Understanding the benefits of extending workers' contracts
The manufacturing industry is one of the largest sectors in the U.S. economy, and according to The National Association of Manufacturers, there are currently more than 12 million workers in it.
However, this figure doesn't account for the workers who are contractually employed on a temporary basis. As per the research carried out by the American Staffing Association, the industry has approximately 1,080,000 million workers on this type of agreement.
While this number may seem small in comparison to the overall workforce, it's actually fairly significant. And as we'll see below, there are several benefits associated with temporary employment that can be used to your advantage if you're looking to improve retention rates, productivity and reduce costs.
Why is extending contracts beneficial to your company?
The short answer is that extending contracts is beneficial because it gives you an opportunity to retain highly skilled workers for a longer period of time.
However, there are several other reasons why you should consider extending workers' contracts:
Temporary workers are often very skilled at their jobs, and keeping them on board can be an excellent way to fill gaps in your workforce.
In 2020, Mckinsey recommended that companies should identify their high-risk critical roles, then convert temporary workers in those positions into full-time employees to avoid losing their knowledge and expertise.
2. Maximize productivity
Temporary workers can help you deal with surges in demand by allowing your business to scale up quickly without overworking your other employees.
In turn, you maximize productivity by keeping the work balanced and uninterrupted. This can also improve employee retention rates over time, as one of the most common reasons that people leave is because they feel overworked and under-appreciated.
3. Workforce consistency
The manufacturing industry has a high turnover rate, which can be costly and disruptive.
However, extending contracts can help reduce the time it takes to train new employees — ensuring a consistent workforce as well as culture benefits for your company.
4. Cost savings
Using an agency for your temporary workers can help you avoid the costs of recruiting, hiring and onboarding full-time staff.
Additionally, workers on this arrangement do not require benefits and payroll taxes — which can save your company thousands of dollars a month.
Why is this a good time to consider contract extensions?
The current economic climate has made it difficult for many companies to retain their workforce. With the consequences of the Covid-19 pandemic, concerns of an upcoming recession and other future uncertainties, executives are looking for ways to cut costs and ensure the long-term health of their company.
In light of these factors, it's likely that many companies will begin evaluating their staffing needs in the coming months. If you're one of those businesses, consider extending your contract with a temporary agency as this will allow you to stay flexible should things change at some point in the future.