Costs of Seasonal Employees: How CFOs Can Mitigate
This article was updated on June 29, 2018.
Seasonal work is a regular occurrence for many employers, and so are the direct payroll and indirect organizational costs of seasonal employees. The need can be driven by holiday surges, but also by summer temporary help, special projects or events, and even weather.
Seasonal employment represents a significant portion of total employee hours for some businesses, especially in retail, landscaping and hospitality. USA Today reported that Home Depot planned to hire 80,000 seasonal workers for its nearly 2,000 stores before its busiest selling period in the spring. A surge of recruitment, hiring and training in support of seasonal workers can present a CFO with both budgeting and scheduling challenges.
Offset Hidden Seasonal Workforce Costs
A seasonal workforce presents immediately apparent payroll costs, but there are hidden costs having to do with recruitment, taxes, training, supervision and retention, as well. In addition, training seasonal workers can take permanent workers away from their primary responsibilities.
Tax credits, available to employers at both federal and state levels, can help businesses offset costs they may incur when hiring seasonal workforce. Those credits include the Work Opportunity Tax Credit (WOTC), which is a federal program that can offer employers as much as $2,400 to $9,600 per eligible employee during the first year of employment. In addition to the federal programs, states may have additional location-specific incentives.
Automated HR systems can help businesses track potential tax savings and flag eligible employees. A CFO might bring such a program to the attention of HR, as well to line managers, especially those with active site selection teams.
CFO Cost Reduction Levers
Coordinating certain initiatives with the CHRO and line managers can potentially help CFOs lower seasonal workforce costs, such as
- Revise tax credits available for hiring eligible veterans or workers from enterprise zones or other economically distressed areas identified by the state.
- Actively manage costs and personnel for recruitment pipeline, whether through staff agencies or direct recruitment.
- Promote rehiring of already trained personnel.
- Streamline position management to accommodate transitions, e.g., seasonal to seasonal or seasonal to permanent.
- Identify cost advantages for contract vs. employee seasonal work.
- Consider budget and compliance impact of benefits, particularly ACA, for employees transitioning to full time.
Chief Messaging
A CFO's role can encourage managers to take a 360-degree picture of seasonal work. Rather than asking for a burdened labor cost forecast, consider asking for additional metrics such as:
- Are they measuring which recruitment channels are working best? Consider not only the cost per job ad but whether the workers recruited through that channel worked out. Measure performance across alternative recruitment channels.
- Are they identifying not only the best trainers, but also the best training techniques tailored to the specific seasonal task? Line managers can be responsible for assessing their training techniques and comparing those with methods used by peers. Work with HR to improve position descriptions. Enumerate and measure seasonal workforce training and supervisory responsibilities.
- Have they identified retention and rehire goals? What percentage are expected to transition to full-time employment? Make line managers responsible for seasonal workers by monitoring their process outcomes for employees selected for part- to full-time transition.
- Are managers adequately protecting the firm from workplace violations? Develop training systems to support safety and protect intellectual property. Employee self-assessment quizzes may be appropriate in some industries.
CFOs may discover they have a much larger role to play in managing the costs of seasonal employees.
