Contract Staffing Growth Results In New Blended Workforce Model

174491219There has been a lot of talk about the growth of contract staffing in the wake of the recession.  The staffing industry was responsible for 763,000 of the jobs created in the first three years of the recovery, more than any other industry in the United States, according to the Bureau of Labor Statistics (BLS).  With a record-breaking 2013, this is not just the normal spike we are used to seeing following a recession.  Instead, contracting has become a long-term business strategy as companies build a new blended workforce model that integrates both direct hires and contractors.

Anatomy of the New Workforce Model
In this model, companies maintain a small core of traditional direct employees supported by a larger outer ring of contractors.  The core is comprised of key personnel who are vital to the stability and growth of the business. With their experience and longevity, turnover among this group tends to be disruptive. While contractors in the outer ring are often responsible for day-to-day tasks and critical projects, turnover among them is not as crippling to the business.  In fact, the beauty of this model is that the outer ring can be easily adjusted to meet business demands. It can quickly be increased during peaks in business and just as easily reduced due to economic or business conditions without the ugly layoffs that typically accompany a reduction in force.

For example, a company that has neglected its computer hardware and/or software while waiting for the economy to improve may suddenly find themselves in need of major upgrades.  Rather than permanently adding to their overhead with direct employees, they can add contractors to complete the upgrades. When the work has been completed, they can simply end the contracts.

We could provide many other examples, but the bottom line is that companies are looking at each open position strategically to figure out if they really need a direct hire. In many cases, the answer is no, and they find the job is better suited to the outer ring of contractors.

PREMIUM CONTENT: Long-term U.S. Staffing Industry Forecast

The Driving Forces
This workforce model is largely a result of the recession. To survive, companies learned to run lean. Contracting provided a way for them to remain lean during the recovery by allowing them to match workforce to workload.

But while the recession and slow recovery may have been the impetus for the new workforce model, that model is not likely to disappear even as the economy improves. The rapidly changing business landscape, with its increased regulations, taxes, audits, insurance requirements, etc., has made workforce flexibility a long-term necessity. As a result, many experts are predicting that contractors will comprise 40-50 percent of the entire American workforce by 2020.

Great News, But . . .
This, of course, is great news for the staffing industry.  Companies will need quality contractors that they can trust with their critical, day-to-day tasks, and they will need them FAST to respond to real-time needs. For this reason, recruiting and staffing firms will become more critical partners to companies.

But within this positive outlook lies a challenge. As the need for contractors increases, so will the competition for the best contract talent.  To win, you will have to ensure you are the firm of choice for contractors.  This goes beyond simply paying well.  You will also need to provide the benefits they expect: a weekly paycheck with the option of direct deposit, Affordable Care Act-compliant healthcare insurance, dental, vision, and life insurance, and 401(k). If you do not already have those benefits, you may want to consider options for acquiring them.  One option is aligning you firm with a contract staffing back-office provider that already has the benefits contractors expect.

The future looks very good for staffing and recruiting firms that can provide quality contractors.  Make sure your firm is in the position to take advantage of all of the opportunities ahead.

MORE: Is your workforce reaping the benefits of mature workers?

Debbie Fledderjohann

Debbie Fledderjohann
Debbie Fledderjohann is president of Top Echelon Contracting Inc., the recruiter’s back-office solution. Find her on LinkedIn.

Debbie Fledderjohann

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One Response to “Contract Staffing Growth Results In New Blended Workforce Model”

  1. […] There has been a lot of talk about the growth of contract staffing in the wake of the recession. The staffing industry was responsible for 763,000 of the jobs created in the first three years of the recovery, more than any other industry in the United States, according to the Bureau of Labor Statistics (BLS).  […]

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