Managing a Contingent Workforce

Freelancers, independent professionals, temporary staff, contactors, and consultants  in one form or another we’ve all encountered contingent workers; a portion of the workforce that is growing. A rising hiring trend, contingent staffing offers a number of benefits for companies including: flexibility in type and amount of labor resources as needed, cost savings in benefits and taxes, immediate access to expertise not present internally, and a decrease in spend across long term compensation.

While, these types of non-employees may seem like the answer to many of the challenges your organization may face, the contingent workforce is not without their obstacles, such as a lack of loyalty to employer, disruption to company culture, and a high turnover rate. However, the key to driving the most value out of your talent investment is effective management. Contingent Workforce Management (CWM) is the strategic approach to managing an organization’s contingent workforce in a way that it reduces the company’s cost in the management of contingent employees and mitigates the company’s risk in employing them.

As the shift in the workforce continues to be equal parts full time employees and non-employees, companies must first work to understand the different types of contingent workforce classifications and how managing them effectively can aid in business operations and drive cost savings and optimization. There are 3 different classification of a contingent workforce, traditional, complex and Independent Contractor (IC).

Traditional: The most common understanding of a contingent worker is the traditional category. The traditional contingent worker is sourced from a staffing agency and typically supports low to mid-level job openings for short time periods. On average, these positions tend to be quick to fill and last only for a few months.

Complex: The complex contingent worker will perform more project based or statement of work (SOW) roles. These workers are placed at a company by third party agencies to complete very specific projects with clear milestones and deliverables. Additionally, expenses may be incurred which will need proper management.

Independent Contractors: IC’s tend to have more specific, high level skill sets, which the company does not have staffed internally. The IC tends to have their own company and are their own employee. This can lead to more risk to a company compared to the other worker classifications.

What does all this mean and where do you go from here? It means that the contingent workforce has changed and the population has increased and with that the total workforce has been completely altered. Internal HR and Procurement teams have to manage multiple agencies, placing various types of workers into every department within their organization. A task that can seem both daunting and unmanageable. Fortunately, as the landscape has changed so have the resources available to assist with this change.

The idea of total talent management has been introduced as well as consulting practices with a Managed Service Provider (MSP) and a technology/software solution utilizing a Vendor Management System (VMS). Through the implementation of a MSP/VMS, companies are able to understand percentages of workers that are achieving their goals, who the workers are and where they are working within the traditional model. In the complex role, the ability to track when milestones and deliverables are met and, in turn, paid appropriately. Thereby, allowing for projects to run more smoothly and cause less change order management from the hiring managers.

For Independent Contractors using a MSP/VMS model will assist with regulatory state and federal compliance by ensuring correct classifications of the workers. In doing so, reducing the risk of co-employment and audits in the future. Ultimately, by addressing the contingent workforce, no matter which type, will lead to better management of resources and result in cost savings for the company. All this can be accomplished without compromising the quality or delivery of the service that is needed.

About the Author:  Tracey Horrocks is a Senior Project Analyst at Source One Management Services, LLC with years of experience in procurement and strategic sourcing in an array of categories including Professional Services, Marketing, and Facilities Maintenance. In her role, Tracey serves as a pundit for developing RFPs and executing strategic sourcing strategies. Her detailed approach to supplier identification and vendor management helps clients achieve sustainable costs savings and operating efficiency.