How does your consulting business cope with unexpected personnel shortages? Many businesses face this question, whether the cause is seasonal peaking, several employees on sick leave, or an unexpected increase in business. For some skills, many consulting services hire and use independent contractors. They may also use them in the office to fill a void or provide additional services. For office work, a growing number of businesses also hire help through temporary personnel services. In fact, many new consulting services will start up their business renting part-time temporary office personnel or independent contractors instead of hiring full-time employees.

Using a Temporary Personnel Service

A temporary personnel service, listed in your phone book's Yellow Pages under “Employment Contractors — Temporary — Help,” is not an employment agency. Like many service firms, it hires people as its own employees and assigns them to companies requesting assistance. This means that when you use a service, you're not hiring an employee; you're buying the use of their time. The temporary personnel firm is responsible for payroll, bookkeeping, tax deductions, workers' compensation insurance, fringe benefits, and all other similar costs connected with the employee. You're relieved of the burden or recruiting, interviewing, screening, and basic skill training.

Most national temporary personnel companies also offer performance guarantees and fidelity bonding at no added cost to their clients. Equally important, you're relieved of the need for government forms and for reporting withholding tax, social security insurance, and unemployment compensation insurance.

If you need temporary personnel for a period of six months or more, it's usually more cost-effective to hire a full-time employee. Also, if the task requires skills or training beyond basic office skills, it may cost you less to pay overtime to an employee who has those skills.

Using Independent Contractors

An independent contractor is a self-employed person who performs a service for you. Because an independent contractor is not an employee, you cannot dictate the hours in which the service is performed nor, in many cases, where it will be performed. The advantage of an independent contractor is that they are not on your payroll.

A contract with an independent contractor should state clearly that the person is an independent contractor and not an employee. Otherwise you may have to pay social security and other payroll taxes on their services to you.

Many consultants expand their services by using the service of other consultants on a contract basis. These collaborations can help a consultant reach a new market with additional services without the expenses of adding staff. If you do establish a collaboration, make sure there is an equitable sharing of revenue based on who found the client, who will do most of the work, and who brings more to the collaboration.

Using Temporary Employees Efficiently

The key to successful use of temporary employees lies in planning what type of help you will need, how much, and when. The accurate information you give to the temporary service firm will improve its efficiency in supplying the correct person for your needs.

Before your temporary employee arrives on the job, there are a few things you should do. First, appoint one of your permanent employees to supervise the temporary employee and check on his progress. Be sure this supervisor understands the job and its responsibilities. Next, let your permanent staff know that you're taking on extra help and that it will be temporary. Explain why the extra help is needed and ask them to cooperate with the new employee in any way possible.

Have everything ready before the temporary employee arrives. The work to be done should be organized and laid out so he can get right to it, minimizing the time he has to spend adjusting to the job and the surroundings. Also, don't set up schedules that are impossible to complete within the time you allot. Try to stay within the time limits you gave the temporary help service, but plan to extend the time period if necessary, rather than hurry the employee.

Finally, furnish detailed instructions. Describe your type of business and the services you offer. Help the temp feel comfortable and part of your team. Most temporary employees have broad business experience and can easily adapt to your requirements — if they know what they are.

Using Co-Employment Services

All states allow employees to be hired by a professional employer organization (PEO) as the employer of record. Technically, your employees work for the PEO. Practically, you manage the employees as if they were your employees.

The obvious advantage to co-employment is that your small consulting business doesn't have to be burdened by the paperwork of employment, payroll taxes, and worker's compensation insurance. The PEO typically advises you throughout the hiring process.

The downside can be the cost. Many co-employers will charge you a flat percentage over and above the employee's wage. The rate can vary depending on the PEO and services, typically ranging between 25 and 35 percent.

Unfortunately, not all PEOs are reputable. Some will send you any warm body and the bill. There is no pre-screening. In fact, they may be taking deductions for payroll taxes but not passing the money on to the government. You can be in a worse mess than if you'd just handled your own payroll. Make sure that the PEO you select is reputable. Your business banker or accountant may be able to recommend such a service to you. Also, look for membership in professional organizations like the National Association of Professional Employer Organizations (www.napeo.org).