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Part-Time Employees – Smart Play or Added Expense?

August 7, 2014

Guest Post by Philippe Asselin, Compensation Performance & Management Consultant at Balanced Comp

Philippe

Recently someone shared with me their teenage son averages over $20 an hour working part time bussing tables at the local BBQ place- and he receives some optional benefit offerings plus half-price food (I hear they even have fried corn nuggets!) Oddly, they are still taking applications even though they pay at that rate. I can meet you there later today…PM me…

Does $20 an hour to bus tables sound like a lot of money- or maybe too much money? More than your part time or even full time employees are making? Perhaps so- but more interesting to me is that they are still hiring in a town with moderate to higher unemployment levels and low overall wages compared to the national averages for financial institutions. (89% of the average to be exact) So is $20/hr actually high enough if they are still looking for more help? Will he quit and go to work at a financial institution for $12 an hour? Maybe after he graduates? Probably not, as this all-star athlete and student maintains the same “show me the money” mantra as many of his peers. It’s great to be at the age of perceived invincibility!

It would seem the best scenario would be to have all full time employees with full benefits, as many companies with a sound compensation philosophy experience lower turnover with full time employees (part time employee turnover is almost 3x higher, as noted by the Hay Group Study in an article published by Fortune in September of 2013 titled “How Costco Saves Taxpayers Money.”) Typically the full time employees are career minded and seek long term, stable employment, especially during economic downturns as fear grips their hearts. Often the most marketable employees consider trading up for more compensation and benefits, as they believe and typically can find employment anywhere. If this is true, would all employee turnover be detrimental? Or only when we lose the “playmakers” on the team? Interesting.

Unfortunately most businesses do not have a constant and consistent rate of work coming in, especially businesses open to the public, as they are at the mercy of those they serve. Technology investments that theoretically increase efficiencies often compound the challenges. This makes the need for part or peak time employees paramount to some successful businesses, as the down time for full time employees can be very costly if they are left to invent work on their own.

Still, some companies are switching part time to full time as the Affordable Healthcare Act shifts thinking of company giants like Wal-Mart, who recently converted 35,000 jobs from part time to full time. Other companies seek to recruit part time employees to work less than the 30-hour threshold established by the Affordable Healthcare Act in efforts to avoid the rapidly rising cost of benefits. Some teams have challenged stodgy benefit plan offerings to mitigate rate increases often passed on to the employees. The hope is to find plan choices to meet employee needs in a variety of settings, without reducing the quality of healthcare plan offerings.

Many that choose to recruit part time employees share their stories with me, and they all have legitimate concerns. Part time employees are tough to find, have the highest turnover, aren’t always committed and just wait for a full time opening. They are too young or inexperienced, harder to train with limited availability, and require additional monitoring to make sure they do not go over the hours (and yet it still sometimes happens). They are always looking for something else if they are in college, or will leave as soon as they graduate. The supervisors don’t like to work around the limited availability of part timers. The list continues to grow, as the challenges with hiring and retaining part time employees continues to increase.

All the concerns are valid and tough to overcome. Have others found a way to make part timers work for them? The answer is a conditional yes, as those finding success have had to be very creative to make it work, and adjust to a new normal in staffing metrics. The conditions are going to be different for every organization. Population demographics and unemployment rates can make attracting part time talent more challenging- but not impossible. Some employers have come to the realization that having part time employees will be more of a challenge and require more effort, but they found the returns on their efforts are deemed worthy. They understand it is just the new way of doing business and have modified their roles to accommodate the extra work involved with part time employees.

I have seen many successful companies with mostly part time employees, and with lower turnover than their industry counterparts. Some of these employers chose to pay benefits or higher pay to part time employees across the board, even though they didn’t have to do so. It was what worked for them, but may not work for everyone.

Others chose to give employees a choice of higher pay and no benefits, or benefits plus pay similar to full time employees doing the same job. Some companies had full time employees transition to part time as the pay change was significant enough to persuade them to choose making more in less time, which also worked for the companies in effort to reduce costs and improve service during peak times. This was pivotal in finding the tipping point to recruit and retain part time employees for those organizations.

I have also seen successful companies with mostly full time employees. They choose to fill down time gaps with other duties such as business development, and try to avoid “making up” new and often less efficient or effective work duties in the process. Technology investments have enabled many financial institutions to increase efficiencies, allowing some to choose to develop cross-functional teams in lower volume markets as transactional flow and transactional types begin to change. A majority of financial institutions are noticing transactional declines, as referenced in the recent Teller Line Study from FMSI.

The ultimate measure of costs with this model must also include additional recruiting, training, sales effectiveness, and accuracy as all employees are not always fulfill multiple roles effectively and transition from strengths in one competency to other more complex and extroverted roles like business development and sales or account holder consulting. Moreover, hybrid roles are often sought after by competitors in the market and may increase potential losses in what is typically the largest expenditure for financial institutions.

The challenge always seems to be in determining how the changes will affect their strategic goals, core values, and compensation philosophy. Many may consider part time employees in a perfunctory fashion, yielding undesirable results. Proper planning and comprehensive understanding of your market can establish the proper foundation for success in any mix of part to full time employees.

Partnering with a team of experienced compensation and performance management consultants can enable and equip your leaders with the tools they need to thrive in any economy, and allow part or full time employees to want to work for you in an equitable pay for performance culture.

 

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Contact Philippe at philippe@balancedcomp.com

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