Agency Workers Regulations 2011 – effective from October 1st 2011 - are the latest in a line of employment legislation to affect businesses both large and small in the past 12 months. AWR 2011 applies to those temporary workers who complete a qualifying period of 12 weeks in the same job.

The regulations may impact on business agility, costs and growth. Media reports that one leading retailer was using a loophole to work around the regulations didn’t offer advice on how to tackle AWR 2011 issues without resorting to that kind of action.

Large companies might want to fight their corner alongside the retailer – and will have the resources to do so – but SMEs may find it more difficult. With that in mind, what can SMEs do to reduce the impact of giving agency workers the same basic employment and working conditions as if they had been recruited directly? And how could that help with profitability and business plans?

There are ways to make the best of a difficult situation in most types of business while at the same time improving performance of the staff and the business. The challenges presented by AWR 2011 are little different to those found in underperforming and under-managed workforces, or those that have expanded quickly and are unsure how best to measure and manage individual, team, departmental and company-wide performance.

The introduction of AWR 2011 was followed by reports in the media that older and underperforming workers could be more easily sacked under yet-to-be written legislation.

The reports stoked a wave of protesting reader comments from older employees, who felt they were productive and adding value to their employer. The reports also served to highlight the business issues raised by AWR 2011.

What action can SMEs and blue chip companies take to soften the effect of AWR 2011 and handle any new legislation about productivity of employees?

The starting point should be performance appraisal per employee followed by improvement if that is needed. Improvement should include aligning all staff to the business goals, with an extra effort made to familiarise temporary workers with the company culture and helping them focus on the goals.

Where the subject of unproductive workers arises, the company may have to look at itself and ask if it is to blame; and, if so, how can it make employees more productive. Then there is the problem that if some or all temporary workers are more productive than “in house” employees, what are the implications of that for the latter?

It’s a grey area that the business may want to address and ask the potentially painful question of who – or what - is to blame for allowing productivity to drop or not be raised among its own staff?

Value

AWR 2011 includes “day one” rights, which give temporary staff certain rights from day one with their hirer. The rights are reasonably straightforward and make perfect sense in one key way; if you are going to hire people, you want them to add value to your company from day one. Regardless of the length of the assignment, it is to everyone's benefit if they are adding value as soon as they start work.

Unproductive workers will clearly not be adding value. The same techniques that are used in appraisals and improving individual performance will show if these workers have an attitude or behaviour problem and/or where training or coaching should be used. Some problems may be down to the culture of the business. i.e. “the way we do things around here”.

The culture can be measured and managed to arrive at one that best supports the aims of the business and how it can handle challenges posed by employment legislation and economic uncertainty.

If a company accepts that its employees should be a real asset and essential in driving the business to achieve its goals, the status of their employment [agency or not] should not be a concern and all workers should be aligned to one thing - the business goals.

The status of the productivity of any type of worker should be of concern, however.

Although agency workers have the right to be paid a bonus based upon performance, there is no requirement for them to be integrated into the same performance appraisal system of the hirer. Wouldn't it make sense to do so?

Those SMEs without a manual or online system might be put off by a perceived complexity and overhead to administer and manage a performance appraisal system. They should balance those largely unfounded expectations with the excellent ROI attainable through simple to use, lower cost systems.

The ROI can be quick – just months. Appraisal followed by performance improvement typically results in a significant boost to company performance. A “released capacity” level of 10%-35% can be achieved in under 12 months, meaning that lower cost solutions in particular pay for themselves quickly.

Released capacity gives SMEs and blue chips greater scope for business agility, regardless of legislation, and enable them to reduce operating costs through closure or mothballing of offices etc and function with fewer, but better trained [if necessary] and better motivated staff. The staff can include agency workers whose added value from day one can be measured and managed.

The combination of released capacity and employee performance management underpins business plans for growth and stability – and can counter any negative affects of AWR 2011 through ensuring agency workers add value from day one.