perceived corporate value and ultimately lower compensation for higher-end labor.
Partly due to the lower cost and higher availability of project-based experts, their use has begun to increase despite many firms' continued reduction in headcount. While lower cost is one of the benefits that has helped fuel this trend, there are a number of additional advantages. Firms are able to source and retain the various specialists required for a given project without having to pay for their downtime. Similarly, their employment-related costs are greatly reduced and in many cases can be eliminated altogether.
In these uncertain times, many business owners are especially concerned about the risks of hiring additional employees. Since there is a relatively low risk associated with this type of relationship when compared to hiring additional employees, the utilization of this highly viable option will undoubtedly continue to increase.
Peter Lawrence Gray is chief executive officer of Peter Gray Staffing in Stamford, CT. For more information, e-mail him at email@example.com.