5 Common Misconceptions About Employee Leasing.
Misconception #1: Employee Leasing And Temporary Staffing Agencies Are Essentially The Same Thing
The Truth: They’re really not even close to the same thing. A temporary staffing company, as the name implies, supplies job-specific employees on short notice and/or for a short amount of time, and are paid a fixed fee or a percentage of the employee’s salary as payment. They have no long-term interest in the employee, and do not get involved in employee benefits such as health insurance, paid time off, or retirement account matching. Generally, no more than 5 to 10% of a company’s jobs will be filled by temporary workers at any given time.
Employee leasing companies, on the other hand, partner with companies long term to save them money on their employee costs by modifying benefits and/or taking advantage of economies of scale for health insurance benefits. Normally a company participating in employee leasing will lease 50% to 70% of their employees from the leasing company, including existing employees that were on the payroll when the leasing relationship began. While a good employee leasing company WILL provide oversight and protocol for hiring new employees, “job filling” is only a small part of the total employee leasing package.
Misconception #2: I’ll Lose Control Over My Employees If I Lease Them
The Truth: Your management team stays in complete control of your employees—how much you pay them, how you manage and discipline them, what job titles/roles they have, and so forth. Employee leasing is not an employee management solution---instead, it is a smart way to control employee costs by managing benefits and taking advantage of economies of scale available to very large employers. In many cases, employee leasing firms will provide insight and protocol for HR-related functions including hiring, terminating, time-card keeping, legal issues, and more.
Misconception #3: My Employees Won’t Like Being Leased
The Truth: Because the management hierarchy and company culture remain unaffected, most employees won’t notice any difference whatsoever in their day-to-day work environment. In many cases switching to employee leasing does coincide with reduced benefits (such as PTO and retirement account matching), but typically only when these benefits far exceed private-sector benchmarks, and only to bring these benefits in line with said benchmarks.
Misconception #4: We Can Achieve The Same Cost Savings/Results Without Leasing Our Employees
The Truth: Some of the cost savings we provide can be implemented by Community Mental Health Organizations, but most cannot. One of the major advantages of working with an employee leasing company is the ability of government-funded entities to operate more like their private sector counterparts. This includes the ability to making hiring and firing decisions unencumbered by endless red tape, the ability to implement automated time card solutions that increase accountability (and productivity), and the elimination of HR-related legal issues (such as EEOC, on-the-job injuries, etc.). The full panorama of savings, efficiencies, and productivity increases are ONLY available through employee leasing.
Misconception #5: The Savings Realized By Employee Leasing Aren’t Worth It
The Truth: Because there is virtually NO downside to employee leasing, there is no reason to believe that employee leasing is a bad idea for a Community Mental Health Organization. The savings are significant (generally 8 to 10 percent of gross payroll), and the efficiencies are dramatic and immediate. All Community Mental Health Organizations can better emulate their private sector counterparts by engaging in an employee leasing relationship with AMP.