Helping Firms for Short Term Is a Big Industry
Jeffrey Zimmerman vividly recalls the time he was asked to separate curds from whey. It was in a tofu factory in Boulder, Colo., where he used a bulky ladle to skim off the watery whey from the steamy bean curds that make up the bland, custard-like food. “I had big rubber gloves on--and my fingers were so numb at the end of the day that I couldn’t even take my clothes off.”
Then there was the time that Zimmerman, an aspiring actor, typed invoices and mailed packages for a film distributor who turned out to be less, well--reputable--than he’d expected. “I remember being surprised to see titles like ‘Lusty Ladies No. 3’ and being told not to use our real return address.”
At present, the Hollywood resident, who aspires to a role in a television comedy, is a receptionist for California Federal Savings & Loan Assn., where he gets to use his newly acquired word processing skills. But tomorrow, who knows?
Zimmerman, 29, is one of a growing army of “temps”--people who earn their income through temporary stints of work at various companies rather than joining the permanent payroll of a single employer.
Industry in Spotlight
The temporary personnel industry is booming, as employers seek to keep their companies “lean and mean” in the cost-conscious business climate of the 1980s. Increasingly, managers are discovering that a way to cut costs--and avoid the agony of layoffs when times are tough--is to take on extra workers only for limited periods.
Moreover, the firms that supply temporary help have benefited from a seemingly inexhaustible demand for workers who are up to date in modern office technology, although--as Zimmerman’s own experience shows--temps perform an almost unfathomable range of tasks.
“We had a request once where they wanted people to sniff air out of bags,” recalled Marjorie A. Bartok, a Los Angeles area manager with Manpower, the world’s largest supplier of temporary personnel. (Concerned about safety, Manpower turned down the order, which was from a pollution-control firm.)
Manpower and the rest of the temporary personnel industry have been in the spotlight of late, as Blue Arrow, a large but little-known employment firm based in London, aims for control of the U.S. giant. And Milwaukee-based Manpower is a tempting target, indeed. It owns or licenses close to 1,400 offices in 33 countries. Its revenue jumped 35% to $1.2 billion for the fiscal year ended Feb. 28.
Yet it is only the most visible company in an industry whose 1986 U.S. payroll exceeded $7 billion. From its roots in the labor shortages of World War II, the business of providing fill-in workers has blossomed into an industry where 5.5 million Americans are now registered for such transitory employment. On an average day last year, more than 800,000 Americans served as temps, according to the National Assn. of Temporary Services in Alexandria, Va.
In many cases, suppliers of the help cannot keep up with demand for workers, which has quadrupled since 1970 and grown at rates of more than 11% each year since the end of the last recession in 1982. “In most areas of the country, we aren’t even able to fill all our orders,” lamented Thomas Anton, executive vice president of Kelly Services in Troy, Mich., which has 729 offices in the United States, Canada, France, Ireland, Scotland and England.
Companies use temporary help to pinch-hit for workers on vacation, to pitch in on special projects, to cover a vacancy during the search for a permanent worker and for seasonal increases in their workload. More and more, the basic goal is the same: to avoid being unnecessarily over-staffed with permanent, full-time people.
Different Arrangement
Transamerica Occidental Life Insurance, for example, has used about 30 temporary workers a month this summer in various office jobs, with an overall increase in the 20% to 30% range during the past two years. “There’s been a real consciousness over the last several years to run lean and mean--working to the maximum potential with the minimum amount of workers,” said Barbara McNamara, senior recruiter with the insurer.
Each time a company places an order for a temporary employee, there begins an arrangement that differs radically from the employer-employee relationship that most people are used to. It works this way: Say an advertising agency needs a typist. The placement firm sends somebody over for the job, and the advertising agency provides the supervision.
Yet the placement company remains the legal employer, whether the job lasts one day or several months. It pays the workers--at rates that, according to such firms, are “competitive”--and handles all state and federal withholding. In return for such services, the advertising agency reimburses the personnel firm an amount that is substantially greater than the worker’s pay.
The temporary companies are shy about saying how much they “mark up” the pay--that is, what they really charge a client company for a worker who gets, say, $8 an hour--but it can amount to an additional 40% to 50%, according to one industry executive.
Increasingly, the sort of workers requested are those undaunted by the mysteries of modern office technology, including word processors and computers. “The demand for people to operate this new technology is almost frantic,” declared Samuel R. Sacco, executive vice president of the National Assn. of Temporary Services.
As a result, the temporary employment companies are feeling pressure to train job applicants in these skills themselves, rather than wait for those already skilled to walk in the door.
At Kelly Services, for example, demand for word processing temporaries skyrocketed 130% last year, according to company officials. To keep up with the need, Kelly uses microcomputers to help teach temporaries 11 commonly used software packages. And it has set up a toll-free hot line which its temps can call when they are out on a job and need an expert to guide them through the complexities of such equipment. The support helps: In July, Kelly temporaries placed an average of 125 calls a day to the hot line from all over the country.
“They are amazingly busy,” Nora Pearson, a Kelly spokeswoman, said of the four software experts manning the hot line. “They get people out of a lot of jams.”
To the smaller firms, such services may seem a luxury. But they feel the competitive pressures, too. “I would say that it (office technology) is about 30% of our business,” said Howard W. Scott, president of CDI Temporary Services, which has 74 offices nationally and is determining whether to set up a training program. “And it’s growing rapidly.”
Manpower has already made a huge commitment to such training and teaches word processing to 60,000 workers a year. For Lind Duca, a Culver City resident who entered the temporary work force after her husband retired a year ago, the training has meant a chance to escape the drearier aspects of office work. “Instead of sitting there waiting for phone calls, I could have been typing. I could have been doing other jobs.”
Made Deal With IBM
Duca, 49, gives Manpower’s personalized approach--featuring computer disks that allow students to progress step by step--a ringing endorsement. “I haven’t spent two more pleasurable days in years,” she said of the training she got earlier this month.
While part of Manpower’s future relies on a reservoir of skilled workers such as Duca and Zimmerman, the firm has devised a more ambitious, long-term strategy to get its many feet inside office doors. Earlier this year, it signed an agreement with IBM in which Manpower was authorized to provide on-site training for companies using popular forms of IBM software.
The goal is not simply some extra income from the training, however. (Fees range anywhere from $150 per worker to more than $350, depending on the number of people to be trained, their location and the training needed.)
Rather, Manpower officials say the real payoff should come from the good will and the new contacts at companies which, after all, are a market for its basic product. “Our goal is to show more and more businesses what we’re capable of doing,” said Laurie Andersen, a spokeswoman with Manpower. “If we train the permanent operators, when the companies need replacements, of course they’ll come to Manpower.”
Whether they come to Manpower or one of its competitors, it is clear that employers are using a lot of temporaries. It is less clear whether the workers are well-served by entering situations in which they lack most of the benefits and protections that others take for granted. This concern is exacerbated by the fact that temporary workers are more likely to be young, female and black than is the overall general private work force.
A report last year by 9 to 5, a national association of working women, for example, described temps as the “have-nots” of the labor market. “The expansion of part-time and temporary work ushers in a new era of reduced expectations for the working family,” it declared.
Nonetheless, the trade-off of fewer benefits for greater flexibility is one that many temporaries are willing to make--with enthusiasm. “It gives me the flexibility to say: ‘I’ve got three auditions coming up next week--so I choose not to work next week,” said Zimmerman, who has worked through Manpower, Talent Tree and other temporary firms.
The temporary personnel companies increasingly are offering benefit packages that include health insurance and vacation time. But the majority of workers--many of whom register with several different firms--typically don’t accumulate enough hours with any single firm to qualify. “I never seem to work long enough to accrue the benefits,” Zimmerman acknowledged.
Moreover, a company has far greater flexibility in getting rid of an unwanted temporary than it would a permanent employee. “If I hire you (permanently) and I don’t like you, I’ve got a problem, don’t I?” said Jeffrey Pfeffer, a professor of organizational behavior at Stanford University. “But if a temporary company sends you, and I decide I don’t like the way you do word processing, you’re gone--and it’s no big deal. That’s the reason why temps are so desirable.”
And while the use of temporaries can be unpopular--unions often complain that they take away more lucrative, permanent jobs--they can provide a protective buffer for the permanent workers when times get tough and management is looking to clamp down on labor costs. As a result, “Using temporaries is a way to instill loyalty for their permanent work force,” Anton of Kelly Services said.
For all the forces propelling the industry, however, there are potential problems for the employers as well as the employees. As Anton’s comment suggests, the industry is highly vulnerable to economic downturns. It is also vulnerable to what most people would consider a sign of economic health--high employment.
The national unemployment rate fell to 6% in July, and in pockets of the East and West coasts the rate was much lower. In other words, there already are a lot more job openings than there are people to fill them in many parts of the country. And the population of youthful job-seekers is diminishing, all of which cuts into the potential supply of temporary workers.
For an industry that, like fast-food restaurants and grocery chains, depends on volume--after-tax profits are typically in the range of 2% to 4%--the potential scarcity of new workers is worrisome. “We’re spending more money in trying to recruit applicants than we are in trying to get business,” said Scott of CDI in Philadelphia. “Far more.”
As a result, some now argue that people in their 50s and older--still eager to work but alienated from the permanent grind--represent the key untapped source of future temporaries. Ted Cobb, chairman of the TOPS temporary firm in San Diego, said he has had some success in recruiting temps by speaking to chapters of the American Assn. of Retired Persons. “We need to try to retain the talents we already have in industry,” he maintained.
For the temporaries themselves, the tightening labor market has a silver lining. As they become increasingly scarce in the coming years, their wages and benefits will increase, predicted Katharine Abraham, a research analyst at the Brookings Institution in Washington. She added that the costlier temporaries will still be attractive to many employers because of the difficulties in getting rid of permanent staffers. “Companies are thinking more consciously that if they use temporaries now, they can avoid hiring permanent people that they won’t need later.”
