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Temp-to-perm (temporary to permanent) hiring offers numerous advantages for employers. The concept is also commonly called temp-to-hire, and in some cases, you may hear it referred to as “try-before-you-hire.” All of these terms make the meaning of temp-to-perm obvious: it’s a way for employers to bring in talent first on a temporary basis, without committing to a permanent offer of employment. The primary benefit for employers is that it enables them to essentially “test out” potential new hires before investing the resources and going through the process of a formal, full, or part-time hire.
Here’s a look at how temporary staffing works and a few compelling reasons to consider temp-to-perm hiring for your business.
The Functions of Temporary Employees
Temporary workers can serve a multitude of functions for employers. They’re often used to fill in temporary vacancies, such as when a permanent employee is off on maternity or medical leave, and they’re also commonly used to accommodate for volume increases during the holidays or busy seasons in certain industries (such as temporary tax preparers who add to the staff from January through April to help with tax-crunch season). Other companies may have short-term projects that require additional help. 
There’s often a difference between a temporary employee and a temp-to-hire employee, however. Some roles are truly temporary, lasting a pre-determined amount of time without the opportunity for the position to become permanent. In a temp-to-hire situation, on the other hand, an employee is brought on to work for a pre-determined length of time (12 weeks, for instance) on a temporary basis, at which time the company decides whether to offer a permanent position to the employee. In some cases, temporary work arrangements can be extended, sometimes indefinitely. Laws on the use of temporary workers, including specific benefits that must be offered and any limits to temporary status may vary by state, so check with your state’s Department of Labor for specifics.
Benefits of Temp-to-Perm Hiring for Employers
Temp-to-perm hiring is advantageous for both employees and employers. The benefits of utilizing a temp-to-perm hiring strategy for employers are clear:
- Conducting a trial run to determine a candidate’s suitability. The hiring process is imperfect and largely subjective; a candidate who interviews with ease and looks great on paper may end up being a poor fit for the role in the real world. Companies leveraging a temp-to-perm strategy can reduce the risk of bad hires by essentially putting a candidate to the test in real-world conditions to see how they perform with the existing team and how capable they are of meeting the requirements of the position before committing to a permanent employment offer.
- Avoiding wrongful termination and unemployment costs for employees who are not converted to permanent. With a temp-to-perm arrangement, there’s an opportunity for the position to become permanent – not a guarantee. That means that if the company’s needs change after the temporary period, the employee is not eligible to make claims such as wrongful termination or to file an unemployment claim against the employer. In other words, it’s a strategy with less risk compared to hiring a full-time employee from the start.
- Reducing the cost of benefits, such as paid vacation, paid sick leave or other paid time off, retirement benefits, and medical and dental benefits. While an employee is on temporary status, employers may be required to provide worker’s compensation and overtime pay where applicable, as well as meet all applicable occupational health and safety regulations, but the company can save on other benefits typically offered to full-time employees, including paid time off (vacation and sick leave), medical and dental benefits, and retirement packages. After a temporary worker is determined to be the best fit and a permanent role is offered, these benefits are then added on as part of the transition to a permanent position.
- Easing the growth transition. If you decide to offer a permanent role to an employee after the temporary period has ended, the transition is relatively simple. The main advantage at this point is that the employee is already trained and familiar with your policies and procedures, so transitioning a temporary worker to a full-time role is largely a matter of paperwork, allowing your company to better accommodate growth without disruptions that may be potentially visible to your end customers.
Best Practices for Successful Temp-to-Perm Hiring
To utilize temp-to-perm hiring successfully, there are a few best practices you should implement. First, treat temporary workers as part of the team, and make introductions to key players and team members they’ll be interacting with on a regular basis. If the role is complex, it can be helpful to assign a mentor or point person a new temp-to-perm worker can turn to for guidance and assistance if needed.
Be clear about what the temporary worker’s role and responsibilities will be, and how they fit into the bigger picture. Set expectations about the quality and quantity of work. In short, you should treat a temp-to-hire worker just as you would a permanent employee, providing them with the training and other resources they need to perform their duties to the best of their ability.
Spend time evaluating not only how well they perform assigned tasks, but also how well they integrate with your existing team. Cultural fit is a critical component of career satisfaction, and satisfied employees perform their best work.
You should also be as transparent as possible about the possibility of the role becoming permanent. If it depends on the extension of a contract or whether demand remains strong after the initial temporary period, let the employee know. If transitioning to a permanent position depends solely on how well the employee meets expectations, be clear about it and provide three to five key indicators that you’ll be evaluating to make the decision. Conduct periodic check-ins to see how a temporary worker is doing, whether they require additional training, or if there are any shortcomings that may need to be addressed.
Temp-to-perm hiring is a smart strategy for businesses in periods of growth. Both cost-effective and practical, temp-to-perm hiring allows companies to determine the right fit and hire the best candidates for permanent roles without the risks associated with a permanent hire. Most of all, it’s a win-win strategy for both employees and employers.
