Contingent workforce management refers to the strategies and practices used to manage temporary or contract workers who are hired by a company on a contingent basis. Contingent workers may be needed for a variety of reasons that include:
- completing a special project
- fulfilling a short-term staffing need
- supporting a seasonal influx of work
Effective contingent management involves a variety of activities including:
- contract negotiation
- onboarding and training
- performance management
A contingent workforce management program supports both workers and the employer. It includes legal and regulatory compliance responsibilities as well as financial management.
What Is a Contingent Workforce?
The contingent workforce is comprised of workers who are not permanent employees of a company or organization. These employees may be referred to as:
- independent contractors
- temporary workers
- gig workers
Contingent workers may have a specialized skillset an employer needs for a specific short-term project. They could also be used to supplement the existing workforce, think retail help during the busy holiday season.
A contingent workforce program must be in place to manage these types of workers. Managers who want to effectively manage contingent workers must learn the differences between managing their permanent full-time employees and contingent workforce.
How is the Contingent Workforce Different?
There are many differences between continent workers and traditional full-time employees. Some of these differences include:
- Benefits: Contingent workers typically don’t have the same benefits as permanent employees. They are often offered a higher wage to compensate for the lack of full benefits.
- Job Security: Since contingent employees are not permanent employees, their employment is not guaranteed. Permanent employees typically stay at their place of employment until they decide to leave.
- Work Schedule: A contingent worker might have more freedom with their schedule than a permanent worker. They may also be able to work from home or at an alternative location depending on need.
- Company Loyalty: Permanent employees are typically local to the company they are working for. This isn’t necessarily the case with contingent workers since their work is usually focused on a short-term effort.
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Why is a Contingent Workforce Beneficial to a Company?
There are many reasons a company may consider hiring contingent workers. Some of these include:
- Cost savings: Many companies find that utilizing a contingent workforce is more cost-effective than hiring permanent employees. Employers save on costs associated with benefits. Hiring workers for short-term special projects allows them to meet business objectives.
- Flexibility: Employers who hire contingent workers can quickly adapt to changing business needs. Hiring workers for short-term or project-based work allows businesses to adjust their workforce as needed without company layoffs or cuts to permanent staff.
- Access to specialized skillsets: Companies who utilize a contingent workforce can get access to workers with specialized skills that they may not need on an ongoing basis. Using these workers only when needed helps companies stay innovative without keeping these individuals on their payroll.
- Reduced Risk: Layoffs and terminations can be costly. Using a contingent workforce can reduce some of the financial risks associated with permanent employees. Having an effective contingent workforce program in place can also reduce the risks associated with contingent workers…it’s a win-win.
What are Some Contingent Workforce Management Strategies?
Employers should have an effective contingent workforce management plan in place to handle the nuanced nature of this category of employees. Some effective strategies include:
- Workforce planning: With a clear understanding of current and future needs, businesses can identify skill gaps and plan accordingly.
- Recruitment and onboarding: Companies should have a plan in place for how to recruit and onboard contingent workers. Some companies use a vendor management system (VMS) or contingent workforce management software to help facilitate the process.
- Engagement and retention: This looks different for temporary help, but contingent workers should be given the opportunity for career growth and receive recognition for their work.
The Benefits of a Total Workforce Management Strategy
Companies recognize the value of contingent workers. While there are differences between permanent employees and the contingent workforce, businesses strive to break down the barriers between the different types of employees to meet business objectives. Companies use an approach called total workforce management (TWM) strategy to manage their entire workforce. This holistic approach to management optimizes the use of all types of workers. It recognizes the benefits while striving to reduce risks commonly associated with contingent labor management.
Everyone who works in a contingent work environment must ensure they have met with a manager who will help them ensure their experience is wonderful. The managers must study the management of contingent workers, and they will learn how to serve someone who does not work for the company on a full-time basis.