As COVID-19 vaccinations are being rolled out across the globe, companies are preparing for a production rate ramp-up, evaluating the impact of COVID-19 on their supply chain and rethinking their Supply Chain strategy; work repatriation, consolidation of risk, reducing dependency and supply chain capacity.
Hiring and Laying Off Is Very Costly
On the Operations side, most companies were forced into major layoffs or at a minimum, furloughing of employees for extended periods. However, hiring and laying off employees following market behavior is extremely costly, essentially it means throwing away all invested time and effort training, upskilling of your workforce and starting all over again. Spending to hire; Spending again to layoff and then to rehire again. It is a very costly cycle.
The Cost of Increasing Your Workforce by Hiring Direct Employees
Keeping a core crew employed and staffing up and down with contractors should be on everyone’s mind going forward. Contractors’ cost might appear more expensive than direct employees, but there are significant additional costs buried in companies overhead when you take everything into account. When hiring direct employees, companies must account for the costs of hire, training, severance, social and health benefits, prorated cost of supporting functions and more, for all these employees.
Maintaining a Team of Core Employees
Companies need to determine what core resources they need based on their strategic objective, and ask themselves:
- What is the bare minimum crew I need per function to operate?
- Who are my most versatile assets?
- Who is absolutely critical to my organization/company?
- Which employees give me the most value for the money I pay?
- Should I be scaling Up & Down by Hiring Contractors?
Nowadays, hiring contractors to support your peaks and valleys is more recommended than ever before. The chosen contractors should arrive with the right experience and competencies at your location, ready to make an immediate impact on you or your supplier’s operations. Outsourcing supporting functions to specialized firms should be considered as well. Doing so gives you desirable scalability, and agility to manage market cycles and in this competitive landscape we live in, it is what’s expected of and by all stakeholders.