We’ve written this blog to provide our readers who are interested in learning how to keep the people side of their businesses flexible – how to reduce fixed people commitments, focus on your company’s financial health while staying ready to move quickly when needed! We think the timing is right to give FLEXIBLE STAFFING STRATEGIES another look. It just might turn into your next COMPETITIVE ADVANTAGE!
The timing of our decision to repost this blog is purposeful. While most employers have been hiring/adding core employees to their teams since the earliest post-COVID days (putting the benefits of flexible staffing on the back burner in order to compete for talent ) the uncertainties in the current economy are definitely sending signs that it might be time to take a second look at how we get work done. While flexible staffing models have been around for a long time, they typically become more popular when its hard to predict what’s coming next.
What exactly is FLEXIBLE STAFFING?
Flexible staffing, as the name suggests, includes the many ways employers can get work done while minimizing anything that looks like a fixed or long term committment. It includes any organizational model that mitigates against that growing list of responsibilities, risks, and costs associated with employing people directly – i.e. tapping into employees provided by third party employers whenever possible. It also includes any staffing model that makes your people costs more variable than fixed – incurred only when you need them.
Flexible staffing models start to get attention when companies realize they don’t have to stay stuck in an operational paradigm that assumes fixed, long term employee relationships are the only way to get work done, to a paradigm that recognizes that the ability to move quickly or adapt to changes that you can’t always control, is the better more financially healthy model.
Flexible staffing models are typically driven by two primary principles, objectives or core values….
1) The importance of preserving a company’s financial health – a preference for spending money only when there is a high probability of return, leaning heavily into short term alignments between costs and revenues in all areas of the business – staffing included.
2) An increased emphasis on operational readiness – an ability to take advantage of opportunities or adjust to obstacles as they present themselves. Never to under prepare to perform. The “just in time” work organize models often were backed by flexible staffing strategies.
Any kind of staffing solution based on one or both of these two principles get attention in times like now – when its hard to predict what’s going on in an external environment we cannot control. That said, we’ve also seen companies who successfully base their entire business or staffing models around the need for flexibility – to align the people side of the business very directly with the demand for what these people do (ex. Uber). We’ve also seen companies who do just the opposite and have no problem keeping extra folks on board – “just in case.”
We think there is a time and place for both models, both points of view of what’s most important to long term success!
The Back Story Behind Flexible Staffing
Flexible staffing models are not new nor did they just evolve without conceptual underpinnings. The temporary staffing industry that offers a form of flexible staffing got its first legs in WWII by offering a very traditional model where you could use a “temp” for a project or to cover for the absence of a core employee.
In the 80’s the temporary staffing industry found a more sophisticated use for its temporary staffing services, spinning off the publication of Charles Handy’s now infamous book, Age of Unreason. Handy was one of the first organizational futurists to predict that companies would be rewarded by limiting the size of their core workforces and relying ,instead, on a pretty heavy use of temporary or contract staffing and outsourced service arrangements to get important work done.
He referred to these organizational models as “shamrocks”. Theoretically they consisted of equal numbers of 1) core employees, 2) temporary or contract employees (who would be always in an auditioning mode seeking to become part of the core team) and 3) employees actually working for vendors with contractual performance agreements – i.e. the three leaves of a shamrock.
Handy believed that to compete for business with new products and services, companies needed to stay agile (a new word at the time) – able to move quickly, unencumbered by fixed commitments to lifetime employees. He also believed that business strategies based on the notion that to grow or change you just needed to “add to staff” were dangerous, creating out of control cost structures and sub standard performance. Sound familiar?
We’ve been around long enough to see flexible staffing models go thru lots of peaks and valleys. In the 80s and 90s the new tech companies relied heavily on the employees of third party staffing companies to grow their businesses. Wall street supported that model by showcasing who they thought were the “best companies” based on their “productivity per headcount”. These definitions of performance excellence incented companies to limit “headcounts” by tapping into the types of workers never counted as employees – temps, contractors, consultants, etc. With “productivity per headcount” metrics soaring, companies had a good reason to embrace flexible staffing models as their preferred way of growing or just plain getting stuff done.
Flexible Staffing Today
While Handy’s predictions never became fully realized, the impact of his ideas on the business community has been substantial. The Northwest “bigs” – Microsoft, Amazon, Google, etc. – still use flexible staffing as a way to scale up or down quickly which they believes optimizes their profits, and to keep themselves ahead of the technology curve – always adding new skill sets to their organizations without going thru the very high costs attached to train folks internally.
You saw these factors in full swing during covid when the demand for technology required tech companies to staff up quickly. Temporary and contract workers were the perfect solution. lot of temporary and contract workers. Post covid, when demand slowed down, most of their scale backs took place in their flexible workforce, not their core.
We’ve always made note of the fact that many companies, even entire industries, tend to increase their ratio of flexible workers to core workers during and following each major recession. A workforce with 2-3% flex employees was once considered the norm. Now its more like 10-15% – sometimes as high as 30%. And these are the ratios that are maintained despite what’s going on in the external economy.
As for the temporary staffing industry…..we’ve gone thru an interesting pattern. During the build back post-COVID era, employers relied heavily on the temporary help industry to staff their companies with interim employees – just to keep the engines running. Temporary staffing companies delivered employees quickly, by passing normal hiring processes and all but eliminating a company’s fixed recruiting costs. Unfortunately for the temporary staffing industry that trend came to an end when it became clear that to retain employees they needed to hired directly. With workforce participation rates at all time lows, there simply wasn’t enough workers to go around, and employers had to offer regular full time jobs if they hoped to compete for the limited talent that was available to them.
All these changes impacted the temporary staffing industry. By 2022 the demand for temporary staffing peaked and the market started to shift towards hiring direct. Up until mid 2024, even though the economy never really stopped being unpredictable, we saw employers continuing to show a strong preference for hiring direct, leaning into fixed cost models of getting work done, as opposed to making that sometimes scary shift back into more flexible ways of staffing.
Today – employers are not necessarily bloated but we predict they many are starting to notice they may be overstaffed for what is to come and be less likely to “add to staff” than they were just 6 short months ago. Going forward, we’re wondering if temporary staff are the folks who are going to fill in the gaps. We even get brave enough to recommend that model from time to time with mixed results. 🙂
We think there are more reasons than ever for employers to get more flexible when it comes to its people!
- In an economic environment like now, with lots of reasons for uncertainty, it just makes good business sense to avoid making long term commitments – to make sure you conserve your staffing dollars so that when its time to hire you have the money to invest. The need to always be adjusting costs to revenues is a business principle that applies to all investments, including your investments in people. Timing of those investments matters.
- The high market and regulatory costs associated with being an employer have dramatically increased pre and post covid. Washington State is one of the most costly states in the nation to be a employer. Our Washington State unemployment (SUTA) tax is over the top high when compared to other states, even California. Our mandatory sick and parental leave costs continue to grow. Any time an employer can shift or share some of these employer costs to/with others, that is a good thing.
- When the number of employees available for work starts to improve, as it is doing now, flexible staffing strategies once again start to make sense. Employers can get access to more and better talent but on an interim basis.
- We think might be an ideal time for companies to step out and lead with flexible staffing models as a way to get a competitive advantage over their more fixed cost rich competitors.
What changes can you make now to recognize the need for FLEXIBILITY?
When we see clients start to shift their staffing paradigms towards more flexibility, some of the first things we notice are that…..
- …they become more strategic about who and when they hire. When an employee resigns they do not automatically assume the role will be replaced by a new hire. They take the time to reflect on the purpose of the job, review the work performed to see if it can be reassigned elsewhere and reconfigure the job description to fit current needs.
- …they start using more temporary or contract employees for more and different reasons. When business picks up, a manager might decide to hire a temp to do some back office order entry rather than add to their sales or service staff. Instead of training all their staff on AI, they might bring in a temp with those skills already in place to help them figure out where AI makes the most sense. While the traditional use of temporary staff is still there – to cover for an employee absence or to staff a special project – we see companies using temporary staff in new ways. Even C suites that become staffed by interim COOs, CFOs, or CEOs, represent the need to avoid fixed committments.
- ….they tend to be big fans of the “temp to hire auditioning” process and use third party employers not just to cut down on their recruiting costs, but also to make sure that only high quality folks become part of their core team. Companies who have large number of “operant” workers tend to keep large numbers of temporary employees in auditioning mode so that when its time to hire they can do so quickly.
- …they are creative in how they attach themselves to core employees, often offering part time/adjustable work arrangements to employees who, for any number of reasons ,can no longer work on a regular full time schedule. The number of ways an employee can be attached to an organization – flexible work schedules, work from home arrangements, job sharing – start to become the norm once an employer understands the benefits of flexibility as a strategy. The benefit? Employers can retain high value employees they might otherwise lose while still reducing their staffing costs. Our employer of record business regularly processes requests from clients who need our help in paying an employee they want to retain but who is moving out of state. They’ve flexed by partnering with a company like ours willing to take on the employer role.
- …they pursue opportunities to outsource certain functions that just don’t have to be done internally. HR, recruiting, purchasing, accounting, and customer service are functions often turned into an outsourced vendor arrangement. In 2024 and 2025 we started an outsourced recruiting service that allows our clients to get access to high level recruiting expertise on a per hour ad hoc basis, avoiding the high costs of developing this expertise on their own.
- …they keep their headcounts low so they can optimize their pay and benefit programs for their core group. One of the positive aspects of flexible staffing models is that they give an employer the ability to focus their resources on the retention and development of employees they can’t afford to lose.
- …they tend to stay keenly aware of the costs actually involved in different staffing models. Many employers simply don’t know how much it costs to be an employer after you factor in all the direct and indirect costs associated with the employer role. The make their staffing decisions based on analysis of what option delivers the required results for the lowest cost. You might be surprised at those cost comparisons. Check out our blog on this topic here.
Some Final Thoughts and a True Confession…
To be honest coming out of the post covid era we thought employers would return to using more flexible staffing strategies long before now. Let’s face it the economic environment has had its share of risks for clost to 6 years now. We keep wondering if there isn’t a better way for small to medium sized companies to navigate that type of environment – getting the absolute best out of the people side of their businesses.
If you’d like to read more on this topic we blog on it often Here’s some links to other blogs that might be of interest…
- To learn some of the important things that need to be in place in order to embrace flexible staffing strategies check out this blog.
- For a side to side comparison of the costs of a temporary employee compared to an employee hired direct, this blog is a good read.
- If you’d like to better understand why employees might choose to be a “temp” rather than get hired directly, here’s some facts about the temporary workforce that might be of interest.
Regardless of your staffing strategy – We’re Here to Help!
Because we provide both temporary/contract staff AND a wide range of recruiting services for clients who want to hire direct, we are in a position to deliver the services you need regardless of which staffing model you use, how little or big staffing flexibility is to your organization. Our team has been helping organizations implement and upgrade the quality of their flexible staffing strategies for over 50 years but we’ve also helped them develop really strong teams of core employees.
We’ve helped companies find that just right mix between fixed and flexible, getting them thru economic storms while creating a competitive advantage over their less nimble competitors. We’ve also seen companies successfully hang on to the more traditional direct hire staffing models, with core teams that have been key to the success of their businesses. We find ways to help both types of clients.
For a discussion about the right mix of interim and core employees for your team or ideas for implementing some flexibility into your current team, contact us at 425-637-3312 or email our Partner Services and Solutions team at partnerservices@pacestaffing.com.
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PACE Staffing Network is one of the Puget Sound’s premier staffing /recruiting agencies and has been helping Northwest employers find and hire employees based on the “right fit” for over 50 years.
A 5-time winner of the coveted “Best in Staffing” designation , PACE is ranked in the top 2% of staffing agencies nationwide based on annual surveys of customer satisfaction.
PACE services include temporary and contract staffing, temp to hire auditions, direct hire professional recruiting services, Employer of Record (payroll) services, and a large menu of candidate assessment services our clients can purchase a la carte.
