When William Russell Kelly created the temporary employee business in 1946, he probably never envisioned how radically it would change in the '90s.

    "Temporary help used to be viewed as an emergency service," explains Phil Blair, co-owner of the six-office San Diego franchise of Manpower, a national temporary agency. "It was all short-term, knee-jerk fill-in work. Now it’s part of a company’s long-term strategic planning in order to maximize flexibility in staffing."

    Today, 2.3 million temporaries work every day in this country. That has more than doubled in the last decade, reports the National Association of Temporary and Staffing Services (NATSS). Ninety percent of all companies use temporary employees, making it one of the fastest-growing industries in the nation.

    "This industry has seen incredible growth during the past few years," says Bob Svet, founder and CEO of the Eastridge Group, the largest independently-owned temporary staffing firm in San Diego. "It has grown 20 percent in the last year alone."

    In San Diego, most agencies report growth rates ranging from 35 to 99 percent. The NATSS reports that in 1996, 14,620 San Diegans worked as temps each day, creating an annual payroll of $260 million.

    To best understand the radical changes in this industry as well as its explosive growth, both nationally and locally, one must first look at changes in the business environment during the past decade.

    Changes In Climate

    The truth is, the temporary employment business always has boomed when the economy emerges from its worst. "After every recession we’ve had spectacular growth," says Svet. "After a recession, companies have wounds and scars. So they tend to be tentative in hiring full-time people."

    During the last recession, downsizing was so prevalent that the word became part of everyday vernacular.

    "They don’t want to be caught in the situation of having to downsize again," says Vicki Riechers, corporate vice president of AppleOne Employment Services, a 33-year-old temporary agency with six locations in San Diego. "So they use our services for contingency staffing, which allows them to flex up or down, according to demand. This also provides security for their core group."

    So if a big project is coming up that will last only six months, rather than hiring 20 full-time people, a company hires temps. That way, when the project is complete and there's no more additional work, the company doesn’t have to fire or maintain costly, unnecessary employees.

    The early '90s recession hit especially hard in San Diego, so it’s no wonder that temporary employment agencies here are riding the crest of success. In addition to losing the core defense industry, the banking and transportation businesses took big hits. But it wasn’t just the engineers and bankers who left town.

    "For five years we had an enormous brain drain when so much talent left San Diego," says Svet. "The aerospace engineer might have left, but so did his spouse, the bookkeeper. And these people haven't come back."

    What has been left are small technical firms that are just now starting to experience significant growth.

    "San Diego is now comprised of small to medium-sized high tech firms engaged in R&D projects," says Mike Lyons, consulting services manager with Source Services Corp., a 20-year-old placement and staffing firm based in the Golden Triangle. "What they're doing is on a fixed timeline and budget. They can’t afford to hire people then lay them off."

    The answer for many of these companies is flexible staffing. But even then, the way companies are using temps has altered.

    Staffing Changes

    Using temporary employees allows companies to trim benefits and costs. "Temporaries cut your overhead," says Blair. "That's especially important if your business is cyclical. If you know that between October and May you need 50 extra people, you don’t have to have those people look busy the rest of the year when there's little work for them to do."

    Because more temporaries are higher-skilled today, employers can now hire seasoned professionals when they need them and not pay high-priced salaries year-round.

    "There are a lot of high tech companies in San Diego who hire new engineering talent just out of college for a lower cost," explains Lyons. "Then they augment them with a seasoned staff of temporaries. These people bring a wealth of knowledge with them, which they transfer to the core team. But when it’s time for the temporaries to leave, there's no ill will. They knew their contract was ending."

    That's not to say that companies don’t have to pay for this service. In fact, the cost of these contract employees is much greater than a salaried employee. But when you add benefits and other elements of staffing, it’s still more cost effective.

    "The cost to employers depends on many pricing nuances," says Svet. "It depends on the relative volume as well as the type of people and how much they're in demand. The longer the assignment, the lower the rates."

    According to Svet, a high-volume (30 to 40 people), long-term contract would cost 40 percent above the temporary's salary. Short term, low volume assignments can add a 50 to 70 percent markup. With the current low unemployment rate, the price for temporaries has increased during the last few years.

    Many companies say what they're paying for is worth the money and the convenience. In essence, a temp agency becomes their human resources department.

    "Because companies cut so much, they're lean and mean and going 110 miles per hour," says Svet. "How are they going to take time to find people? They turn to us for additional screening."

    That screening guarantees that employees can do the required work with little training. "Our customers are depending on us to have employees that hit the ground running and who have pride in their work," says Blair. "Temporary services can recruit, train and background check and even screen for drugs. We need to make sure we have the quality of employees our customers need when they need them."

    In fact, many companies now use temporary agencies to find full-time employees. This way, they can "try out" an employee with little or no risk to make sure the fit is right before hiring them permanently.

    "Companies don’t want to take a chance," notes Riechers. "They want to be sure an employee works well with the company. We find that if it’s going to work out, they'll make an offer within two weeks."

    And just as the employer is trying out the fit, so is the temporary. "We have as many employees who turn down a job as accept one," says Svet. "They want to feel comfortable with the fit as well."

    Turn down a job? Yes, temporaries have changed as well.

    Changes In Temps

    "The temporary employee are different animals than they used to be," explains Chris John, office manager for Tops Staffing Services Inc. in San Diego. "They are now people who are highly-skilled, who can pick and choose jobs and for whom flexibility is a key point."

    During the recession in San Diego, many highly-skilled professionals were down-sized. Many of these people are now temporaries, some even returning to their old workplaces on contract-basis. Some are even earning more money.

    "It’s a different culture now," says Svet. "People no longer expect a lifetime commitment from a company."

    While the NATSS estimates that 90 percent of temporaries make $11 per hour or less, there are those that make up to $100 per hour. It depends on the level of skills a temporary has to offer. In San Diego, a higher number of people are suited for the hot markets of technology, information systems and bioscience, where hourly pay is high.

    Nationally, 38.7 percent of temporaries work in the clerical field, while 14 percent work in technical areas, according to the NATSS.

    Professional Temporary

    Some people consider themselves professional temporaries. These people enjoy the flexibility of being able to work when they want to or even just to earn more money for special reasons. The average assignment can be anywhere from three days to three months and then they can choose not to work.

    "I have people who ask me to call when we have fun jobs available," says Blair. These jobs include things like hosting convention events, testing products, conducting surveys and being characters at the zoo.

    In the technical field, temporaries can pick and choose their assignments. "We have computer programmers who will come in and design software, but they don’t want to be converted to full-time employees," says Lyons. "This gives them the opportunity to do what they do best and not have to stick around to do the more boring technical support."

    And today some of these professional temporaries have something their predecessors didn’t: benefits. Many of the larger agencies are offering employees insurance and even 401Ks after a certain number of hours worked. Although the cost for these benefits is higher than if they worked full-time, it keeps them temping.

    "We give our employees holiday pay, medical and dental insurance, a 401K and access to a credit union," says John. "We want to recruit the best and keep them happy."

    Some temporaries are using agencies as a means to get full-time work. "I'd say 70 percent of our applicants want full-time work," says Svet. "This way they can job shop, but not have to put 20 jobs on their resume."

    In many ways, the changes in the temporary services industry seem to be a win-win situation. Companies can better manage their staffing needs. Employees have the flexibility to look for a new job or work when they want it. And in the end, it’s the bottom line that wins out.

    Kelly would be proud.

It's a fact of business: Smaller companies have trouble attracting and retaining employees because larger businesses can offer a more tantalizing benefits package.

    But there is a way around that. Called employee leasing, it’s experiencing explosive growth across the nation.

    "It’s the business trend of the '90s," says Julie Crisp, director of sales for Kelly Staff Leasing. "It’s great for small businesses because it gives them leverage."

    Here's how it works. An employer signs all or most of the workforce over to an agency. "Which means that they legally work for us," explains Phil Blair, co-owner of Manpower in San Diego. "It’s a long-term situation, so those employees fall under our benefit package."

    In essence, the agency becomes the small company’s human resources department, which means it provides the employee's medical, dental and life insurance, even a 401K.

    "These would be too cost prohibitive otherwise (for a small employer)," says Crisp. "We also take care of worker's comp, payroll and keep up to date with employee laws."

    Not only does employee leasing benefit the employee, but it also allows an employer to cut overhead and paperwork. Plus, when an employee leaves, the agency helps find a qualified replacement, just like a human resources department would.

    "When you’re a small business person, you have to wear so many hats," says Crisp. "This way you can concentrate on their core business."

    As companies recognize the bottom-line advantages of employee leasing, more and more agencies are beginning to offer this service.

    "We’re always looking for the value-added thing," says Blair. "We want to make ourselves indispensable for our customers."

    Congratulations. Your small business is growing, and now you need more than just a bookkeeper. But where are you going to find the money for a controller? And do you have enough work to keep a seriously educated highly-paid employee busy 40 hours a week?

    Perhaps you should consider a temp - a temporary accounting department, that is.

    "We’re an accounting department for hire," says Mike McCullough, marketing manager for Byte Bender Business Services in Rancho Bernardo. "We’re different from other temporary agencies. We don’t send someone out."

    Byte Bender has four full-time and six part-time employees who essentially function as an accounting department for the firm's clients. After the company meets with the employer to ascertain the needs, it provides budgeting, projections and other financial services, keeping in touch daily electronically.

    "If someone called, they wouldn't know they're not talking to your company," says McCullough. "But we can keep an accounting employee busy eight hours a day. Which means you’re not paying overhead and you’re only paying for time worked."

    Byte Bender began offering accounting services last year. Now the company has 25 clients with annual billings that range from $600,000 to $8 million.

    "We’re just getting started, really," says McCullough. "The reaction so far has been tremendous."