It’s Never too Early to Prepare
Turn to any news outlet today, and the leading story will undoubtedly include the dreaded “R” word…recession. While there are analysts and statistics being used to both prove and disprove the fact that our economy is headed for (or already in the middle of) another recession, it is certainly on the minds of every business leader. No matter which side of the discussion you’re on, it’s a good idea for all companies to prepare contingency plans that will shelter their bottom lines and weather the recession storm, if (or when) it makes landfall.
Running a Business is Expensive
No matter the economic state, everything about running a business incurs a cost, and for nearly every company, the highest expense is employment. The cost of hiring a full-time employee adds up…fast. In addition, to pay, the many benefits (including Social Security, Medicare, state unemployment, healthcare, insurance, 401(k) plans, etc.) can easily add an additional 18-20% to a base salary. To defer this portion of the expense of employing workers, businesses often partner with a third-party payrolling solution provider to cover these ancillary employment costs are covered.
How does “Payrolling” Cut Costs?
When people hear the term “payrolling,” they often think of the outsourcing of a company’s paycheck processing. Did you know there’s another type of payrolling, one that is associated with Employer of Record (EOR) services? That kind of payrolling solution will not only cut workforce costs but also protect your company from co-employment risks and provide greater workforce flexibility. How?
Overcome Regulatory Hurdles with Flexible Workers
Almost every business has some kind of “indirect worker,” whether that employment arrangement is via a statement of work, temporary-based, or even an independent contractor. These types of employees can be short-term in nature to provide specialized services for a project or may have a longer-term employment commitment to a business. In general, companies use EOR payrolling services to overcome the regulatory and cost hurdles that occur when employing indirect workers. As payrolled employees, these individuals still work on behalf of your business but are not legally “on your books.”
Respond to Changes in the Economy Quickly
While adding a payrolling solution provider is a great way to save employment costs for businesses any time, during a recession these partners can make a huge difference in surviving a stormy economy. In a recession, things can change drastically and without much forecast or notice. The nimbler a company is when responding to changing economic conditions, the more robust their business will be when the recession title wave recedes. Payrolling solutions providers can maximize your company’s ability to be more consistently agile.
Ramping Down or Scaling Up?
Payrolling indirect employees works well when companies have large projects that must be completed within a specific time frame. In these instances, they know the specific employees needed to get the job done right but bringing them on to the company’s payroll isn’t an option for any number of reasons. If your business needs to rapidly scale up employees, they can be added seamlessly to your roster through a payrolling partner. If your company finds itself with a need to rapidly scale down headcount to reduce expenses, a payrolling partner can help you downsize quickly without sacrificing core employees. In those cases, your organization can reduce the size of your employment expense while continuing to have access to your valuable and skilled workers through a payrolling partnership.
Easier than you Think
If you are engaging with a staffing agency for talent acquisition of indirect employees, there is not a big difference in utilizing a payrolling solution. Under both employment relationships, staffed employees and payrolled employees will have the third-party solution provider as their legal “employer of record.” This makes the third-party solution provider (staffing agency or payrolling partner), responsible for payroll taxes, benefits administration, and compliance with various employment-related regulations. While a traditional staffing agency relationship includes the recruitment and selection of indirect employees placed at your company, payrolled employees are recruited and identified by your company. Due to this difference in the employment services provided, payrolled employees generally have lower bill rates or mark-ups than the equivalent employee placed through the traditional staffing agency relationship.
Don’t Wait for an Economic Storm
Payrolling employees through an EOR relationship can be a good solution for businesses looking to reduce the costs, administrative burdens, and risks of keeping indirect employees on their payroll. While this solution is applicable to many different industries, payrolling is most beneficial to companies in fields where workforce flexibility is an essential component of business success. Nearly any business would benefit from a more flexible and adaptable workforce, especially in today’s economic state, which is not only affected by shifting economic forces but also the rapid pace of constant technology evolution.
Your Payrolling Partner
Dahl Consulting (DAHL) provides businesses with a traditional payrolling solution for indirect employees, or we have the expertise to customize a solution to meet unique workforce needs. With our diverse recruiting and employment experts, you can rest assured that your payrolled indirect workers are being handled reliably and accurately, whether workers are located on-site or off-site, paid hourly, daily, or per project, and considered freelance, flextime, or a host of other possibilities. Contact our payrolling EOR experts today to see if DAHL can help create a customized solution for your employment situation.