Optimize Your Workforce With Contingent Labor
The world of work is changing rapidly—for both employers and employees. By 2020, the number of U.S. workers freelancing either part time or full time is expected to surpass 50 percent. Meanwhile, the traditional hiring framework is shifting, with more and more companies turning to a contingent workforce to stay competitive in today’s volatile business landscape.
It can be challenging to manage your company and stay up to speed on the evolution of talent acquisition, though doing so is crucial to achieving your business goals. Here’s a brief primer to help you understand contingent labor and how it can help optimize your workforce:
What is a Contingent Workforce?
A contingent workforce refers to temporary or contract workers your organization hires based on short-term need and skills gaps. Most often procured through a recruiting or staffing agency, or as freelance contractors, these workers are not full-time employees. Contingent workers help businesses meet sudden or seasonal increases in demand, as well as provide specialized skill sets on a temporary basis.
The Benefits of a Contingent Workforce
First and foremost, businesses gain flexibility when they leverage a contingent workforce. Rather than going through periods of hiring and layoffs, which can be a drain on manager focus and financial resources, companies can expand their workforce on an ad-hoc basis when needed. This gives them more agility to ride out market fluctuations both within their industry and globally. Businesses can scale back on employment during lean months, and then scale back up quickly when the economy rebounds.
For example, a logistics company using a new tracking tool across their operation may need to increase their IT staff during the roll out phase. Any longer than that and the additional staff may be superfluous. Using a contingent talent model, they can bring on IT workers with the necessary skills only for the time required.
Contingent workers also save companies money. Many of the administrative functions of hiring, such as interviewing and onboarding, are managed by the staffing partner. Because these workers are not permanent employees, companies don’t incur the cost of health insurance and other benefits, such as paid time off or 401K contributions. Additionally, companies are not responsible for paying unemployment when contingent employees’ job assignments end.
Another advantage of contingent staffing is that companies gain an in-house pool of workers that have gone through the onboarding process and are familiar with your business. Hiring managers can turn to star performers among their contingent workers to fill permanent positions that open up. This streamlines the recruiting process and significantly reduces time-to-hire.
Other benefits of a contingent workforce include:
- Improved morale among permanent employees because they are not overworked during the busy season, or required to take on tasks that are not within their skill set.
- Improved productivity because contingent hiring values quality as much as speed in recruiting.
- Placing accountability on service providers for candidate assessments, recruiting technology, employer branding, as well as for regulatory compliance issues.
The Challenges of a Contingent Workforce
While the benefits far outweigh the pitfalls, it’s important to be aware of the challenges that go along with a contingent workforce. They include:
- Compliance issues that arise from misclassifying workers as contractors.
- Intellectual property protection in some industries.
- Misunderstanding the roles that are well-suited to contingent hires, and those that would be better served by a permanent employee.
Getting the Most From Your Contingent Workforce
It’s important to treat your contingent workers as valued members of the team so they are motivated and engaged throughout their tenure. A strong and dedicated contingent onboarding process will avoid compliance issues and set you off on the right foot. Onboarding fosters a professional relationship with temporary workers and makes them feel respected as individuals.
Here are other ways to optimize the value of your contingent labor:
- Make it clear to people at every level of your company that contingent workers are as important to business goals as permanent workers.
- Pay market value for their skills.
- Clearly communicate the possibility of transitioning to a full-time role—or the lack thereof if that is more accurate.
- Offer new-skills training and professional development where possible. This informal benefit is valuable to the worker and also to your company’s employer brand.
Companies from tech start-ups to midsize manufacturers to Fortune 500 companies are already maximizing their workforces through contingent labor. Contact LINK to find out how a contingent workforce can enhance your business.