With traditional staffing, you’re not just paying for the worker’s wages and benefits. There are various other expenses to consider, and they can make this a very costly option, especially if you can’t always fully utilize that worker’s skills.

Additional expenses include:

A staffing agency will do the leg work for you, but their services aren’t cheap. They typically charge a markup for temporary hires, and that can be anywhere up to 80% of the employee’s wage. In other words, you’re not just paying for the employee and the work they do; you’re also paying for the pleasure of hiring them.

For longer-term placements, you may face direct-hire placement fees, which can be up to a third of the employee’s first year’s salary.

Posting on job boards and announcing new positions can incur substantial fees. The more roles you need to fill and the more specialized they are, the greater those costs will become.

Someone needs to review all of those applications and find the best candidate for the job. There are AI tools to help you, but we have yet to reach a level where they can accurately pick the best candidate 100% of the time. At the very least, you’ll need human intervention to act as quality control, not to mention job interviews andfollow-ups.

Understaffing causes work stress and burnout; it hinders employee performance and reduces response time. But over-hiring can be just as detrimental:

The biggest disadvantage of over-hiring is the drain on your finances. Wages are higher, you have more benefits to pay, and it’s hard to keep things ticking over when you have all those expenses hanging over you.

You have all of the staff that you need to deal with a recent sales increase, but what happens when the wind changes and your sales drop? All those staff now have nothing to do, but they’re still getting paid.

If they’re on-demand workers, you can let them go until they are needed again. If they are full-time traditional hires, it’s going to be much harder to scale down your business and protect yourself during fluctuations.

Too many cooks spoil the broth—if you have more staff than you need, the workplace will become one big distraction. Those employees will feel less valued, too. If there are suddenly dozens of staff members who can perform the same tasks, they’re no longer the star of the show, and they may struggle to find the motivation to give it their all.

One of your most important resources just increased, but what about everything else? Space is limited, and equipment is finite, so they may get in each other’s way.

The more people you hire, the more your standards drop. If you’re not carefully considering every hire and vetting every employee, there will be mis-hires, and they can be very costly in the long run.

Sports fans will tell you that the best teams often struggle when there are many new introductions in a short space of time. Cohesion is important; teamwork is essential. Introducing many individuals into a new environment isn’t conducive to creating an integrated space.

The hospitality industry is subject to major seasonal fluctuations, with peak occupancy rates usually coming in the months of June, July, and August. Hotels in prime locations can still survive with local and seasonal vacationers during slower periods, but the same can’t be said for smaller and more rural operators.

The difference between off-peak and peak labor needs are drastically different, and as you never really know how the season will progress, it’s hard to predict your needs.

If you hire a full-time team in the summer, they’ll be with you throughout the peak periods and can become masters in everything from brand voice to customer satisfaction. But they’ll still be there when winter rolls around, occupancy drops, and you’re struggling to maintain profitability.

Rather than moving between states of thriving and surviving, hire a small full-time team to fill managerial roles and rely on on-demand workers to fill the gaps elsewhere.

Hire more cleaners and front desk staff in the summer, train them in key tasks and operations, and let them go when you’re no longer fully occupied and need to balance the books.

Tax for on-demand workers is a little more complicated, but those complications lie with the employee and not the employer. Furthermore, if you hire your flexible staff members through platforms like GravyWork, we can help you with all of your payroll needs.

We have a W2 and 1099 staffing platforms to manage timesheets and benefits for all of the on-demand workers that you hire through our platform. You can focus on your business while leaving all of the fiddly payment and tax stuff to our platform.

GravyWork professionals are fully qualified and insured. In many jurisdictions, you must insure your employees, covering them in the event of workplace accidents and liability claims. With full-time teams, you’ll need to arrange this insurance yourself, but with GravyWork, we’ll handle all of their insurance needs, including workers’ compensation.

Our last advice for running a cost-effective workforce is to monitor their productivity and get your money’s worth. This is important whether you’re hiring full-time teams or emergency staff.

Use project management platforms and time-tracking/management applications like Hubstaff, Slack, ActivTrak, and Teramind to track everything that your employees do and keep them active, productive, and accountable. If they fall short of your expectations, call them for a performance review and offer constructive criticism.

If your feedback isn’t having an impact and you’re still not getting the results you need, simply let them go and find someone else. It’s often assumed that on-demand workers are less productive than full-time team members, as they aren’t incentivized by long-term contracts and the promise of promotions.

However, on-demand workers are heavily reliant on good feedback. They want to make an impact so that you’ll keep hiring them and recommending them—their reputation and future earnings rely on them doing a good job and making an impact. As long as they have the right guidance and support—from managerial staff, colleagues, and mentors—you can get the best out of them.

To get started on our on-demand recruitment platform, create a free account. Most job posts are fulfilled within 24 hours, so even if you need skilled professionals at short notice, you’ll be able to find what you’re looking for.