Managing Temporary Labour

Many companies are unaware of how pay rates and agency margins can vary dramatically across recruitment agencies and their branches.  Additionally many companies will be paying differing amount for the same temporary worker doing the same job in the same location.  With this in mind many companies are unaware whether or not they are over-spending on temporary agency labour.  In the past, little action has been taken either to find out, or to establish any consistency. But as the recession took hold and organisations squeezed by tougher trading conditions began battling with tighter budgets, the need to standardise and reduce rates become more important than ever before.

As the largest purchaser of temporary agency labour in the UK our leverage within the recruitment industry provides us with the ability to negotiate fixed, standard pay rates for all job categories and agree fixed, optimum agency margins. This standardization and our leverage delivers between 6% and 12% direct cost saving for our clients, revenue that can be delivered straight to their bottom line to improve financial performance in tough trading conditions.

To standardise rates effectively, it is important to establish an 'optimum rate' for each job category, found through balancing the market-driven charge rate with a competitive pay rate. Not only is this essential as a means of saving money for organisations, but the key to ensuring the continued supply of high quality temporary agency workers.  Our unrivalled insight within the recruitment industry enables us to recommend rates which are reflective of the economic.

Another aspect of rate standardisation involves organisations operating within a preferred 'panel' of agency suppliers, designed for each of our clients locations to ensure supply. By having a pre-established list of agencies all working to the same standardised rates, competition is reduced between suppliers, the agencies can develop a long term relationship with the client and the optimised margin becomes attractive..

Our selection process includes a thorough review of your current suppliers, who may form part of the preferred agency supply list, as well as suppliers recommended by us where we feel applicable to ensure coverage. Importantly, we do not seek to radically change our clients' supply base or outsource their agency relationships, but to help them do what they are currently doing, more cost effectively, through our powers of negotiation and industry expertise.

Our rapid growth in a number of different industries is testament to the success of our solution in this area. It is reflected in our client base, testimonials and case studies

The recruitment industry relies heavily on the processing of paper based timesheets and invoices.  The average error rate on an invoice is 15%, caused by the laborious tasks of creating, submitting, processing and matching both timesheets and invoices.  Essential details are often omitted from agency invoices which create additional work for companies in solving such queries.

The conventional means of handling multiple time sheets and the collation, reconciliation and payment of invoices typically adds around 12% to agency service costs.

The chartered institute of purchasing calculates that the processing of each invoice equates to £50.06 for the receiving company.

Our solutions are supported by a unique web-based timesheet and invoice processing system, e-tips^®, which eliminates transactional costs and removes the administrative burden of processing multiple timesheets and invoices, delivering one single consolidated invoice a week. The typical invoice error rate of 15% is reduced to zero.  The use of e-tips® helps our clients to save considerable amounts of indirect costs and may help them to reallocate valuable internal resource.

One weekly accurate consolidated invoice per week - no administration cost or burden.

As e-tips^® removes the need for paper-based timesheets and invoices we are helping the environment by reducing the destruction of trees and helping to contribute to our clients own environmental targets. During 2009 alone, we saved 167 trees from being destroyed.

Typically, large companies have very little, or in some cases, no visibility of temporary agency labour usage across locations or by job category.  This lack of information presents difficulties when attempting to control or leverage spend, or to forecast or budget for future spend.

Our system provides real-time management information, by using our web-based system e-tips^® to reconcile the booking of temporary agency workers, the system captures all the data enabling our clients to manage, budget and forecast their temporary workforce more effectively.

This high visibility and control provides transparency of spend across all locations, regions, job categories and suppliers, over what historically has been an invisible spend. Organisations in turn can react to budgetary requirements and analyse spend accordingly.   Operation compliance can also be monitored to ensure spend figures are accurate. 

The recruitment industry is both highly fragmented and unregulated. Legislative compliance is becoming increasingly important as the Government focuses on conformity to legislation affecting the use of temporary agency labour.  The Employment Agency Standards report identified 2,393 infringements of the law during 2009, leaving companies exposed to litigation.

We establish a Service Agreement for agency panel members so our clients are not operating to several different sets of agency terms and conditions but to one Service Level Agreement. The agreement is designed primarily to mitigate the risk of legal exposure and to set required agency service levels. We conduct regular face to face agency audits to ensure compliance and help to mitigate the risk of legal action.  Initial and ongoing compliance checks include:

• Legislative audit
• Insurance cover
• Internal processing audit
• Induction process
• Specific client support

Over the last 18 months we have witnessed a range of new legislation which has affected the use of temporary agency labour, such as the immigration points system, ISA checks, etc. it is vitally important that organisations are aware of this and confident recruitment agencies are adhering to legal requirements.  Fines will be automatically issued to the end users, please refer to our legislation section for more information.

Supplier performance is continually measured using Key Performance Indicators (KPIs).   Our team will help you to select and negotiate a series of KPIs which accurately reflect the service criterion that are important to your organisation. These are then formalised within your Service Agree­ment. The agreement brings further benefit by giving the successful agencies a guarantee of your commitment based on service delivery, typically for 12 months. This gives them further motivation to maintain the very highest service levels.

The fragmented use of multiple agencies with varying payment terms prevents organisations from controlling and forecasting monthly cash flow.  The withholding or delay of passing paper invoices to head office for payment presents an inaccurate cash flow picture and can adversely affect the supply of workers from agencies

Typically we find that agency invoices are being paid to standard agency terms, with payment terms being anywhere from 7 to 30 days depending on the agency, the branch, the invoice and the clients internal team.

Our clients pay de Poel to standardised payment terms providing the ability to control and forecast cash flow more accurately.  In most cases we are able to push back payment terms by one working week, giving the optimum level for both the client and the agency. Typically this process will give our clients a cash uplift equivalent to one weeks spend to improve their working capital.

de Poel's solutions require no capital expenditure.

The principle of our fee structure is that there is no charge unless you make direct cost savings on your contingent workforce costs.  Our fees are taken as a per­centage of the direct savings achieved through agency transactions and are taken on a per hour basis.