Contingent labor is an important and rapidly growing segment of today’s workforce. In 1983, contract workers accounted for just over 0.5% of all employment. Today’s average mix of contingent workers has grown from 12% in 2009 to 18% in 2015, according to a survey conducted by Staffing Industry Analysts. CareerBuilder’s 2016 Job Forecast reported that 47% of employers plan to hire contract workers in 2016.
What is the explanation behind the shift? Contract labor has become an increasingly popular component of employers’ long-term workforce strategies. It provides employers with a cost-effective, steady workforce, while offering workers flexibility and balance not found in traditional jobs. It’s a win-win!
Managing a Contingent Workforce Isn’t Easy
That said, a contingent workforce also presents its own challenges. Managing a constant influx of contingent workers can create:
- Increased stress. Recruiting, hiring, and onboarding the people you need to maintain and grow your business requires time, effort, and skill; when faced with high-volume hiring, those requirements grow exponentially. Greater levels of complexity call for greater levels of expertise. Even if you have a very capable staff of recruiters and HR pros, the process of hiring a large number of workers can be daunting.
- Inefficient processes. A contingent workforce is often handled by multiple department managers within a company, each possibly using a different staffing vendor. As a result, the organization’s staffing model is riddled with inconsistencies. Some workers may be redundant, hired at higher rates, or not tied to the appropriate cost center.
- Unfilled positions. Seasonal demands, new projects, and new processes can create urgent hiring needs. Organizations can quickly find themselves understaffed which can lead to a number of costly consequences, including lost revenue due to lower production, excess overtime, and low staff morale.
- Worker misclassification. Due to changing laws and technicalities, employers often do not understand the differences between an employee and an independent contractor – and it’s easy for an oversight to slip through the cracks. The federal government has recently increased enforcement of perceived abuse of worker classification laws and, as a result, many companies have been penalized and are paying hundreds to millions of dollars in fines.
Creating a Seamless Contingent Workforce Program
Whether you need seasonal workers or have a long-term project that requires skilled personnel, at some point, you may be asked to recruit, hire and onboard a large number of contingent workers at one time. If your organization lacks the processes, tools, and expertise to effectively and efficiently manage your contingent workforce, it may be time to hire a reliable procurement partner to manage and streamline your contingent labor program.
This partnership may be limited to staffing, but usually includes other efforts to optimize cost, quality, efficiency, and mitigate risk. The relationship can take on many forms and no two programs are alike.
Many employers with high concentrations of contract labor are realizing the benefits of an On-Site Staffing Partner. This staffing model places a dedicated team at the client’s facility to provide hands-on staffing support for one or multiple locations. By working on-site, the team gains an intimate understanding of your operations and workforce needs in order to develop a highly customized staffing strategy.
Oftentimes, the staffing vendor becomes a Managed Service Provider (MSP) for their client. This arrangement is when the outsourced agency manages a client’s temporary and contingent workforce program. The MSP takes on the recruiting process and provides candidates from their own talent pools and, often, from other agencies as well. This partnership can be managed on- or off-site depending in the complexities of the program.
A staffing partnership can also take the form of a Recruiting Processing Outsourcer (RPO). An RPO is an external service provider that assumes all or part of its recruitment processes for a company, including resume screening, job board searching, and job posting.
Some businesses find that a Vendor Management System (VMS) is sufficient. A VMS is a software platform that businesses use to automate and acquire temporary and permanent placement staffing services. While it streamlines and organizes processes, those using a VMS may still require assistance from an outside vendor.
The benefits of a contingent workforce are endless, but if mismanaged, the challenges can overshadow the advantages. Whether you choose to outsource your program to an MSP or manage with internal resources, realigning your contingent workforce program with a qualified partner can streamline your hiring processes, improve productivity, enhance compliance – and, ultimately, positively impact your bottom line.