08.12.06

Personnel for Rent: New forms of HR management
Anastasiya Ivanova
Elitnyi Personal

The array of services offered by personnel agencies has grown much wider than simply filling open vacancies. The extent to which these other services are in demand in today's market – and how useful they are to today's enterprises is the subject of this article.

There's No Stopping Progress

Despite the rapid development of the Russian labor market, personnel selection remains a quite conservative process. Many employers have been slow to accept new services, opting for the traditional "resume – interview – labor registration – permanent job in the office from nine to six." However, in the opinion of Galina Dmitrievoi, Client Manager for the Ventra Employment personnel agency, the future belongs to those who are not afraid of innovation. Today outstaffing, leasing, outsourcing, and temporary personnel are already standard tools-of-the-trade of the personnel business.

"The reasons these service are in demand are quite varied: a desire to keep personnel information confidential to a desire to share the responsibility for certain projects with provider-companies" comments Tatyana Terekhova, Director of HR Solutions at Alinga Consulting Group. Each of the personnel services listed above are quite specific, but all help to solve many problems connected with HR management. "As a rule, these services help in non-standard situations: for example, when regular employees must be urgently replaced, when re-structuring, or when professionals are needed for a temporary project. Outstaffing and leasing also cut down on expenses for legally registering personnel" says Alexander Teteria, the Head of Projects for Aline Personnel, a specialized subdivision of Staff Empire. If a company reduces the number of employees on staff, it also reduces the burden involved in related accounting and reporting, which also reduces the number of people needed in the HR and accounting departments of the company.

Outstaffing and Leasing. Services from employees of a provider-company are delivered directly to the client-company. The provider-company (outstaffing company) is the official employer, with full legal and financial responsibility. The leasing arrangement leaves the personnel on staff at the provider company, but "leases" them to the client-company.   Outsourcing. A method for accomplishing needed tasks peripheral to the company's main occupation. These peripheral tasks often include marketing, advertising, transport, or catering services. The customer thus buys services rather than the work of specific employees. Very often HR departments outsource payroll, tax calculation, and personnel record keeping.     Temporary staff. "Temping" is used for short-term projects or to fill positions lasting a few hours up to 2-3 months. As a rule, this is used for hiring managers and service personnel for exhibitions, conferences, marketing research, or to fill-in while regular employees are on vacation.

Which is better?

Therein lies the rub! The choice of weapon to choose from this new arsenal of HR management depends on the goals of the company. "The primary goal of an enterprise should be to concentrate on key business and strategic activities and not spend its own resources on auxiliary activities," – says Anna Chernykh, the director of Leasing Company, held by the holding company ANKOR, "therefore, for certain functions, an external provider is sought or temporary personnel are hired."  Payroll, for example, is a rather time-consuming procedure. At small enterprises where each employee usually combines several duties, it is much more convenient to outsource payroll.

The growing popularity of outstaffing speaks to its real benefits. "In particular, these functions allow the trial period for new workers to be increased and allows us to postpone their movement to regular staff positions," explains Paul Ishanov, the general director RKKA explains. "Under certain conditions, this can also reduce the tax burden for the employer, and offset the fee charged by the personnel agency providing the service."

Leasing (the long-term rental of personnel) gives companies many advantages. "First, the organization obtains any necessary employees in the shortest possible amount of time. Second, legal, tax and training risks are essentially decreased. Third, there is an opportunity to adjust the number of employees without changing the quantity of regular staff, and thus companies can keep the status of 'small enterprise,'" comments Anna Ermohina, the head of the StaffSupport division of The Russian Connection Group.

Winning is guaranteed

An inquiry about leasing or outstaffing, as a rule, arises when some problem occurs. "For this reason, the work of the provider-company begins with client consultation and searching for an optimum resolution to the problem. To start, the problem must be defined, then priorities identified based on an audit of the personnel situation at the company. After that, plans for business-process optimization can be formed and offered to the client," says Marina Tarnopolskaja, a partner in Agency Contact, and head of the Department of Leasing, Outstaffing, and Mass Recruitment there. "Only after choosing the most effective strategy can a solution be directly applied."

As part of the outsourced services package, a provider-company is responsible for selecting the candidates (in conjunction with the client-company), hiring the employees, paying the wages, providing employee benefits, paying the taxes, and observing all norms as dictated by labor legislation. "Outsourced HR duties can include auditing of all personnel documentation over previous years, updating all documents, consultation, and assuring that all record-keeping is conducted in line with the current legislation," explains Olga Tseitlin, the head of the Outsourcing and Temporary Personnel department of Coleman Services. "Outsourcing payroll means that is carried out according to needs of the client-company and in observance of all accounting norms."

Daniel J. Hill, the general director of InterComp Outsourcing, an affiliated company of InterComp Technologies LLC, notes that for the HR-manager, it is much more convenient to cooperate with a trusted and reliable partner who knows the specific candidate criteria, organizational structure, and the corporate values of the client-company. "If a client-company does not hire separate providers for each service, and works with one agency for several of its needs, that company will have the opportunity to optimize internal procedures." Certainly, outsourcing in the sphere of HR services provides companies a great opportunity to concentrate on their core business, instead of spending valuable time for routine and time-consuming procedures – hiring, firing, payroll, tracking seniority, and from time to time, even participating in legal proceedings concerning former employees. Hiring a permanent provider can provide opportunities for consultations on labor legislation, record-keeping, payroll functions, and assistance in developing internal company personnel policies.

What types of businesses are using these new services?

Leasing and outstaffing are in demand from companies involved in retail, manufacture and distribution of consumer goods, food stuffs, and pharmaceuticals. They are often used in banking, hydrocarbons, consulting, telecommunications, and IT.

Temporary personnel for unskilled positions are very popular within supermarkets, warehouses, and industrial enterprises, especially if these are subject to seasonal peaks in demand. Outsourcing is applied everywhere, especially among companies involved in logistics.

All of these services, including recruitment for office positions, are used by international corporations and representative offices, irrespective of their sphere of business.

Read more about HR Solutions from Alinga Consulting Group

Elitnyi Personal #46 (in Russian)
Section - HR Management 
Editor - M. Polunova
Editor in Chief - L. Burkina