Remote employment is becoming increasingly popular, there might still be a time when small businesses need a team they can interact with physically. Businesses turn to staff leasing when they want to strategically expand their team.
A third party can help them provide staffing that will do in-house tasks for them on a fraction of direct employment. Whether it’s small jobs like maintaining the office space, coordinating with the courier to deliver their products, or safeguarding their place.
Staff leasing for your business
Staff leasing is the process of hiring employees through a third-party company. This works the same as seat leasing where the third party provides the office space complete with equipment and connection needed for their work. Only, they will provide the manpower and cover the administrative duties for them.
The company and the business owner share employment responsibilities for the staff. Their work duties will come from the employer while the third party will take care of the salaries, benefits, and tax payment, all paid by the employer.
Employers decide to do staff leasing for a few reasons:
- Ease the burden on administrative services. Hiring additional employees mean additional paperwork required for compliance. It also means additional tasks needed such as payroll management. With staff leasing, the PEO can handle the administrative services needed for staff employment, including tax payment, benefits application, etc.
- Save on recruiting costs. Since PEOs do the recruitment for the business, the costs of hiring and onboarding an employee is now decreased. It is also an advantage for their HR team since they can focus on core activities for the company.
- Hire for maintenance and other services. To focus on the main tasks, employers lease staff to do maintenance work. Most PEOs provide blue-collar employees, usually janitors, lobby receptionists, security guards, etc.
How does staff leasing work?
Businesses that lease staff may use either a PEO, a staffing agency, or a business process outsourcing company to hire additional employees. Once they have come into agreement, the third party will then either take care of the recruitment and hiring of the employees for them or they will choose within their own pool. Once approved, the third party charges the business on an hourly or monthly rate including their taxes and benefits.
Professional employer organizations (PEOs) usually offer full employment services. They are a cost-effective option for employers who are looking for five or more full-time staff. Hiring a PEO can benefit the company and its employees themselves. Since they are leased in teams, employers usually have the option to grow and include insurances and incentives in their salaries
The staffing agency, meanwhile, has a more limited function. Instead of a team, they can only look for individual staff who will do a job for them. Unlike PEO, staffing agencies mostly have a say on the compensation and benefits of their workers. Most staff in the agency are temporary employees. With this, they mainly control the staff’s employment.
Staff leasing is the most common model in the BPO industry. The company will set up the business’s team according to their standards, then train them for their tasks. They also cover all of the HR duties, tools, and equipment needed.
Leasing employees pros and cons
|Access to top talents||Less control over employees|
|Expertise in compliance||Lack of direct communication|
|Legal protection courtesy of PEO||Increased dependency on staff leasing|
|Leased staff getting equal benefits||Lack of motivation and commitment|
Advantages of staff leasing
Staff leasing has a lot of advantages both to employees and their clients.
Leased staff is considered employees of a business. This means they are included in compensation, benefits, and incentives as a regular employee of the company. With staff leasing, they technically have two employers: the company that leased them and their PEO.
Leased employees are qualified for state benefits and incentives. Depending on the agreement of their employers, they can have bigger incentives and insurances awaiting.
Relationship with the company
Leased staff feels that they belong to the company. They have the chance to absorb their culture, work ethics, values, and morals. They also have the chance to get to know other employees and bond with them through team-building activities and other social events.
- Access to local top talents. There’s no need for employers to have expertise in finding high-quality talents needed for their roles. The PEO or the leasing agency will do it for them.
- Expertise in compliance. PEOs are trained to coordinate with tax agencies and other offices and comply with their required paperwork needed for new staff. With this, employers can assure that they will file these documents with minimal errors on their part.
- Legal protection. In case an employee sues them for alleged discrimination or wrongful termination, a PEO can help them provide the legal requirements for the trial.
Disadvantages of staff leasing
Less control over employees
Though leased staff renders work for a business, they are still under the employment of a PEO or staffing agency. Therefore, the company still has to communicate with their agency if they want to hire or fire certain staff.
Lack of direct communication
Employees won’t have direct communication with the company HR or authorities once they request or demand for a salary increase or raise a concern in their workplace. They would have to go to their staffing agency to raise their concerns properly.
This goes the same with the company they render work to.
Increased dependency on staff leasing
Companies might also grow dependent on staff leasing, which could have a negative impact on their business. In turn, work and product quality might be sacrificed, and they might end up with both unsatisfied customers and employees.
Lack of motivation and commitment
Lastly, leased staff are only committed to a company for a certain period. This demotivates them in planning long-term commitment with their employees and investing in their growth as a part of the company.
This also demotivates employees in return, since they are aware of their definite time with the business.
What to consider when leasing employees
In order to avoid this, business owners must consider a few things before hiring their first leased staff.
Find the best staff leasing provider
The internet is the easiest place to start when it comes to researching. Review sites like Manta list different agencies including their address, contact number, pricing, and ratings. Some even include reviews and rankings n their website.
A referral is also a good way to start researching. Ask a few friends and local businessmen who already tried staff leasing if they have a company to refer to.
Determine the need for staff leasing
Leased employees also work full-time, though they should be hired for the short term. Check their tasks.
If it requires a long-term employee commitment, then better to hire an in-house employee or outsource it.
While staff leasing comes with a number of drawbacks, such as a lack of involvement in the employee hiring process, many of these disadvantages can be negligible if you’ve partnered with an established and well-trusted company like Booth and Partners.
Consider outsourcing processes that don’t need physical interaction. Outsourcing processes help to save big on costs and resources. Hiring an offshore BPO company is also a good strategy when it comes to expanding a business.