Contingent Workforce Hiring Best Practices

joseph cole

Updated on May 2, 2023

It is not a secret that the contingent workforce has become one of the leading labor forces over the years. With the advent of remote work due to the pandemic, the need for contractual workers has increased. This necessity for contingent workers has increased the urgency for contingent hiring as well.

According to the US Bureau of Labor Statistics,

“Nearly 4 out of 5 employers, in establishments of all sizes and industries, use some form of a contingent workforce.”

The Department of Labor published that the contingent workforce was among the fastest-growing segments of workers with an increase of 23% over the decade from 2010-2020.

Although, targeting contingent workers for hire isn’t always as easy as it sounds. Recruiters have to come up with innovative ways to attract the required workers from the vast pool of them.

What is Contingent Workforce?

Contingent labor means working under a company as per a contract.

According to Wikipedia,

“A contingent workforce is a provisional group of workers who work for an organization on a non-permanent basis, also known as freelancers, independent professionals, temporary contract workers, independent contractors (1099’s) or consultants (SOW – Statement of Work).”

Many recruiters hire contingent workers to fulfill the skill-gap in the company. These workers are freelancers, contractors, part-time workers, who are hired based on the project that they are to deliver. They are used as backup support at some points. Contingent workers are highly skilled in their field of work and provide a tremendous level of expertise in the subject matter. Many companies take advantage of contingent workforce to cut down their expenses and maximize their productivity.

As per a report, nearly 6 million workers in the U.S are contingent workers, making up 30% of the total U.S workforce. The contingent workforce is hired for a short period and relieved after the work is done. According to a report by TBM Growth, by the end of 2020, the total contingent workforce will grow up to 4 million, covering around 20% of the total workforce worldwide. It should be noted that contingent workers do not get offered long-term opportunities based on their work. However, they can be called back to work if the requirement rises again.

Rise in Contingent Workforce

The contingent workforce is on the constant rise due to the changes in the working culture and the imminent flexible workforce. The growth is also because businesses now prefer people who are highly efficient and less demanding. A Success Factors survey found that 61% of companies agreed that contingent workers were more efficient and contributed more to the success of the company. Another CareerBuilder survey conveyed that 51% of companies favored hiring contingent workforce.

Technology has also had a part in pushing the popularity of temp workers. With completely revolutionizing the world, technology has made workers more free and better yielding. People now work from anywhere in the world and can select any project that they want.

This phenomenal rise has helped businesses attract the right employee for as long as they want resulting in better productivity and less hassle regarding employee satisfaction.

Advantages of a Contingent Workforce

Apart from low costs and a more productive workforce, a contingent workforce has various benefits. The following is a list of all the advantages that a contingent workforce provides.

  • Flexibility: A contingent workforce provides flexibility to the work culture. Going as per the workload, a temp workforce can be reduced or increased. It is more susceptible to change and requires less time to adapt. The company can change, adapt according to the market conditions with the help of a contingent workforce.
  • Skill-gap Management: Hiring can be a tough job and finding the right skilled person can be tougher. With the evolution in the market, the situation has changed and companies require a lot of skilled workers for various reasons. A contingent workforce comprises the most skilled workers based on the project. Recruiters can hire the employees under contract for as long as the project requires and relieve them of their duties after the work is done. This increases the flexibility and the productivity of the business, ultimately leading to the success of the company.
  • Cost-effective Hiring: Contractual workers can be hired at short notice. The hiring gets a lot easier and less time taking. Efficient temp workers provide immediate support to the company when they are hired. No need for the long onboarding processes. Contractual or contingent hiring happens in a jiffy.
  • Low Maintenance: Contingent workers do not require perks and benefits from the company, unlike their permanent counterparts. Companies do not need to offer any retirement plans or insurance plans to the temp workers. Just the payment based on the project is all that is needed.
  • No Tax Issues: Regular or permanent employees need to be taken care of. Companies need to maintain their provident funds, income taxes, and other types of required taxes. Employer contribution also needs to be given. But not in the case of contingent workers.Companies need not to withhold any taxations for temp workers. However, if the contingent worker is an independent contractor, they will need to pay self-employment tax. If the contingent worker is the company’s contract worker, taxes need to be withheld.
  • Different Perspectives: External workers bring a lot of new ideas to the table. An internal workforce after years of working may become a little predictive and cliche. A highly skilled contractual worker can bring the X-factor required to uplift the spirit and the productivity of the company. Sometimes all a company needs is an “out-of-the-box” thinker who can put in efforts towards the success of the company.
  • Open up New Positions: Contractual job roles let the company try out the employee and examine the productivity of that employee. Sometimes, that leads to a permanent position in that company. This also enables the company to evaluate if the requirement would need a permanent solution or not. A contingent worker provides a view of the long-term solution that may be required.

Traditional Workers or Contingent Workers

The debate regarding the efficiency keeps heating up between the traditional and contingent workers. With companies getting inclined towards short-term job roles, here are some of the facts that solidify the efficiency of a contingent workforce.

  • Most of the contingent workers are younger than traditional workers. This makes them more likely to work longer hours and put in more effort.
  • Contingent workers have been found to have better degrees and certifications based on their skills than traditional workers.
  • Contingent workers are more likely to explore various jobs and have great relationships with the ever-changing technology as compared to traditional workers.
  • The educational and health institutions mostly prefer a contingent workforce rather than a traditional workforce.
  • Contingent workers work on low wages and produce better results due to their range of skills compared to traditional workers.

It is of no doubt that traditional or permanent workers are the basic workforce in every company. But when it comes to delivering a high level of efficiency at a low cost, then, a contingent workforce is the go-to.

Contingent Workforce Hiring and Management- Best Practices

Companies have recognized that a contingent workforce is the need of the hour. The short-term workforce has become an integral part of various industries. However, if the management of this workforce is not maintained properly, it can nullify the efforts put in hiring them. Unlike managing the full-time workers, companies get daunted by the management of a contingent workforce.

Though, with the right set of knowledge and apprehension, companies can undertake a proper management of a contingent workforce.

Based on research, these are some of the steps companies can follow to better manage their contingent workforce.

  • Recognizing and evaluating the skills of the contingent workers helps in better management of them. As companies hire them to serve a specific purpose, discerning the actual skills helps in retrieving the best fit which in turn results in the betterment of management. A strategic approach in the usage of the contingent workforce should be the basis of the administration.
  • Technology must be used to the fullest extent. With the abundance of affordable HR software in the market, companies need to get hold of the management proficiently. However, it has been evident that 52% of businesses are still using traditional tools for employee management.Vendor Management Systems, Attendance tools, etc., should be given more preference than Excel to achieve better results.
  • Recruitment Process Outsourcing model should be merged with MSP to get better accountability and visibility of the contingent workforce. A Contingent RPO helps in attaining better quality by lessening the cost and increasing the Employer Value Proposition (EVP).
  • A contingent workforce management system should have visibility. The workforce needs to be integrated with the whole organizational workforce, keeping in mind the legal compliances. There should be collaboration among all the workforces in the company, resulting in better management.
  • A contingent payroll management system should be exercised by companies to maintain a consistent compensation structure. Having different pay structures can lead to confusion. This may also hamper the morale and productivity of the employees if biased pay structures are maintained.

All said and done, the management of a contingent workforce is a real headache and companies need to get that straight and have proper management facilities to achieve better productivity.

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