Written by Salary.com staff
Managing contingent workers only gets more complex as 2024 moves further. With more companies relying on part-time, temporary, and freelance workers, effectively overseeing a fluid workforce mix requires new strategies.
This article will look at the upside and downside of contingent staffing. It will provide tips for maximizing productivity and engagement when other team members are not actually employees. For those utilizing contingent workers or considering it, learning strategies to manage a blended workforce is key to success.
What Is a Contingent Workforce?
A contingent workforce is composed of workers who are not permanent employees. Companies hire contingent workers on a temporary basis. They include independent contractors, freelancers, consultants, temporary staff, and part-time workers who work on specific projects, handle short-term assignments, or provide specialized skills that are not available in the permanent workforce. The use of a contingent workforce allows companies to maintain flexibility, manage labor costs, and quickly adapt to changing business needs.
Contingent Workforce vs. Contract Employees
Contingent workers are temporary employees hired to supplement a company’s full-time staff. They are not permanent members of the company and paid by the hour or project. Contingent workers allow companies to scale their workforce up or down as needed without the commitment of hiring full-time employees.
On the other hand, contract employees are temporary workers hired for fixed terms, often 3-12 months. They receive benefits such as health insurance and paid time off. Contractors fill temporary staffing needs, but companies can hire them on a long-term basis.
For companies, contingent workers offer flexibility and reduced costs since they do not receive benefits. But contingent workers may lack loyalty and require extra management. Contract employees provide stability but at a higher cost.
Companies must weigh the pros and cons of each option based on their unique needs and situation. Contingent and contract workers play a vital role in the modern workforce. With the rise of the gig economy, contingent work is likely to become even more common in the coming years.
Types of Contingent Workers
The contingent workforce has become a common fixture in various companies. Companies categorize contingent workers into three main types: independent contractors, temporary workers, and part-time workers.
- Independent Contractors
Independent contractors are self-employed individuals who provide services to companies on a project basis. They have the flexibility and autonomy in how they do their work. Companies hire them when they need specialized skills for a fixed period. Independent contractors charge higher rates but companies do not have to pay benefits.
- Temporary Workers
Companies hire temporary workers through staffing agencies for short-term assignments. The agency handles payroll, benefits, and other administrative tasks. Companies use temporary workers to fill in for employees on leave, handle seasonal workload increases, or work on special projects. Temporary workers provide flexibility and continuity.
- Part-time Workers
Part-time workers have permanent jobs but work fewer than 35 hours a week. Companies hire part-time workers to save costs on benefits and fill in gaps in the work schedule. Part-time workers earn lower wages and receive fewer benefits than full-time employees. They provide stability and continuity for more routine tasks.
Using a combination of these workers along with full-time employees gives companies the flexibility they need and ensures continuity to adapt to changes in the business environment. With clear policies and management, the contingent workforce can be valuable.
Pros and Cons of Hiring Contingent Workers
Hiring contingent workers provides both benefits and drawbacks to companies. On the good side, they provide flexibility and cost savings. Companies can scale their workforce up or down as needed by hiring them for short-term projects or to fill temporary roles. This allows companies to avoid the costs of hiring full-time employees when demand is uncertain.
But there are also risks to relying on contingent workers. Lack of loyalty and higher turnover can be issues, as they usually work for multiple companies. They may also lack company-specific knowledge and experience. Blending them into company culture and processes can require extra effort. Falsely labeling them as independent contractors instead of employees poses legal risks as well.
For companies in fast-changing industries or with uncertain demand, the pros of a flexible, scalable workforce often outweigh the cons. For those roles requiring specialized skills or knowledge, permanent employees are usually a better choice. An optimal strategy for most companies is to maintain a balance of both contingent and permanent workers.
Tips for Effectively Managing Contingent Workforce
Managing contingent workers requires close attention and care. Here are the key tips for effectively managing contingent workforce:
- Provide Clear Expectations
Be clear about expectations, priorities, and deadlines. Contingent workers are not full-time employees. Managers must provide detailed guidance about roles and duties, which helps avoid confusion and ensures proper completion of work.
- Offer Feedback
Contingent workers often function alone, so offering regular feedback is vital. Meet with them often to review work and help them improve. This allows to recognize great performance as well.
- Foster Collaboration
While contingent workers are not full-time staff, managers must encourage teamwork when possible. Invite them to relevant meetings and events. Introduce them to key team members. This makes them feel like part of the team and enables better teamwork.
- Consider Conversion
For top performing workers, consider turning them into full-time employees. Contingent work often serves as a trial period, and turning the best workers shows value for their work. It also provides more stability for the company by bringing that role in-house for good.
Managing a contingent workforce requires balancing freedom and teamwork. With clear guidance, feedback, and a path to growth, companies can build a highly productive contingent workforce. Treat them well, and they will become a valuable asset.
Conclusion
Managing a contingent workforce comes with its own unique boons and banes. While there are pros and cons to utilizing non-permanent employees, companies can implement strategies to onboard and engage this talent pool. With the right technology, training, and culture campaigns, companies can seamlessly merge contingent workers into their teams.
As the business world evolves, successful companies will embrace more flexible work arrangements. They will tap into the skills of independent contractors, temporary staff, and freelancers to drive success. The future of work is here.