You need an expert with specific skills for your next project. No one on your team fits the bill, and it’s not the right moment to hire a new employee. The solution to your staffing dilemma might be to recruit a contingent worker.
Contingent workers are a great addition to businesses across the globe. They can provide you with the help you need to get a project done without requiring the full overhead costs of regular employees.
What is contingent work and is it right for your business? Read on for the basics.
What is a Contingent Worker?
Contingent workers work for a company but are not considered employees. They may provide their services remotely or at your business location.
Hiring contingent workers is an alternative work arrangement. It gives your business a higher level of flexibility to expand your labor force on-demand. With outsourcing, you can use the skills of different specialists for short-term work without employing them full-time.
A contingent workforce can consist of freelancers, contractors, or consultants, among others. Usually, they are classified differently from temporary workers and part-time employees.
Contingent employees are typically highly qualified and have specific valuable skill sets. Accountants, web designers, and electrical engineers, for example, are often contingent workers.
In the last Contingent and Alternative Employment Arrangements study of the United States Bureau of Labor Statistics from 2017, contingent workers represented 3.9% of the workforce in the country, or 5.9 million Americans.
You can hire a contingent worker for a project contract or on a temporary basis. When the job is completed or the contract ends, the employment relationship can conclude, or be extended for another project or period of time. You are not required to pay contingent workers continuously or provide them with a steady stream of work.
The Advantages and Disadvantages of a Contingent Workforce
Adding a new team member to your business is a serious commitment. In many cases, hiring a contingent worker can be a great way to meet your staffing needs.
For one, the costs and responsibilities are much lower when you hire contingent workers. You don’t need to handle and pay different types of employment taxes. Contingent workers are not entitled to receive employee benefits, overtime payment, health insurance, paid time off, sick days, or retirement plans. This leads to direct savings for your company.
For example, independent contractors are not on your payroll. You don’t have to withhold or pay income, Social Security, and Medicare taxes, as you would for regular staff. You don’t need to cover paid vacation days or any other benefits.
Hiring a contingent workforce also adds flexibility to your company and helps you respond to the needs of specific contracts or jobs. Let’s say that you need somebody with unique skills for a temporary project. Instead of adding a permanent team member, you can use the services of a contingent worker. When the job is done, you don’t have to continue paying a salary for skills that your business doesn’t need anymore.
The same goes for periods of increased workload. You can hire a contingent worker temporarily to cover the influx of work. Once the period is over, your business can go back to using its typical employee base.
Another advantage of hiring contingent workers is that you get access to a larger pool of talent. Many highly qualified specialists prefer to offer their services as independent contractors or consultants instead of working full-time for a single company. Even if you can’t recruit the top expert you need, you may be able to use their services on a project basis.
Continent workers can be а great asset for your business. However it’s a good idea to watch out for some common drawbacks.
An important point to keep in mind is that you don’t have the same level of control over contingent workers as with permanent employees. This applies to both their working hours and the management of their work.
Contingent workers are not required to be available at all times of the workday. Instead, they are responsible for completing a set of tasks within a fixed timeframe. It’s up to them how they will handle the work process. You can only demand a certain level of quality for the end product, but you typically can’t supervise the process of executing the work.
Another potential issue with having a contingent workforce is that there are compliance risks. You have to be careful that the status of each worker is in line with the Department of Labor and relevant employment laws. A contingent worker’s classification should match their actual work responsibilities for your business. If you classify someone as an independent contractor, but in reality they work as a regular employee, you may face serious penalties.
Hiring contingent workers can lead to security risks as well. The recruiting process is typically not as stringent, leaving out some screenings that permanent employees have to go through. This may be problematic, as contingent workers may have access to sensitive company data.
Recruiting Contingent Workers
If you’ve decided to add contingent workers to your team, keep in mind that your recruitment process is likely to be different than when hiring full-time staff.
You can use specialized platforms for contractors and freelancers, as contingent workers would typically use them for finding new gigs. Some of the most popular ones include Upwork, Dice, and 99designs. You can also post your job listings on social media and online job boards.
Referrals from team members and stakeholders are always a good idea, as you get first-hand information about the candidate.
It’s important to inform the potential members of your contingent workforce about all the details of the job during their first interview. Make sure they know the length of the contract, the expectations, and the culture of the team they’ll be a part of.
Don’t forget to ask candidates about their professional plans as well. If you’re happy with the services of a contingent worker, it’s good to know whether you can count on them in the future as well.
The Top Tips for Making the Best of Your Contingent Workforce
Having a contingent workforce doesn’t have to be complicated. With these straightforward tips, you can set the ground for successful collaboration.
Create a Plan For Integrating Contingent Workers
It’s a good idea to set up a plan for how contingent workers will work with the rest of your staff. In some cases, they will need very little interaction with your in-house employees, but in others, proper collaboration may be necessary.
Starting with a sound onboarding process is a smart move. That way you can give contingent workers an idea of how your company works and highlight any rules and regulations they need to comply with. It’s also a way to make them feel welcomed by the team—even if they will be a part of it for a short time. This approach can boost contingent workers’ feeling of belonging at your business, which can help with morale and engagement.
At the end of their work period, it’s best to have an offboarding as well. This may include a wrap-up session, providing deliverables, and the return of any materials and gear.
Set Up a Contingent Workforce Policy
Establishing a contingent workforce policy for your company is an important step before you launch the working relationship. It’s a basic document that describes the working arrangements with non-contractual staff.
In the policy, you can detail the rules that you would like your contingent workforce to follow. The expectations you have about work ethics and processes can also go into that document. By having all of this in writing, you can avoid unpleasant conflicts around complying with the policies later on.
Optimize Your Processes to Accommodate Outsourced Work
To really benefit from adding contingent workers to your team, it’s worth making sure that your company is prepared to use their help. This requires taking a close look at your existing processes. Some may need a revamp, while others may need restructuring to fit the contribution of external specialists.
Even though you typically can’t supervise the day-to-day work of external workers, management is still necessary for your contingent workforce. Make sure that there are specific people on your team who are in charge of managing outsourced projects. They should communicate frequently with contingent workers, so that important milestones are reached and celebrated.
Adapt Your Technology
While contingent workers may work on your premises, very often they provide their services remotely. The technology that your company uses should not be an obstacle for including them in projects. This is ever more relevant today due to the COVID-19 pandemic, which has pushed remote work to the forefront.
Managing Your Contingent Workers
Even though contingent workers are not on your payroll, you still have to manage the working process with them. Hourly can help with this, and with many other critical time tracking, payroll, and workers’ comp tasks for your contingent and full-time workforce.
Ready to try it out? Just download our payroll app on your mobile device.