Advantages of Contingent Workers
Businesses of all shapes and sizes are forever looking for a competitive advantage. They all want to find those things that give them a step up on their rivals. In recent years, many firms have started to look toward how they build their workforce to find an edge.
Technology and evolving values have seen contingent workers form a more substantial part of a business’s plans. Evolution in areas such as unified communications as a service makes remote work more viable. Higher value getting placed on work-life balance has also played a role. It’s made less traditional working relationships more popular.
Data from 2018 revealed that there were close to 60 million freelance workers in the USA. It also showed over one million in the UK. Those figures are likely to have risen significantly since then. Freelancers, too, are only one part of the contingent workforce. A Deloitte survey shows that firms expect their use of all types of contingent workers to rise in 2020.
Embracing the contingent workforce could bring real benefits to your business. We’re going to explain the primary advantages that using contingent workers can deliver. Before we get there, though, let’s make sure that we all know what the phrase ‘contingent workers’ truly means.
Who Are Contingent Workers?
Contingent workers are people who provide work for a company on a non-permanent basis. The phrase sometimes gets used as an alternative to either ‘freelancer’ or ‘contractor.’ That’s not entirely an accurate enough usage.
Both freelancers and contractors are contingent workers. They’re not the only type of professionals who fall within the category, however. The following are all people who can come under the umbrella of being contingent workers:
- Independent freelancers
- Contractors (both individuals and those provided by companies)
- Agency workers
- Interns (not always)
What the above have in common is that they only work for a particular company on a temporary basis. They’re relied upon by a firm under certain circumstances or for certain projects. That’s where the ‘contingent’ part of the name comes from.
As such, contingent workers are not employees of a company for which they provide work. Their relationship with those companies is different from the traditional employer-employee relationship. The difference helps to explain why the contingent workforce is growing.
Why is the Contingent Workforce Growing?
Both the modern workforce and workplace are changing. The new generation of workers prizes flexibility and freedom over stability and high wages. They are more open to less traditional ways of working. Those include options such as telecommuting or interacting remotely. These types of work fit better with modern lifestyles.
The growth in contingent workers isn’t all down to employee preference. Technology has also played a vital role. There are now tech solutions that make remote work and freelancing more viable. Take a cloud PBX system, for instance. With a simple tool like that, workers can communicate as if in the same building, even if they’re not in the same country.
A desire for less traditional forms of work and tech to facilitate them is a heady combination. There’s one final factor, too, that explains why contingent workers are growing in number. That’s that contingent workers deliver a broad range of benefits to the firms that use them.
Benefits of Using Contingent Workers
We’ve touched on the reasons why workers may choose a less traditional relationship with firms. As a contingent worker, they have more freedom and control over their own working life. There are also advantages that contingent workers offer to companies that use them. The following are the most notable.
Access to Expertise & Filling Skills Gaps
Contingent workers are often highly talented individuals with a specific skill set. Contracting those kinds of pros is the ideal way to fill a skills gap within an organization. Firms – especially SMEs – often struggle to cover all bases. It’s hard to have expertise in all areas, within any permanent workforce.
Looking to contractors is a way to cover any shortcomings in your workforce’s skills. Contractors can give the firm specialized expertise that you may only need on a project by project basis. Opting for a contingent worker for a particular task lets you work with an experienced pro. It’s less likely you’d be able to hire a worker at a similar skill level on a full-time basis.
The modern business environment is fluid. Small companies need to be agile and able to respond to changing circumstances. The temporary, short-term nature of contingent work fits ideally with that requirement. Using contingent staff doesn’t tie a firm into a long-term, inflexible agreement.
The contingent workforce is a resource for a business to use when needed. If there’s a sudden influx of work, a firm can use contingent workers to pick up the slack. If a specialized project arises, they can find a contractor with the right expertise. Then, when a period of cooperation ends, so do the business’s responsibilities to the freelancer.
Using contingent workers makes a lot of financial sense for many smaller companies. Contracting a non-permanent worker for a project means you only pay them for as long as you need them. You agree on a price for the work you need, pay it, and get the input you need from the worker.
The financial upside doesn’t end there. Using freelancers or contractors helps firms avoid other expenses. There are many expenses other than wages associated with full-time staff. They include benefits like insurance, paid leave, or pension contributions. A business doesn’t have to provide these to contingent workers.
A company doesn’t always need a new employee. Often, all that’s required are some new perspectives. A fast and cost-effective way to get that kind of fresh outlook is by bringing someone in from outside. A consultant or advisor brought on board temporarily is still a contingent worker.
Sometimes in business, a firm’s key decision-makers can struggle to see the wood for the trees. Being too close to day-to-day operations makes it tough to find new paths for development. A pro with industry experience but no close ties to the company may see things more clearly. That kind of fresh perspective could make all the difference to a firm’s strategic direction.
Easier, Swifter Hiring
Hiring for your business is often a complicated process to solve a simple problem. You need to add talent and skills to your organization so that you can succeed. That’s simple enough, but in practice doing so takes lots of time and effort. You must perform a talent search, interview process, and then onboard your new hire.
There’s far less red tape if you choose to contract a contingent worker. Experienced contractors or freelancers are often available at short notice. You can find them, negotiate a project, and then set them to work. That all takes a fraction of the time to find and hire the right permanent employee. There’s also considerably less expense involved than when successfully hiring a full-time worker.
Freedom to Trial New Approaches
A final key benefit of contingent workers is that their use allows firms to be more adventurous. For any company, diversification is a thorny issue. Finding new ways to improve or make money can be transformative. Making the wrong moves, though, might have catastrophic effects.
If a company takes on temporary staff, they can more easily trial new approaches. That firm can have all the staffing needed for a new venture, without getting tied to them for the long-term. If things work out, the business can then make things more permanent. If they don’t, it’s easier to walk away.
Trialing these new approaches can help companies meet many essential challenges. Those include meeting new market demands and improving customer experience.
Challenges of a Contingent Workforce
It’s rare for any business decision to be all upside. Choosing to use contingent workers is no exception. Using non-permanent staff can create some challenges. The following are five that you need to overcome if you go down the contingent work route. The first step to overcoming them is fully understanding what they are.
Control & Oversight
Contingent workers aren’t your employees. Always keep that in mind. You can – and should – give them a clear brief as to what you expect from them. You can also keep track of their process and check-in regularly. Even given that, though, you don’t have as much control or oversight as you would have over a permanent employee.
There’s a simple way to visualize the difference. With a contingent worker, you can dictate what they do but not how they do it. You don’t have control over the hours they work or when you can speak to them. You also don’t have the power to define the processes they use to complete a project. This won’t necessarily impact the quality of work provided. Lacking that control, though, can prove a challenge for some managers and owners.
Screening & Trust
One of the advantages of contingent workers is the speed at which you can get them on board. Starting a project with a contractor often takes far less time than hiring a full-time worker. That can, however, distract a firm from correctly screening the people with whom they work. Overlooking the screening process can cause significant problems.
Even though they’re not permanent employees, you put a lot of trust in contingent workers. You’ll often give them access to your premises or systems. You may also allow them to see and use sensitive information. If you don’t vet contractors as you would other workers, they could cause real damage. It only takes one person to improperly handle customer data, for instance, to dent your reputation forever.
In general, a firm has fewer responsibilities to a contingent worker than to an employee. You’re not typically expected to offer employee benefits. That means you’re likely not liable for providing insurance, paid leave, or similar. Things aren’t always black and white, though.
It can be tricky to define whether an individual is an employee or not. You need to get familiar with all the relevant legislation in your area. It can cause legal problems if you treat an employee as if they’re a contingent worker. You may get hit with fines and penalties, for instance, by your region’s relevant tax authorities. That’s if you improperly declare an employee as an independent contractor.
Inconsistent Access to Talent
Taking on contingent workers is a way to cover skills gaps. It’s one of the primary advantages of project-by-project hiring. There is a related drawback, however. On occasion, you may find yourself unable to harness the right skills at the right time.
Take, for instance, if your firm faces a particular challenge at short notice. If you rely on contingent workers, you’re not guaranteed to be able to find and contract the right pro in time. You wouldn’t face that issue if you’d hired a full-time employee who has the relevant skills.
Team Building & Culture
This is a drawback to using contingent workers on a significant scale. It’s less relevant if you only contract outside pros now and again. Relying a lot on non-permanent staff makes it tough to build company culture or cohesion. You’ll get no sense of team or camaraderie from your workers. That’s understandable as there’s no genuine, permanent connection to your company.
Weak company culture and no real team morale can hurt any company. Engaged employees who bond with their colleagues are more productive. Weigh this drawback of contingent workers against the benefits their use can bring.
Tips for Managing Contingent Workers
That there are challenges when using contingent workers, doesn’t mean you shouldn’t do so. By being aware of the potential drawbacks, you can best place your firm to avoid them. That way, you can enjoy the many benefits of non-permanent staff. We’ve put together a few very brief tips for managing a contingent workforce.
Before contracting an external worker, you ought to do everything you can to know who you’re working with. Due diligence in researching potential contractors is common sense. An excellent place to start is by checking out testimonials. You can also try to speak to firms who’ve worked with the individual before. If you’re going to place a worker in a position of trust, too, you may want to consider a background check.
Systemized Talent Sourcing
If you’re going to lean on contingent workers, you need to find the best people for each project. Having a systemized approach to sourcing talent is a sensible first step. Try to set up a defined process for finding and contracting contingent workers. You could potentially assign that responsibility to a team member. It may also mean implementing specialized software to facilitate talent searches.
Engagement & Integration
It’s tougher to generate camaraderie and engagement amongst a non-permanent workforce. That’s particularly true if your contingent staff also work remotely. You will see a benefit, though, if you do try to better integrate your non-permanent staff. Try to foster links between contingent and permanent staff. Above all else, ensure you don’t create negative perceptions of contractors. Don’t belittle their importance to your full-time team.
You must always adhere to laws and legislation in your territory. Regulation can get a little complex when it comes to contingent workers. If you haven’t used such staff before, get to grips with the relevant legislation, as a first step. Then, ensure that you or someone in your firm keeps up with all changes as they occur.
Contingent Workers – A Vital Element of the Modern Workforce
The modern world is a far cry from that of ten, let alone twenty years ago. How people interact and communicate has evolved apace. Tech has reshaped everyday life in ways that you couldn’t have imagined possible. Personal views on life and work have also changed. All that means that the modern workforce is a very different animal.
Traditional employee-employer relationships are getting more consistently challenged. A higher proportion of the workforce prefers to take the role of contingent workers. Working that way better fits their personal lives and gives them greater flexibility.
Using contingent workers is also beneficial to many companies. Contractors or freelancers can prove more cost-efficient than full-time hires. It’s often easier, too, to get the help of more highly skilled pros, as and when needed.
Contingent workers aren’t without their drawbacks. Firms must be careful to contract and use non-permanent staff correctly. Doing so, though, may increasingly become the best way to get the most out of the modern workforce.