The world of work is changing. And companies that want to remain competitive need to find new, innovative ways to maximise efficiency, cut costs, and meet their staffing and business needs amid a global talent shortage.
At the same time, more and more employees are leaving the 9–5 behind and setting up as freelancers or independent contractors.
And there’s no sign this is going to change: a 2021 survey found that 70% of freelancers were ‘very satisfied with their job — with only 1% reporting being ‘very dissatisfied’.
Companies that are willing to embrace new ways of working can expect to see great results by using contingent labour to achieve their business objectives.
However, contingent workforce management is a complex and multifaceted undertaking that’s very different from managing a traditional workforce.
What is a contingent workforce?
A contingent workforce is a labour pool made up of people who work for an organisation for a fixed period, often on a project basis. Contingent workers are not employees of the organisation and are not on the company’s payroll.
Instead, they are made up of freelancers, consultants, advisors, and independent contractors, and may work for multiple companies at the same time or move regularly from one company to another.
Are contingent workers employees?
Contingent workers are not employees of the company they provide services to.
They may be freelancers who run their own businesses, work with several clients at a time, and negotiate their own prices based on an hourly, monthly, or project rate.
Alternatively, they might be employees of a staffing agency that invoices the client company for the workers’ time and manages payroll for its workers.
Pros and cons of engaging a contingent workforce
If you’re considering leveraging contingent labour for your organisation, it’s important to be aware of the advantages and disadvantages this comes with.
Benefits of hiring contingent workers
- Increased flexibility: When you work with independent workers, you can stop and start their services as you need them. This allows you to ensure you have the manpower you need during busy periods, without losing money on retaining staff when things are quieter.
- Potential cost savings: Employing permanent workers comes with a lot of additional costs, like employment taxes, paid time off, sick leave, retirement benefits, and even equipment and office space. You can often avoid this by using contingent workers instead.
- Access to top talent: Many freelancers are highly skilled and experienced — and simply not available for full-time work. People brought in from the outside can also bring fresh outlooks that could be valuable to your business.
- Shorter hiring process: According to Jobvite’s 2021 Recruiter Nation Report, it takes somewhere between 14 and 60 days for 70% of companies to make a new hire. The recruitment process is much shorter for temporary employees, so you can get access to the talent you need — fast.
Benefits of hiring contingent workers
- Disconnected workforce: When your workforce is largely made up of contingent workers, they may not feel as connected to your organisation as permanent staff.
- Need for risk mitigation: Care must be taken to ensure that you are engaging contingent workers legally and compliantly — or you could face fines and other legal consequences.
- Effect on company culture: Having a workforce that’s not around for very long can have an effect on your company culture unless you take steps to avoid this.
Contingent workforce trends for 2022
There were an estimated 23.9 million independent workers in the US in 2021, compared to just 12.9 million in 2017.
While this trend has likely been accelerated by the pandemic, the shift towards less traditional forms of work has been underway since well before 2020 — and is likely to continue.
The rise of the side-gig is another interesting trend in the world of contingent work in 2022.
Many people are now offering their services to clients on a freelance basis alongside part-time or full-time employment.
This means that companies have access to a huge pool of additional talent.
And according to a report from Intuit, 80% of large corporations plan to increase their use of flexible talent in the coming years.
This means that companies that don’t (or won’t) consider this option are likely to be left behind.
Companies that do adopt can see big benefits from engaging contingent workers.
84% of companies involved in another survey said that they had experienced cost savings through managed services providers (MSP), and 76% had seen savings with a vendor management system (VMS).
Improvements to technology that allows for speedier and more convenient sourcing, recruiting and onboarding for contingent workers will also be a driving force behind contingent workforce trends in the next few years.
What is contingent workforce management?
Contingent workforce management is the hiring, onboarding and management of non-permanent workers, including freelancers, independent contractors and gig workers.
Managing a contingent workforce is not the same as managing permanent employees.
The management style and processes you adopt depend on the nature of your business relationship with the contingent workers in question.
Managing a contract worker working through a gig platform will be very different from working with an external consultant or advisor, for example.
7 key pillars of contingent workforce management
If you want to leverage contingent talent to combat rising labour costs and achieve your business goals in 2022, it’s important to have some key strategic elements in place.
1. A smooth, compliant and personalised onboarding process
Is your onboarding strategy for new contingent workers engaging, personalised and optimised to promote productivity from day one?
Do your new temp hires know where to go with their questions?
If you haven’t thought about your contingent worker onboarding process, start now.
It could be key to familiarising workers with your operations, building strong professional relationships, and ensuring your workers have everything they need to do their best work.
2. The right engagement structures for each company
When you decide to supplement your permanent workforce with contingent workers, you need to determine which engagement structure will work for your company.
For example, you might take on temporary staff through an agency, or engage a self-employed freelancer who invoices you directly.
Alternatively, you could look into other contingent workforce solutions, like working with a managed service provider (MSP).
3. Effective risk mitigation and ensured compliance
As the global contingent workforce has grown, governments and regulatory bodies are starting to get tougher on regulations that protect both independent workers and the companies that engage them.
Companies that don’t do their due diligence to mitigate risk could face problems related to tax non-compliance, misclassification of employees, immigration, or insurance, for example.
Anyone managing a contingent workforce in 2022 needs to be well-versed in the relevant employment laws and regulations — or outsource this to an external expert.
4. Seamless invoicing and payroll procedures
How consistent and compliant are your processes for contingent worker invoicing and payroll?
Managing pay for independent workers can be complex, especially if you’re working with workers under several different structures.
Before you start to build your contingent workforce, then, you should take some time to consider how you’ll manage pay.
This might include setting up a monthly schedule for the dates you’ll expect contractors to submit invoices, and the dates payments will be made.
If you decide to work with an external vendor like an MSP, they’ll likely already have internal processes they can share with you.
5. Appropriate care and benefits for contingent workers
Historically, care and benefits packages for contingent workers have been limited — if they existed at all.
And since workers typically don’t spend very long with a company, it might not seem like it’s worth investing in benefits.
In reality, though, many companies have long-term, ongoing relationships with contingent workers.
And if you want to retain the best freelancers, contractors and advisors for longer, it’s worth thinking about the perks and benefits you could offer.
Things like corporate discounts, employee assistance, and learning and development opportunities can go a long way.
6. Health and safety for everyone (not just your perm staff)
Almost every company gives considerable thought to how they’ll ensure the occupational safety of their employees — but contingent workers are sometimes forgotten.
For freelancers, contractors, and temporary workers that work on-site, it’s just as important to have properly defined health and safety policies and to do everything you can to maintain a happy and healthy workforce.
A simple step you can take is to include health and safety training as a standard part of the onboarding process for any new independent contractor or freelancer who will work on-site.
7. A positive and productive offboarding experience
A positive and risk-free offboarding process is a vital part of a contingent worker’s lifecycle within your organisation — but it’s a stage that’s often neglected.
It’s important to ensure that you’re not leaving yourself open to risk or missed opportunities when a worker leaves your organisation.
Things to think about include processes for the return of any company assets, and for automatically disabling access to IT systems at the appropriate time.
Effective offboarding also includes the ability to identify and redeploy contingent talent internally, so you don’t lose access to valuable skill sets as soon as a project is over.
Manage your Contingent Workforce with confidence with CXC
Companies around the world are significantly increasing their spend on flexible staffing to combat rising labour costs, supplement internal talent, and create built-in flexibility that gives them an advantage in a rapidly changing market.
Under our contingent workforce management model, we become the HR function for your contingent workforce, ensuring a streamlined approach that will make life easier for both you and your workers.
Do you need help with contingent workforce management? Get in touch to find out how CXC can help you contingent workforce management