Temp to Perm Meaning: How Does it Work?

Contingent workers are typically sourced through staffing agencies to augment an organization’s existing workforce, providing extra support that allows them to complete new projects, ramp up for seasonal demand and acquire new skills or expertise.

These temporary workers come into an organization under a working arrangement that is limited to a certain period of time based on the needs of the hiring business, giving the company benefits such as:

• The ability to quickly meet fluctuations in demand
• Improved business flexibility to adapt to changing market conditions
• Cost savings
• Filling gaps within their permanent workforce

But what happens if those workers make such a big impact with your business that you want to hire them on a permanent basis? 

In some cases, staffing agencies offer a service known as temp to perm. In this blog, we take a look at what that means, how it works, and what the benefits of temp to perm workers are for your organization.

What does temp to perm mean?

Temporary workers serve a wide range of functions for hiring organizations. They’re typically used to fill in temporary vacancies, scale up for increased demand, or to fulfill the requirements of short-term projects.

These roles are truly temporary. They last a predetermined period of time, without the opportunity for the position to become permanent. If the hiring organization wants to keep the temp on, the contract has to be renegotiated.

A temp to perm situation, also known as temp to hire, is a similar agreement but with one big difference - the outcome after the predetermined period. 

In a temp to perm agreement, the temporary worker has the opportunity to be offered a full-time permanent employee position with the hiring organization after the temp to perm period is over. 

What are the benefits of temp to perm for employers?

• Additional time to determine a candidate’s suitability 

One advantage of the temp to perm model is that your business has the chance to evaluate workers before making them permanent employees. Your organization can ensure that workers adjust well to your company culture, have the skills they need to complete their job effectively and that they fit seamlessly into your work environment. This “Try before you buy” model can be very beneficial for some companies.

And it’s not just about your ability to evaluate potential new permanent employees. It also gives temp workers to evaluate whether your business and company culture is a good fit for them and what they’re looking for. 

When you give both your business and temps the time to evaluate each other, you can dramatically mitigate the chance of making bad hires and significantly reduce workforce turnover within your organization.

• Improve business agility

As the market changes, so do the workforce goals of your organization. Businesses today need to stay on their toes, with the ability to seamlessly scale depending on changes in demand and new projects.

Hiring temporary workers allows businesses to prepare for rapid changes in demand at a moment’s notice, and temp to perm situations allow organizations to seamlessly grow their business as demand grows.

• Reduce costs associated with employee benefits

While a worker is under a temporary contract, they typically aren’t entitled to the benefits that employees are, such as paid time off, medical and dental benefits, as well as retirement packages. You’ll save significant amounts of money by not paying employee benefits to candidates that haven’t been recognized as a best-fit. 

After a temporary worker is determined to fit your organization and a permanent role is offered, these benefits are then added on as part of that workers transition to a permanent employee position with your business. 

Just like any part of the contingent workforce, temp to perm hires should be managed strategically so that your business has visibility and control over contingent spend and is able to mitigate any workforce misclassification risks.

• Faster time to get someone in

Temp hires are normally faster to source and onboard than hiring permanent staff.

What are the best industries for temp to perm arrangements? 

Temp to perm arrangements can be beneficial across various industries. However, some industries are particularly well-suited for this hiring strategy.

1. Information technology: The IT industry often experiences rapid changes in technology and project-based work. Temp to perm arrangements allow organizations to quickly access specialized skills for short-term projects and evaluate their compatibility with long-term objectives.
2. Healthcare: With fluctuating patient volumes and seasonal demands, healthcare organizations can benefit from temp to perm arrangements. Temporary healthcare professionals, such as nurses or allied health staff, can provide immediate support during peak periods and seamlessly transition into permanent roles as needed.
3. Retail and hospitality: These industries often experience seasonal fluctuations in customer demand. Temp to perm hiring enables businesses to scale up their workforce during peak seasons, such as holidays or tourism surges, and retain high-performing temporary workers as permanent staff members.
4. Manufacturing and logistics: Temporary workers can help manufacturing and logistics companies manage surges in production or warehouse operations. Temp to perm arrangements allow employers to assess workers' productivity and reliability before offering them permanent roles, ensuring a skilled and reliable workforce.

Tips for managing temp to perm transitions

Effectively managing temp to perm transitions is crucial to ensure a smooth integration of temporary workers into permanent roles. Here are some tips to consider.

• Clear communication: Maintain open and transparent communication with temporary workers throughout the temp to perm period. Provide feedback on their performance and address any concerns or areas for improvement.
• Set clear expectations: Clearly define the expectations and goals for temporary workers during their assignment. This helps them understand what they need to achieve to be considered for a permanent position.
• Onboarding support: Provide a comprehensive onboarding process for temporary workers who transition to permanent roles. This includes introducing them to the company culture, policies, procedures, and relevant team members. 
• Integration with permanent employees: Encourage interaction and collaboration between temporary and permanent employees. This fosters a sense of belonging and facilitates knowledge sharing. Recognize and Reward: Acknowledge the contributions of temporary workers who successfully transition to permanent roles. Recognize their achievements and provide appropriate rewards or incentives to boost morale.

Legal considerations of temp to perm workers

When engaging in temp to perm arrangements, it is important to be aware of legal considerations and ensure compliance. Familiarize yourself with relevant employment laws and regulations that apply to temp to perm arrangements. These may include labor laws, non-discrimination laws, and wage and hour regulations.

It's important to ensure that the temporary workers are properly classified based on legal requirements. Misclassifying workers can lead to legal consequences and penalties.

How to find the right staffing agencies for temp to perm hires

• Industry expertise: Look for a staffing agency that specializes in your industry or has experience in placing temporary workers in similar roles. They will have a better understanding of your specific needs and can provide candidates with the right skills and qualifications.
• Candidate screening process: Inquire about the staffing agency's candidate screening process. A reputable agency should have robust screening procedures in place, including skills assessments, background checks, and reference verifications. This ensures that the candidates they provide are qualified and suitable for your organization.
• Quality assurance: Ask about the agency's quality assurance measures. A reliable agency will have systems in place to monitor the performance and satisfaction of the temporary workers they place. This demonstrates their commitment to delivering high-quality candidates who are more likely to succeed in a temp to perm arrangement.
• Flexibility and adaptability: Choose a staffing agency that is flexible and adaptable to your changing needs. They should be able to quickly source and deploy temporary workers, understand your business requirements, and adjust their recruitment strategies accordingly. This ensures a seamless and efficient temp to perm process.
• Communication and transparency: Effective communication is essential throughout the temp to perm hiring process. Ensure that the staffing agency maintains clear and open lines of communication, providing regular updates on candidate progress, performance evaluations, and any relevant feedback. Transparency regarding fees, contracts, and policies is also important for a successful partnership.
• Track record and references: Research the staffing agency's track record and reputation. Look for reviews, testimonials, or case studies from other organizations that have engaged their services. Additionally, ask the agency for references and speak with their clients to get firsthand feedback on their experience with the agency.

Need help managing your temp workers? Get in touch with the Contrax team of contingent workforce management specialists today.