Seasonal sense: How to mitigate seasonal and temporary recruitment risk

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1 Seasonal sense: How to mitigate seasonal and temporary recruitment risk

2 In today s economy, seasonal and temporary staff can be found in audit offices as well as the shop floor and in the ski resort. As companies strive to have the exact amount of people on board to fulfil fluctuating business demand, finding optimal temporary staff has become a priority for many employers. So what are the risks and rewards associated with temporary staff and what steps can organisations take to build a reliable and flexible workforce to meet seasonal as well as ongoing business demands? Overview of the UK s temporary workforce According to the latest figures from the International Confederation of Private Employment Agencies (CIETT), the UK has the highest number of temporary workers in Europe, with over 1.3 million temps working in the UK; that s around 5% of the UK workforce. Since the 1970s, temporary staffing has expanded rapidly to become a significant feature of many national labour markets. Temporary employment, be it seasonal, ad hoc or interim work, is now a permanent feature of the business landscape and for many organisations, it is a form of working that has become integral to business strategy. Indeed, recent research from the University of Manchester has found that the recession has led many firms to have in place a buffer zone of temporary agency workers. During tough economic times, firms may increase the proportion of their workforces which are externally sourced from temporary recruitment agencies as a means of managing the risks of any future recessions. While for most firms, this strategy is a short term one, there is also evidence that it has developed into a longer-term approach to workforce management. Business advantages of using temporary staff Temporary staff can be quickly deployed to cope with unforeseen demand, cover sickness, holiday absence and maternity leave and provide extra support due to seasonal demand like the Christmas rush or financial year end. During times of recession, using temporary staff also allows organisations, at least in the short term, to avoid the costly need to sack permanent, core members of the workforce. The use of temporary staff can also help to reduce the fixed costs associated with labour hiring and recruitment. Temporary workers, for example, represent a relatively low cost method of screening for potential permanent employees, monitoring their on their job performance and culture fit. Recruiting permanent staff from a pool of temporary workers enables businesses to try them out for size over a longer period of time than would be possible under most probation schemes. Conversely, for other employers, using temporary staff can be a way of securing additional time to use for searching for permanent employees. In more recent years, there has also been a rise in the use of independent contractors by organisations. Contract workers provided added flexibility when a company requires it. They can do one off jobs or provide a service which no other member of staff can provide. In many cases, they can often begin work at short notice which helps employers to meet a sudden demand. The added benefit for the employer is that they are not responsible for their PAYE or national insurance contributions. The risks associated with seasonal and temporary workers Clearly, hiring temporary staff offers a number of specific advantages to employers. However, they do come in all shapes and sizes. The good ones can help a company thrive in the difficult times or offer valuable help and support at short notice. The very best temporary workers are often highly motivated, some seizing on the opportunity to gain valuable experience and may see the role as a stepping stone to a permanent position. Others may resent the fact the role is not permanent, they might lack motivation and commitment and could be detrimental to a company s business. At their very worst, a temporary worker may gain employment under false pretences, which potentially could have very serious repercussions. The organisations which tend to have seasonal peaks and a greater demand for temporary workers, also tend to be organisations where these seasonal or temporary employees are most likely to have close access to customers, either directly (in the case of retail and the hospitality industry) or indirectly (in the case of call centres or financial institutions). In both cases, the implications of placing the wrong person in a temporary job could be severe and have potentially high financial, legal and reputational consequences. Experian has found that organisations use temporary staff and contractors while largely ignoring or being unaware of the risks. While the timescales associated with recruiting temporary staff are short, this should not be an excuse for not carrying out appropriate background screening on temporary staff. By doing so, these employers are taking massive risks affecting their own organisations and the public at large.

3 So what are the specific risks and what implications do these have for employers? Legal right to work in the UK Many organisations, which have fluctuating seasonal and temporary demands, employ a significant number of migrant workers. The immigration, Asylum and Nationality Act 2006, makes it a criminal offence to employ someone who is subject to immigration control and who has no permission to work in the UK. In 2009, the UK Border Agency imposed 2,210 civil penalties on employers of illegal workers totalling 22.1m, almost double the number of civil penalties issued in With forged identity documents often very hard to spot without specialist equipment or Scotland Yard level expertise, the importance of electronic identity validation and appropriate background screening should not be underestimated when it comes to temporary employees and complying with immigration legislation. Meeting duty of care obligations The Corporate Manslaughter Act places a legal obligation on employers to ensure that the staff they employ do not pose a threat to themselves or others. For sectors like retail and hospitality, ensuring that customers have a safe and pleasant experience is critical to their success but dependent on having honest, reliable and trustworthy staff. In order to protect themselves from legal and financial repercussions further down the line, organisations must satisfy themselves that the temporary staff they employ have the appropriate qualifications, a full and valid employment record and no previous convictions. Threat of employee fraud The possibility of hiring someone who may pose a direct criminal threat may seem rare, but the fact that the value of reported fraud in the UK has increased by 153% since 2003 reminds us how serious a threat this is to UK businesses. The latest figures from CIFAS, the UK s fraud prevention service, show a substantial rise in the number of cases of employee fraud identified in 2009 compared to CIFAS also reports an increase in the number of cases of employees selling personal data. The implication of this finding is that more staff are being approached by organised criminals and bribed to reveal personal customer data. Indeed, it has been claimed by the police that one in ten of Glasgow s financial call centres has been infiltrated by criminal gangs. Clearly, organisations which hold large data repositories or deal with sensitive financial information are at greater risk from insider fraud. In these days of identity theft, criminals will pay a healthy price for personal information and the temptation for someone in financial difficulties is clear. For these organisations, temporary or contract employees are often the biggest threats when it comes to employee fraud. Generally, they have less to lose, have less loyalty to the company and can also have wide access to sensitive customer information. Fraudsters are also more likely to obtain entry to an organisation through temporary or contracting roles where background screening may be lax or often nonexistent. When it comes to combating employee fraud, these organisations should consider developing an employee screening policy which includes carrying out identity checks, credit checking and criminal record checks specifically on temporary and contract staff and not just those in permanent positions. Top tips on seasonal recruitment: Don t rely on the recruitment agency s screening process - organisations should also undertake internal background screening of temporary applicants Build a temporary talent bank consider prescreening a group of recurring seasonal employees who come back during the busy periods Use background screening to deter timewasters and potential fraudsters - Experian s own experience has found that it s not uncommon for as many as 15 per cent of applicants to drop out when made aware that a thorough background check is used in the recruitment process Effective workforce planning - plan well in advance for busy periods and line up a pre-screened workforce that can be called upon at short notice Outsource the background screening process not only will this save time and money but will also ensure legal obligations are met

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