Permanent recruitment is just what it sounds like: an employee hired on a permanent basis, whether that be full-time or part-time. The meaning is obvious, but the implications for employers are not as clear-cut.
Perm hiring has its upsides and downsides, and may or may not be the best recruitment strategy for your organization.
How do you find out? We’ve made it easy—scroll down for the 5 primary advantages and disadvantages to hiring perm workers over temp workers.
P.S. Click here to read about the pros and cons of temporary recruitment!
5 advantages of hiring permanent workers
For the most part, employers who choose permanent recruitment over temp recruitment are organizations with stable operational needs and/or who need staff with specialized skillsets.
The top 5 reasons these kinds of employers choose to hire staff on a permanent basis are:
1. Longevity
If you’re ready to commit to a team member, hiring on a permanent basis is the way to go. Over the long term, employees can build knowledge of the business and gain insight into the company’s history and its plans for the future, which can be a valuable asset to your organization. With time, these people can eventually advance through their department’s hierarchy, take on future leadership positions and form a key part of business growth.
2. Higher return on training investment
Number two on our list goes hand in hand with our first advantage, longevity. Because permanent hires stick around longer than temp workers, any and all the training and upskilling investment you put into your new recruits will stay at your organization and provide a much higher return for your company.
3. Loyalty to business
In theory, the longer your permanent staff are employed, the more loyal to your business, brand and their colleagues they’ll become. Loyal employees in turn build an engaged company culture, which will help you retain valued staff. If your aim is to hire for the long term, hire those candidates that share your values and fit your company culture.
4. A higher calibre of candidate selection
Hiring permanent typically means you’ll have access to a higher calibre of candidate selection for the open role. With unemployment being so low and the demand for talent through the roof, the most qualified candidates are already working and have high bargaining power. In order to entice high-quality talent to make a job change, they need to know there is job security with the move. Perm recruitment checks that box for you and will give you an edge in this competitive labour market.
5. Temp-to-perm option
Finally, temp-to-perm is a great option when you want to have a trial period prior to deciding if the employee is the best fit for your company. It can also work in the candidate’s favour, allowing the employee to decide if the position is right for them. As mentioned in pro #4 however, to attract top-calibre recruits, it’s best to offer a longer term contract to start, such as a 1-year temp-to-perm contract. Longer contracts still offer job security as an incentive to skilled workers who are already employed.
5 disadvantages of permanent recruitment
Now that we’ve looked at the upsides, what are the downsides? Permanent recruitment has unique disadvantages compared to temporary recruitment:
1. Expense and inflexibility
With permanent employees on your payroll, you’re locked in and committed to paying their salaries in good times and bad. For companies with fluctuating and/or seasonal labour needs, it can be tough to do when the budget is inflexible. Never hire perm unless you’re confident your organization can afford it.
2. Cost of a bad hire
Most permanent contracts come with a standard 90-day probationary period, which sometimes isn’t enough time to gauge the employee’s fit in your company. When the 90 days pass, it becomes more costly to terminate the employment contract, as you’ll be on the hook for notice periods, terms and conditions and severance pay. If you’re hiring permanent employees, it’s crucial to make the recruitment process thorough to mitigate your chances of a bad hire.
3. Legal obligations
Permanent employees come with costs above and beyond base salary pay. In Canada, perm hires are generally entitled to more benefits than their temp counterparts, like sick pay and holiday allowance. Organizations hiring perm candidates will need to do their due diligence to comply with provincial and federal employment laws.
4. Turnover has a greater impact
When a permanent employee leaves after 5, 10 or even 20 years of being a key player on your team, it stings. Long-term employees are harder to replace quickly because of the experience you lose and the extensive training replacements require. Permanent employee turnover can hurt your business much more than temp turnover, which is all the more reason to invest in a solid retention strategy.
5. Longer, more extensive recruitment process
Precisely because of cons 1-4, the recruitment process for permanent hires takes a lot longer than most temp recruitment processes. Before signing on a perm employee, employers may want to do multiple rounds of interviews, personality assessments and reference checks, all of which eat up time and resources.
Is permanent recruitment right for my business?
The best way to determine if permanent recruitment is the best approach to your hiring needs is to look at the data. At Adecco, our recruitment experts will sit down with you to assess your talent needs. Want to discuss industry- and business-specific market trends, local supply and demand and cost of turnover? We’re here to help.
Drop us a line today!