In difficult times, when the protracted economic crisis negatively affects purchasing power, shoe retail companies are forced to make every effort to stay afloat. One of the ways to optimize business processes, ease the tax burden and reduce costs is outstaffing.
Old new approach
Outstaffing (eng. Out - “out” + eng. Staff - “staff”) implies the removal of an employee for the staff of the customer company and its transfer to the staff of the contracting company. Thus, it turns out that the employee works in the same place, fulfilling his duties, but legally his employer is a contractor company.
The history of such labor loans began in America in the 20s. The impetus for the development of this service was the crisis in agriculture, which arose due to the outbreak of the Great Depression and the seasonal demand for workers. Then the seasonal workers' unions found an unusual way out of the difficult situation - they began to conclude special agreements with farmers and plant owners, which stipulated a schedule for the "supply" of workers, their required number and terms of work. Thanks to this, farm owners and manufacturers knew exactly how many workers and at what time they would be able to work in their fields and factories, and could plan costs. And the workers, on the other hand, understood when, where and for how long they would work. This work scheme proved to be very beneficial for all participants, especially since the trade unions acted as intermediaries, guaranteeing work for both parties.
This service was put on an industrial track by Chicago entrepreneur Sam Workman, who in 1929 created the outstaffing agency Workman Diversified Enterprises. He hired people and taught them salesman skills so that they could sell various products to Workman's partner companies. The business was developing rapidly and soon other companies followed suit, having formed over time a whole market for out-wired services. Outstaffing now has the status of a statutory service in the United States, which is provided by the Professional Employer Organization (PEO). Tens of thousands of companies are already operating all over the world, providing outstaffing employees of various profiles and levels - from cleaners and construction workers to financial directors and top managers.
However, outstaffing should not be confused with outsourcing, when certain (non-core) functions are taken out of the company’s borders - logistics, marketing, PR support, cleaning, etc. On the other hand, this is not staff leasing, because outstaffing ensures that your employee is constantly at the workplace, and not a person-function (storekeeper, cleaner, HR specialist, etc.). Thanks to outstaffing, the company can flexibly manage the size of its staff depending on the market situation, the complexity and volume of upcoming business tasks. For example, over a hundred AlfaBank IT specialists, who provide services to nearly 3 million retail customers and several tens of thousands of corporate customers, are officially registered with the contractor. According to statistics, in Russia 46% of outstaffing orders are for administrative staff, 24% for mid-level financiers, 14% for IT specialists, 10% for top managers, 6% for workers.
Outstaffing advantages for a company
- The ability to concentrate on the core business.
The head of the shoe retail company, having shifted the problems with the selection, design and training of personnel to the shoulders of the contracting company, can calmly engage in debugging business processes, developing loyalty systems, developing the network and so on. A huge plus for the customer is that the company that provides outstaffing services, in addition to transferring the required number of customer employees to its staff, takes care of all personnel management - from payroll to the payment of a single social tax, insurance premiums, reporting, and so on. At the end of the month, the client receives an invoice for the service, which includes expenses on salaries, bonuses and a social package plus a commission of 20-30%. The pluses for the employees being handed over are that nothing changes for them: the salary level is maintained, the length of service is ongoing, the dismissal procedure is not simplified, and the current place of work can be indicated in the resume.
- Work for the future.
If your company decides to launch a new project and you don’t have a firm belief that it will “go” and become permanent, and you don’t see the point of recruiting a large number of employees for it and recruiting staff, then it makes sense to resort to outsourcing company services.
— Always the required number of staff.
With outstaffing, the staffing level is significantly reduced while maintaining the actual. Moreover, during the holidays, seasonal sales, special promotions and other events associated with a sharp increase in consumer traffic, you can easily invite the required number of employees and let them go.
— The elimination of "personnel shortage."
Outstaffing helped many companies solve a whole series of problems: some satisfied their hunger shortages, others managed to recruit grassroots staff for hard-to-fill vacancies and junior operational staff. Many companies note flexibility in managing human resources, optimizing staffing, increasing staffing levels and closing the problem of high staff turnover.
- Verification of the professional qualities of employees.
Among other advantages of outstaffing, it is worth mentioning that you can extend the probationary period of an employee to test his professional qualities. In addition, from now on, the solution to all controversial issues falls on the shoulders of the outstaffer company. If you need to carry out staff reductions, then you just need to notify the outstaffing company about this. And the problem will be solved, without any effort and expense on your part.
- Development of regional networks.
Any shoe retail manager who has been developing his network in the regions knows how difficult this process is. You have to select the best specialists, send them for a while to a distant region, so that they can find new employees on the spot, apply for a job and train them in the company's business processes, taking into account the specifics of the local market. As a result, the company spends too many resources on it - time and money. Engaging a contractor company allows you to minimize costs while providing a similar result. The main thing is to be sure that you have chosen a competent contractor company that guarantees you the provision of quality personnel. Indeed, the person in the uniform of your company in the eyes of customers is your employee, for whose actions you are responsible. Therefore, you must be sure that the company carefully selects candidates, conducts their briefing and organizes training. And only after verification, the person is allowed to work in retail chains. Thus, using the services of a contractor, you can acquire experienced workers without wasting time on his training.
However, not everything is as easy and simple as it seems at first glance, and companies that use the services of an outstaffing company may encounter a number of problems.
— It’s not easy to upgrade to a new system.
The changed organization structure causes certain difficulties associated with personnel management. This is due to the fact that all the tasks of the management of your company for an employee working on the terms of outstaffing should be broadcast by an outstaffing company. Therefore, you will have to worry about effective interaction with the company as a service provider.
- Possible difficulties with the tax authorities.
Outstaffing allows you to seriously save on tax deductions. However, as practice shows, tax authorities are really very wary of its practical application. In the event of a dispute, in order to prove the legitimacy of their actions, the contracting organization must determine the goals for which it was necessary to use the service to provide personnel, as well as provide data on the resulting economic effect.
- Low staff loyalty.
Some companies are faced with insufficient staff loyalty, limited opportunities to influence all processes related to working with staff, such as motivation, development, personnel reserve, etc. Also, many actual employers are concerned that the level of control and management is lower than with employees in the state. And also - a frequent change of staff and the need for quick adaptation and training.
- "Work without guarantees and prospects."
About 10% of employees believe that outstaffing work is not supported by sufficient social guarantees, and that the likelihood of contract renewal is the same in all cases (in this group the employees of companies providing general services were in the minority). More than 11% of the employees surveyed are convinced that outstaffing does not give them growth opportunities, in addition, they believe that the employees of the customer company will never consider them full members of the team.
- The correct design.
The customer company needs to understand how to properly apply the use of contingent labor so that it does not have an employment relationship with the employees provided to it. In order for the contract concluded with the staffing company to be recognized as civil law, one should be guided by the criteria developed by the current arbitration practice. The subject of the contract is a service - a service for the selection and provision of personnel. This should be put in the name - “Contract for the provision of personnel”. The inspector should see that there is a service provider and service receiver, or a customer and contractor. Then in the contract it is necessary to indicate which employees are needed, as well as their number (for arbitration this matters), describe the conditions, jobs and the procedure for their provision. You can even fix in the contract that the company providing the personnel has the right at any time to check these jobs for their compliance with the stipulated conditions, although in practice usually no such checks are carried out. It is also important to legalize the executing company as a full-fledged employer. The contract should indicate that it is she who trains and instructs employees. Be sure to write that the investigation of the accidents that happened to them is carried out precisely by their employer - the organization that provided this personnel. The same organization maintains a time sheet - this condition should also be included in the contract.
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