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Is reducing locum spend a false economy?

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Phil Snowball

As recruitment consultants we speak to a lot of companies and a common recurring theme is ‘we want to cut down on our locum spend’. But is this a false economy?

Across the UK the gig economy is booming, and it’s easy to see why, people want greater flexibility and a better work life balance. Convenience and flexibility is now imbedded in every part of our daily lives from hiring a taxi to ordering our shopping and a lot of people want this flexibility in their working lives too.

Given this, isn’t it time companies embraced locums and stopped seeing them as a necessary evil?

First, let's look at the true cost of a permanent employee…

A permanent employee earning £50,000 a year would typically work 220 days a year (assuming 5 weeks holiday, 8 days bank holiday, CPD training days, occasional sick days, etc).

Additional to the salary the employee would receive at least 3% employer pension contribution and a CPD allowance, the employer would also have to pay 13.8% employer’s National Insurance. This would take the actual cost up to around £60,000 per annum. There are also other costs such as internal training, recruitment costs, on-boarding, payroll and HR costs, etc.

Now let's compare this to the cost of a locum working over the same 220 day period.

Typical locum day rate of £300 * 220 days = £66,000

As you can see the difference isn’t that great.

Increase in staff morale

One really important factor to consider is the increase in staff morale when a locum is employed to reduce the workload on existing staff. Excessive workload and long hours are a major cause of workplace stress and workplace stress leads to staff attrition. Staff attrition then compounds the problem of excessive workload and stress on the existing staff and this turns into a vicious circle ultimately leading to the inevitable increase in locum spend, which you were trying to avoid in the first place. By engaging locums quickly and effectively, and not waiting until the problems become apparent you will improve staff morale and staff retention.

Better customer experience

Staff shortages lead to cancelled or delayed appointments, and increased waiting times. This, in turn, leads to customer frustration, which inevitably leads to a negative impact on your brand and lost customers. Engaging locums quickly and effectively will improve your customers experience.

Reduction in locum rates

One of the biggest complaints we hear from locums is when they have shifts booked weeks in advance only to have them cancelled at the last minute. This often results in them being unable to find alternative work and this leads them to factor this cost into their daily rates. If practices could offer guarantees of shifts and refrain from cancelling shifts where possible this would invariably lead to reduced locum charge rates.

Conclusion

In an ideal world we would all love to be fully staffed with permanent staff but despite everyone’s best efforts, in a candidate short market, this isn’t going to happen. Employers therefore need to start embracing locums and looking at them as a vital piece of their human resource jigsaw.

Through this worked example we have demonstrated that the true cost of a permanent member of staff is not vastly different to the cost of a locum, suggesting we need to change our mindset and start looking at ways we can maximise the benefits of locum usage. One huge benefit of engaging locums effectively is that it can be seen as a stepping stone to permanent employment. Consider viewing each locum as an extended trial period, give the locum a great experience at your practice and you never know they could be your next permanent employee!

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