Expense Reduction Analysts discusses reducing your franchise costs

With the recent introduction of WorkChoices' businesses should rethink their approach to staffing, to take advantage of the opportunities for expense reduction.

The new industrial relations regime will dramatically alter the employment landscape. Since the introduction of legisla­tion on 27 March 2006, with its emphasis on flexibility, WorkChoices could fuel the growth of casual, or 'labour hire', employment. However this category of employment has unique characteristics, and the challenge for employers is to avoid the pitfalls, while reaping the benefits of a more flexible workforce.  

One of the distinguishing features of labour hire is the involvement of three par­ties – worker, employing organisation and labour hire agency. The presence of an agency however, adds extra expense with no guarantee of an improvement in service.  

With a smorgasbord of labour hire agencies to choose from, it is difficult to identify the best means of achieving a high-quality, cost-effective service. Indeed, many organisations use multiple suppliers, though this can prove detrimental – potentially duplicating services and even slowing the acquisition of labour.  

If an organisation can formalise its staffing requirements and put labour hire out to tender, the result can be better service and reduced labour hire costs. Trouble is, employers often lack the resources and expertise to complete this process. One pos­sible solution is to outsource the task.  

Brett Hay, Expense Reduction Analysts (ERA) labour hire specialist says part of his role is to clarify the staffing needs of a business, and rigorously examine a range of recruitment agencies to deter­mine which offers the most appropriate and least expensive service. In practice, this gen­erally means putting each agency under the spotlight in terms of pricing, skill-set and service delivery procedures.    

A further challenge of using labour hire is the lack of transparency that often hall­marks the billing process. Employers are generally presented with an agency bill quoting an overall casual labour charge rate. This charge rate incorporates a variety of components includ­ing superannuation, workers compensa­tion premiums, pay­roll tax, and the agency's mark-up. However unless employers are able to dissect the elements of the fee, making meaningful cost com­parisons between agencies is almost impossible. By drawing on extensive industry experience, Brett Hay can do just that.    

Having identified actual labour costs and associated on-costs, ERA can isolate agency margins, allowing their clients to use the tender process more effectively. Indeed, among ERA's projects focusing on labour hire, savings in the order of 10% to 15% have been made – a result that has improved bottom lines while freeing up valuable staff resources. For the organisations involved, it has meant getting the best of both worlds –trimming costs and improving service with­out compromising productivity.  

See the running a franchise page for additional information.

20-Aug-2007