This article aims to further discuss the basics of staff leasing. Also, it intends to provide necessary information in order to help business owners get the most out of its employees. In this way, they will be able to determine if there is a need for their firms to seek assistance on certain aspects of their businesses from staff leasing providers.
Generally, leasing companies act as a provider of different types of services and assets in order to provide assistance for companies to focus more on their profit-oriented goals. Commonly these are services that engage in mass production which sometimes require, due to shifting demand, hiring of temporary employees in order to meet the demands of their customers. As implied in the article by written by Bvsan Murthy entitled Employee Leasing: An Alternative Staffing Strategy, the article suggests the strong advantage of staff leasing and the benefits that it may bring about. In terms of addressing the other needs of any employee with regards to their salary and employee benefits, it would be taken care of by the leasing firm. Because of this, it lessens workload on the part of the company. Since the payroll is taken care of the leasing company, queries of the employees would then be directed to them. The external firm assumes all legal obligations, which, in a way, protect business owners from dealing with legal matters. Having said that, staff leasing can help a business in many different ways that is why it is starting to become a global trend. Also, firms that offer services in connection with attending to back office jobs is gaining its popularity especially in developing countries.
In a company, back office jobs are the ones that are not directly facing the clients. Although they do not directly face the clients, they can act as a support system for companies since they are the ones that actively interact with the front office staff. Also, it is at times referred to as positions that are not directly generating revenue. These are employees that deal with record maintenance, clearances, settlements, accounting, IT services, and regulatory compliance. Nowadays, back office jobs are commonly not in the headquarters of the firm because in order to reduce costs, many companies have turned to just outsourcing back office roles. Also, it enables business owners to have access to sufficient labor pool, inexpensive labor costs, and cheaper commercial leases. This is due to the development of technology that allows companies to have the option to allow having remote-work engagements, which consists frequently of permitting their employees to work from home.
Having said that, staff leasing has its advantages and disadvantages. Staff leasing can become beneficial to business owners for it can reduce administrative tasks, provide improved employee benefits, accurate legal compliance, broader talent acquisition, and cost-effective. Hence, a disadvantage also occurs when it comes to leasing such as confusion among employees, limited control, seasonal employees, and increased company dependency.
ADVANTAGES
Reduced administrative tasks
Directly hiring employees would entail several requirements that a company should constantly take into consideration such as HR management, taxes, benefits, compensation, and payroll. By seeking assistance from staff leasing firms, companies can experience reduce in terms of administrative tasks. Moreover, reduced workload on their part would enable companies to focus on other aspects of the business and can help bring about an increase in productivity.
Improved employee benefits
With the help of staff leasing, employees can experience an improvement on their benefits. This is because staff leasing providers, with their access to various benefit resources, can provide better benefits for their employees. Furthermore, not only leased employees can benefit from this, but regular staff in several ways as well. This is because they can be assured of a more accurate and timely compensation. Also, this can help companies to have more applicants because with these kinds of benefits, there would be more people that would be willing to work for your company.
Accurate legal compliance
In HR management, there are legal aspects that need to be taken into consideration and it should be fulfilled as is. With the help of employee leasing, all legal responsibilities of a company can be fulfilled accurately. HR management, employee benefits and compensation, taxes, and payroll responsibilities would be assumed by the leasing firm, thus, limiting the company’s legal obligations. Also, it would help companies avoid disqualifications that, at times, entail hefty fines.
Broader talent acquisition
By turning to staff leasing providers, companies can be provided with better and broader pool of employees. This is because it would enable companies to have an access to the external firm’s database, which would allow them to scan the credentials for prospect employees with ease.
Cost-effective
By leasing employees, business owners can now be relieved from fluctuating payrolls because these kinds of services are typically offered at a flat rate. Also, companies can negotiate for a better package and a reduce in cost of insurance. The cost of leasing employees is still cheaper than directly hiring employees because of the administrative costs that come along with it.
DISADVANTAGES
Confusion among employees
Staff leasing is prone to causing confusion among its employees. This is because, typically, employees assume that their salary would come from where they are working at. In cases where employees would consult regarding their salaries and benefits, they are likely to become confused as to where should they inquire. However, this dilemma can be avoided if the company and the external firm have a strong working relationship.
Limited control
Having the staff leasing provider assume all HR related matters of the company would also mean lesser control for the company. If a company would come across an inefficient and unreliable professional employer organization (PEO), the responsibilities with regards to HR management would be affected dramatically. Also, in situations like this, companies can be faced with several fines and sanctions that usually involve heavy fines. However, this can be avoided by carefully evaluating staff leasing providers.
When it comes to hiring employees, clients are able to set the standards that they look for in an applicant. However, during the hiring process, the leasing firms are still the one that gets to choose who gets to be hired.
Seasonal employees
Since leased employees are outsourced from external firms, it may affect their commitment towards the company that they are working for because they may feel that they are not totally part of the organization. Additionally, lack of loyalty and motivation among leased employees may affect the overall productivity of the company if not addressed properly. On the part of the leased employees, they are more prone to becoming unemployed since most of them are hired on a contractual basis. Staff leasing is not ideal for companies that are looking to work with their employees for a long time. On the other hand, for businesses with shifting demand and are in need to hire workers temporarily in order to meet a certain demand, or just simply opt to leave the administrative tasks to other firms, staff leasing may be ideal for them.
Increased company dependency
Staff leasing may sometimes cause companies to become dependent on their leasing agencies. Because of this, it may increase the likelihood of such companies to become exposed to several risks once the leasing agency stops operating due to various possible reasons. If this happens, it could greatly affect the company, especially its employees. This is because it would require the company to overhaul their HR systems right away in order to avoid problems that may arise due to faulty HR management.
The process of employee leasing can provide companies with several benefits that would help them improve their company. Also, it would enable companies to focus more on other aspects of their businesses and just leave the tedious task of HR to these external firms. The disadvantages that come along with employee leasing can easily be avoided by simply choosing the right firm. This can be done by researching more about the firm and its reliability.
