A Beginner’s Guide To Contingent Hiring

joseph cole

Updated on May 2, 2023

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Contingent hiring is paramount in the talent acquisition industry in the current times of the unpredictable market. The workforce constituted a staggering 35% of the total workforce (2021) in the U.S. Insights from the U.S Gig Economy 2021 Edition say contingent workers generated $1.3 trillion in revenue last year.

What is Contingent Hiring?

The contingent workforce is a broad term used for hiring any kind of flexible talent for strategic reasons – projects, assignments, etc. Based on the terms of employment, they largely constitute

  • Temporary Workers,
  • Consultants
  • Independent Contractors
    • Freelancers
    • Gig Workers
  • Contingent Workers
  • Fixed-term Contract Employees

Who are Contingent Workers?

AIHR terms contingent workforce as a labor pool consisting of workers hired on for a fixed period of time. The “flexible workforce” model provides functional numerical flexibility, periphery employees, and numerical flexibility to businesses.

Similarly, ILO also defines temporary (contingent) employment, where workers are engaged only for a specific duration. It includes fixed–term, project or task-based contracts, as well as seasonal or casual work, including day labor.

Why is Contingent Workforce a Win-Win for Both Parties?

Ian E. McFadden, former President, and CEO at HRM International, Inc.  says the contingent workforce model is much similar to Game Theory. He offers pros and cons from the perspectives of employers and temp employees.

“Contingent hiring can be lucrative depending on the terms of the employed arrangement. Usually, the employee does not work permanently for the company (that hires) but instead contracts with the company for a specific assignment to be performed.” – Ian E.McFadden, HRM International Inc

Benefits for the Employer

  • High expertise for a specific project or assignment
  • Flexible staffing with a specific budget for a project.
  • No outlay of benefits, payroll taxes or other employment expenses
  • Less hiring formalities
  • Increase in productivity

Challenges

  • Expertise is limited to specific objectives only.
  • Lack of accountability
  • A specified time frame may decrease productivity

On the other hand, he says Contingent Workers can also Benefit through

  • Higher compensation rate for assignments
  • Working on multiple tasks with different companies simultaneously
  • Work autonomy

Disadvantages

  • Work is limited to specific conditions only
  • No provisions for bonuses, overtime etc.
  • Out-of-pocket expenses may not be covered by the company.

How to Execute and Manage Contingent Workers?

In a LinkedIn articleLouis van Tonder, Chief Business Executive for BLU says that the contingent workforce model is not necessarily a ‘low-cost’ model. Companies need to invest in technology, training and other processes to optimize future outcomes. Having said that, he suggests companies must know how to utilize recruitment automation and data analytics for meeting business objectives.

On similar lines, McFadden also highlights how staffing companies rightly manage contingent workers while updating and managing the company’s expectations. Though few companies insist on governing contingent workers on their own, the diverseness of flexible talent is better understood by staffing companies as they facilitate end-to-end contingent workforce management.

To summarize, contingent hiring is no longer a choice, but a strategic necessity for businesses to win the talent war. They must put contingent hiring at the forefront to survive and grow in the near future.

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