Contingent workforce management: it’s a talent phrase that’s become synonymous with efficient, flexible working arrangements. And of course, in these times of a global pandemic, the concept of flexible working has become increasingly commonplace.
It’s this very factor – flexibility – that makes contingent workers a category of talent so appealing to organisations right now.
The contingent workers in an organisation are those workers who are engaged for a limited tenure, typically to deliver on a project or on specific business outcomes. And best practice contingent workforce management, is the process of strategically and compliantly engaging and managing these workers, to achieve the best possible returns from the organisation’s investment in them.
Today, we’ve provided a quick Q&A for employers that are looking to – or have already – engaged contingent workers into their business.
What is a ‘Contingent Worker’?
A contingent worker is defined as a worker who is engaged into a business for a limited period. The contingent worker’s purpose is typically to:
- Plug skills gaps in a business
- Provide insight and expertise to fulfil project or specialist business needs, unavailable from the existing employee pool
- Assist for a limited time in business transitions, change management, commercial transformations – or activities in a business, that are not the typical ‘business as usual’ operations
Businesses have dramatically increased their use of contingent workers over the past decade as they struggle with rising labour costs and the need for a workforce that can quickly adapt to market conditions. Contingent workers are not on the company payroll but provide services to an organisation, such as contractors, consultants, temps and advisers.
What is Contingent Workforce Management?
Contingent workforce management, unlike employee management, requires specific knowledge and expertise (often outsourced to a provider like CXC), especially when it comes to compliance, statutory obligations and risk mitigation.
Extracting the full benefit of investing in contingent workers comes from a best practice management approach. This also typically provides a good experience for the worker – which is critical for optimum productivity and worker engagement.
What are the benefits of contingent workers?
- The organisation enjoys access to specialist, expert skills for a finite period, specifically related to the business’ needs (skills that may not be needed permanently)
- A more pragmatic relationship, less time is spent on overseeing the workers, performance reviews or salary negotiations. Their purpose is very clear-cut
- Lower general talent overheads and lower ongoing talent costs
- Flexibility: talent can be accessed when and as the business needs them, and in response to market fluctuations
- The contingent workforce is scalable depending on the business performance and needs
What are the challenges?
We’ve identified five major challenges of a contingent workforce – all of which can be avoided with a strategic plan and a robust, centralised management structure in place (or, like I said earlier, engaging the services of CXC).
- Poor visibility of all contingent workers in the business. This scenario plays out most commonly when managers hire continent workers outside of the channels of HR, procurement or the centralised contingent workforce management structure. And poor visibility of all contingent workers means the business can’t account for them, assess them properly or be confident that they’re being paid fair, market rates
- With poor visibility comes greater risk. Unchecked workers may not comply with all state and federal regulations and could place the business at significant legal and statutory risk
- Inconsistent rates of pay – or off-market rates – often transpire when contingent worker visibility is poor. Organisations can over-pay for their contingent workforce and remove the commercial and financial benefits available through best practice management
- If the contingent workforce management program is unstructured, it most probably means the business doesn’t have direct access to a qualified external talent pool. Without quality supplier relationships, the benefits of a contingent workforce can be eliminated because of a lack of talent access
- Worker misclassification can result in serious fines, penalties even legal action. Without a centralised management system in place, hiring managers who take it upon themselves to source contingent workers, place the business at significant risk.
It’s important for organisations to remember that as the contingent workforce grows, complexity inevitably ensues. And with complexity comes challenges. The best means for mitigating the risk and downsides of contingent workforce management, is to partner with an expert (like CXC). Costs will be contained, and operations of the continent workforce will be streamlined. As a result, contingent workforce management will achieve transparency and accountability and will become strategic drivers of success in the organisation.