In this second-of-three-part series, we’ll look at the ways in which organisations uncover the ‘hidden’ contingent workers in their business, in order to correct what is often significant financial drain, in addition to the non-statutory-compliance of their contingent workforce.
Bur first, let’s recap on what we’re covering in this blog series:
- The negative by-products of unaccounted contingent workers
- Examples of how organisations have uncovered these workers
- Solutions to resolve the issues of hidden contingent workers
- Strategies to prevent re-offending & the path forward
There’s a critically important consideration for organisations when engaging contingent talent, one that many, historically, don’t consider: how not to lose sight of your contingent workers, and how to reveal those that are out of sight.
But first, let’s recap why a hidden contingent workforce is a problem for organisations. The issue is this: in the absence of real knowledge of the number, type and remit of all contingent workers, organisations are likely to experience issues such as:
- Unnecessary over-spending on contingent workers
- Non-compliance with statutory obligations, and the potentially devastating penalties that can be handed down by the ATO and the FWO
- A likely underperforming workforce: if your contingent workers aren’t delivering to a specific contract, you’re likely spending too much whilst achieving too little ROI
Hence, it’s critical for an organisation to determine the REAL number and cost of their entire contingent workforce.
Let’s look at a few scenarios…
THE HIGH VALUE OF A CONTRACT WORKER
Typically, organisations place a high value on contingent workers (not part-time or casual employees): their remit is commonly to achieve a specific goal or outcome, within a pre-determined timeframe. And if they do the job well, often these workers continue to work in a business, after the initial, agreed period.
The reasons for this could be many: some which we’ve outlined here.
What can then happen in a business, prompting low visibility of a contractor staying on, could be a change in manager, or a shift of talent remit. Hence this valuable person just sits tight. In perception, this talent is ostensibly part of the organisation’s talent pool. And is thus, a ‘hidden’ contingent worker.
Only when there is a critical situation or change taking place in the business, is this talent uncovered as a contractor. For example, the business is acquired, cost pressures start to build, there’s a radical change in the workforce strategy, or the business undertakes a contingent workforce audit.
Still… these workers aren’t treated as contractors, but as employees. A major compliance black mark.
EMPLOYMENT OVER COMMERCIAL RELATIONSHIP
Another scenario is this. In knowledge-based organisations – frequent users of contingent talent – the contingent workers are often considered a part of the organisation’s talent ‘offer’. A dangerous scenario, if compliance with ATO and FWO contractor stipulations are to be achieved.
‘Forgetting’ the category of workers on the team, means a business is increasingly likely to not meet all statutory requirements when it comes to taking on non-permanent workers.
This situation is fraught: the organisation is clearly undertaking an employment instead of a commercial relationship with these workers. Outside of the likely non-compliance with statutory obligations, there’s potential cultural and other internal issues the organisation may face.
NO HR INVOLVEMENT
This next scenario is very common: when HR aren’t across contingent worker hiring.
Typically, if an organisation undertakes a deep-dive or audit of their workforce, the process is overseen by HR. External surveys utilised for this purpose, involve HR: hiring or line managers aren’t involved. Which leaves the scenario as this: many departments across a business engage contingent workers, often without the involvement or oversight of HR, so they remain ‘hidden’ in the working population of the organisation.
THERE’S POOR ROLE DEFINITION FOR THE CONTINGENT WORKER
If a contingent worker is brought into a business, without a genuinely specific remit, there’s a high chance they’re going to remain longer than they are due…that is, as an accurately defined ‘contingent worker’. So again, by undertaking a workforce audit, the organisation will uncover contingents perceived as perms, due to a lack of role definition, potentially a lack of reporting on the outputs of the role, or most likely both. When a contingent worker’s role is systematically accounted for by management, their likelihood of becoming ‘hidden’ is a lot lower.
There are more scenarios at play in uncovering hidden contingent workers, which we will continue to report on. For now, check in next Friday for the third instalment of the ‘hidden workforce’ series. And of course, if you have any comments or insights of hidden workers in your business, let us know in the comments below.
Part one of this series, looked at the price organisations pay for hidden contingent talent. You can read it here. Next week, we’ll look at the strategies organisations can deploy to resolve the issues of hidden contingent workers.