Running a business is really how you take your idea forward, forming one is simply putting that on paper, it takes vision and determination, money follows. Numerous projects, varying requirements for dynamic skilled workforce and what not a successful business requires. Specifically when it comes to allocating assets, the people, in a company, HR are either confused or they overspend.
They are confused as most of them are still not using tools to enable them to scrutinize and manage the human capital. They overspend because they don’t know the options available by means of which they can fulfill the needs for people in a company.
Employee leasing and employee direct hiring are two common options and both of them hold their importance but they can’t replace each other and to analyze your situation and decide which one suits you, is real business. This post will take things forward on this.
What Is Employee Leasing?
Employee leasing, which is commonly popular as temporary staffing or staff leasing, is when an organisation to address a requirement, outsources with a staffing company to lease employees for specific needs, mostly for pre decided short term projects. The leasing company’s employees will be assigned to work for the business, and will be paid by the leasing or staffing company and not directly from the business as they don’t directly employ them.
Also Read: How Small Businesses Can Hire Employees on a Budget
Once the contract period ends, the services of the employees lease will get terminated. This set-up provides flexibility to businesses.
How Does Employee Leasing Work?
Employee leasing enables the business to focus on their core functions while the leasing company takes care of several HR and administrative tasks related to the leased employees. Know the process steps below;
- The leasing company would supply employees to businesses but will itself handle payroll and HR administration.
- Employee leasing company responsibilities include critical functions like processing payroll, managing employee benefits, ensuring strict compliance with employment laws, and maintaining employee records.
- Business pays the leasing company a service fee as per the agreed terms. The client company determines the budget and includes and forms the contract accordingly.
What Is Direct Hiring?
A traditional employment is simple and a direct way of getting demands from the operations, designing job descriptions, posting them with paid ads on recruitment platforms, shortlisting candidates, calling for interviews, shortlisting finalists, negotiating and onboarding and then starts the management with their employment norms. It’s hectic, it’s complex, it must be in total compliance with the local laws failing to which you could be penalised.
How Does Direct Hiring Work?
Get a HR department and hire the hiring managers first to get you the right talent to keep things flow normally. The company in this scenario itself will be the legal employer handling all the particulars of employment ranging from hiring, payroll, taxes, benefits, and employee management, along with managing their operations assessments.
Simple Steps In Direct Hiring
- Understand The hiring need
- Get A Recruitment Plan
- Comprehensive Job Description
- Advertising & Announcements
- Review & Shortlist
- Initial Screening
- Final Interviews
- Applicant Assessment
- Background Check
- Decision
Key Differences Between Direct Hire and Employee Leasing
| Aspect | Direct Hire | Employee Leasing |
| Employment Type | Permanent employee of your organization | Employee contracted through Orion Medical |
| Cost Structure | Includes salary, benefits, and taxes | One consolidated fee for services |
| Flexibility | Long-term commitment | Adaptable to changing staffing needs |
| Administrative Duties | Managed by your team | Managed by Orion Medical |
| Scalability | Limited flexibility | Easily scalable |
Employee Leasing vs. Direct Hiring: Which Is Right for You
As I said earlier, there’s no single better option between these two common options for hiring. The best practice is to analyse your business’s requirements and priorities. Employee leasing undoubtedly provides flexibility and reduces administrative burden, while direct hiring offers greater control and long-term commitment.
Also Read: The Future of Work: Remote Employers of Record
Employee Leasing:
Pros:
- Reduced HR workload: Leasing companies handle payroll, benefits administration, and compliance.
- Flexibility and scalability: A business can quickly adjust their workforce size and skill sets as required, specifically for short-term or seasonal projects.
- Access to specialized expertise: Leasing companies have expertise in various industries or roles.
- Cost savings: Saves costs associated with the process of recruitment, onboarding, and employee benefits management.
- Reduced legal liabilities: Leasing partner handles the legal responsibilities like payroll taxes and with labor law compliance.
Cons:
- Potential for lower employee loyalty: Leased employees sometimes may not invest themselves in the company.
- Dependency on third-party: Business to some extent relies on the leasing partner’s services.
Direct Hiring:
Pros:
- Greater control: More control over the hiring process, employee management, and performance, good for long term commitment only.
- Potential for long-term commitment: Employees are likely to be in the company for a longer period.
Cons:
- Increased HR workload: Business is responsible for all aspects of employee management like recruitment, onboarding, payroll, and perks.
- Higher costs: Involves higher costs for recruitment, onboarding, and employee perks.
- Potential for legal liabilities: Business is responsible for compliance to all employment laws and regulations.
Which Is Better For You?
- Consider employee leasing if:
When your business needs flexible staffing solutions, needs to reduce your HR workload, access to specific expertise, or want to get rid of legal liabilities. - Consider direct hiring if:
When your business needs long-term commitment along with employee loyalty, total control over your workforce, or requires to build a strong team for a longer period.
Recruitment Central As Your Employee Leasing Partner
Recruitment Central excels in all three essential pillars of successful employee leasing services which have earned them prestigious awards in all three categories i,e, Best EOR Firm, Best Recruitment Firm, Best Workforce Management Platform. The Hassle-free onboarding and compliance management and streamlined hiring to find the right talent along with the end-to-end payroll and workforce solutions has helped thousands of businesses in Singapore to bypass staffing challenges and expand their teams globally.
Conclusion
It depends upon your business needs and that can only be understood with the complete understanding of your operations. Hire people who feed you insights while you focus on growth.
As a part of my job, I have met several businessmans, who poke their nose in every micro niche operation task in their company, when they have efficient team leaders hired for managing teams. Such people believe that scrutinizing things frequently can reap results, no it’s not, because people working for you understand that if you are coming to meet them bypassing 4-5 manager levels and that too on a daily basis checking on their routine tasks, you just simply don’t trust your team. Employee retention and smooth operations can never be experienced in such a company.
