The contingent workforce challenges faced by Chief HR Officers (CHROs) in today’s workplace are both old and new.
Old in that risk remains their biggest bugbear, and new in that the type of risk continues to change. Other contingent workforce challenges CHROs are facing are more fundamental. Such as including contingent talent in their workforce strategy planning and adapting to a post-pandemic world where hybrid and flexible working are increasingly the norm.
Today, we cover two of the biggest contingent workforce challenges facing CHROs in today’s workplace. These challenges will vary in complexity and gravity depending on industry and business structure. But for any CHRO with contingent workers, knowing how to face these challenges is crucial for survival.
“Businesses have dramatically increased their use of contingent workers over the past decade as they struggle with rising labor costs and the need for a workforce that can quickly adapt to market conditions. Contingent workers are people who are not on the company payroll but provide services to an organization, such as contractors, consultants, temps and advisers.“
Problem 1: A Tight Regulatory Environment
Organisations are increasingly engaging contingent workers right now, especially given the uncertain market conditions that prevail in most of the world’s major economies. Being able to scale up and down, based on market fluctuations, is proving a valuable staffing approach in these conditions. It also means, companies can access high-quality, specialist talent they may otherwise find difficult to secure.
But the major headache for CHROs in this scenario is the ever-evolving global regulatory environment. Governments across the world are investing heavily in regulatory and investigative initiatives to keep companies honest. For example, if organisations are engaging contingent workers on an ongoing basis, and misclassifying them, they’re unlikely meeting their taxation and other statutory obligations. Exploiting the ‘grey area’ of the different labour regulations of global jurisdictions – be that intentionally or unintentionally – comes with hefty penalties.
Solution 1: Do Your Homework, Partner with Experts
Navigating the workforce regulatory environment of one country is typically complex. But if your business has a global team (like ours does), understanding the rules, expectations, changes, nuances, and motivations of the government of the day, can be truly daunting.
We have helped countless organisations across the globe with this very high-risk issue.
If you’re uncertain about how compliant your contingent workforce is, there’s a good chance you’re breaching tax rules. It’s that simple. And knowing everything, all the time, can be fraught. That’s why we suggest partnering with experts who know the rules, and who will keep your business compliant. Not only compliant but will protect you from reputational damage and potentially, heavy commercial losses. Experts like CXC remove these risks for businesses like yours. (Shameless plug over ☺️).
Also, a valuable tool to explore, particularly if you’re running a global team (but even if you’re not), in your investigation of worker misclassification and associated risk issues, is this Contingent Worker Misclassification Risk Map by global law firm, Baker McKenzie. All categories of contingent worker risks across major economies are ranked according to how prominent the laws are in that region. It’s worth a look.
Problem 2: Zero Integrated Workforce Management Strategy
In companies that haven’t developed a centralised, strategic plan for engaging and managing contingent workers as part of their overall workforce management plan, major headaches tend to arise for the CHRO.
Without a centralised management strategy for your contingent workforce, your company (and your desperate CHRO) will encounter issues such as:
- Ad-hoc hiring by line managers, placing the business at risk of misclassification, as well as a host of other avoidable risks.
- The inability to provide the business with the talent it needs when it needs it.
- Zero access to quality contingent worker data. Most likely, if you haven’t established a centralised management strategy for these workers, you’re unlikely to be supported by the right technology or data to help you make the best talent decisions.
- Poor adoption of company policies and procedures when it comes to vetting, hiring and onboarding contingent workers. This may include poor clarity of contingent workers’ contracts, unclear responsibilities for the worker, and non-adherence to privacy and company non-disclosure agreements.
- Contingent workers will be less likely to feel part of the company or the project team, as the management of them, without the right strategic approach in their engagement, will likely also be makeshift.
Solution 2: Start with Tech, and Build from There
As a starting point, the right technology will enable you to structure your workforce management strategy, especially if your approach is a total talent management solution (as most strategically minded CHROs are leaning today).
The key technologies to consider, depending on the size and complexity of your business, include:
- Vendor management technology. Clarity around which vendors are responsible for the hiring, paying, onboarding and/or training of your contingent workers will optimise your investment in them, and will help establish a structure and process that gets your contingent workers productive, quickly. It will also allow you to better assess the performance of your vendors.
- Cloud-based or SaaS talent management system. Key features you need to consider including: The ability to streamline global workforce management processes. The ability to ensure compliance of contractors in all operative regions. Improve the experience of the contingent workers; with self-service options where contingent workers can see pay slips, submit timesheets and expenses, accept contracts and terms of your business, and issue automatic signatures. Detailed reporting for your management team, including pay rates, extensions, tenure and other costs.
- Collaboration tools for remote teams. As many contract workers operate outside of the company office, ensuring collaboration tools are available for optimum output and performance, is crucial. Slack, Monday, Trello, Zoom, ClickUp and Asana are just a few. This is a category that’s worth exploring, especially to ensure contingent workers can productively engage with all categories of workers in your business.
(We offer a comprehensive technology platform, so reach out if you’d like to find out more).
Once you’ve got the right technology in your sights, you then need to focus on:
- Establish and document your company policies, guidelines and processes relevant to contingent workers. Amongst other factors, this will ensure your contractors don’t put your business at risk particularly around the loss of IP or company secrets.
- Bring your management team together, to brief them on and instil the new processes, protocols and engagement approach for contingent workers. Get buy-in from the top down.
- Educate and train all the relevant people in your business about the importance of following guidelines for engaging contingent workers, especially emphasising the risk factors associated with non-compliance.
- Make sure you regularly analyse talent needs in your business, as part of your contingent workforce planning processes. Knowing the skills your business will need and at what stage, makes for far greater success in your contingent workforce management strategy.
In our 30-plus years of working with CHRO’s, the core challenges they face haven’t changed much (the caveat of industry and complexity of their business notwithstanding). The risks of engaging contingent workers remain their biggest test. But what has changed are the categories of risk they face and keeping up with changing government rules reflecting these risks.
Other challenges to CHROs in today’s work environment are more structural. Such as the changing way people want to work (more remote and hybrid), accepting that contingent talent now forms a strategic part of workforces and workforce planning, and understanding the power of technology to ease typical CHRO challenges.
We’ve helped CHROs just like you, get out of difficult, high-risk situations with their contingent workers, while allowing their business to both lower the cost and boost productivity of this group of talent. If you would like to hear more about our experience, you can reach out to us here.