A Complete Guide to Contingent Employment, Benefits, and Contingent Workforce Management
Organizations are trying to keep up with the changing corporate dynamics worldwide by adopting methods to maximize efficiency and productivity. Contingent employment is one of the techniques adopted by enterprises globally to cut down labor costs and increase their profits. The percent of contingent workforce services has increased staggeringly globally in the last few years. This blog dives deep into the contingent workforce, its benefits, and what does contingent workforce management entails.
What is Contingent Employment?
Contingent employment indicates that a worker’s position with a company is temporary. The individual is not hired permanently and is technically not an employee of the business. Typically, a contingent workforce strategy is undertaken to complete a specific project.
Contingent workforce services are rendered by freelancers, independent contractors, on-call workers, contract employees, people in alternate work arrangements, and other types of individuals hired on a per-project basis.
Most contingent workers will have specialized skills in areas such as digital technology, accounting, and so on. A contingent worker can eventually become a permanent hire if the client is happy with his performance and he needs to hire a full-time contractual employee.
Benefits of a Contingent Workforce Strategy
With a severe shortage of a skilled workforce, organizations today depend on flexible, agile, and on-demand workforce if they need access to the best talent pool that can aid rapid scalability. Given below are the main reasons why organizations might opt for a robust contingent workforce strategy:
1. Acquire Top Talent
In the current market, organizations are finding talent with specialized skills and critical expertise. Contingent employment helps companies to bridge gaps in the workforce and acquire the top talent needed to attain organizational goals. Businesses can leverage the gig economy, hire external workers, and ensure that they have constant access to workers with exclusive skills to complete projects on a need basis. Contingent offers the additional talent pool needed to augment the internal workforce.
2. Increased Flexibility/ No commitment
If you have ever experienced the inability to respond to the rapidly fluctuating marketing conditions and scale its operations, then contingent employment is the answer. A solid contingent workforce strategy will give your organization the flexibility it needs to adapt to market conditions without the delays associated with full-time employment. Employing contingent workers can provide the companies the flexibility to upskill the existing workforce, handle seasonal peaks in business activity and attract a wide array of job-seekers.
Contractual employees allow you to test new waters on an idea before committing full-time employees to do it. Contingent workers help companies test new talent without any commitment. If he is not a good fit, there is no need to go through the tedious process of termination.
3. Quicker Hiring
A vital aspect of the contingent workforce strategy is the quick hiring process without red tape and the easy availability of a talent pool. Contingent employees can be hired if needed during peak business seasons to enhance the workforce with the essential skills and expertise. Experienced contractual employees are often available at a short notice and can provide immediate solutions to persistent issues. The management of payroll is also relatively easy for contingent hires as there is no drag of performance management that can take up the substantial time of managers.
4. Fresh Perspective
New faces bring in novel ideas to the workspace which is a benefit you can gain from hiring temporary workers. The organization’s static workforce can sometimes get stuck in a rut due to a lack of creativity and out-of-the-box thinking. An external workforce can give a completely new dimension to solve a problem or business operation. Innovative ideas of a skilled and motivated employee can propel the business forward in a new positive direction.
5. Cost-Effective Hiring
The costs associated with hiring a permanent employee are absent in contingent hiring. Employers do not have to pay medical benefits, sick pay, or vacation allowance. There are little or no costs for onboarding, training, and professional development when it comes to contingent employees as they often have the skill and experience to work autonomously. There are no tax obligations, health insurance, or retirement plans to be offered to contingent employees.
What is Contingent Workforce Management?
Contingent workforce management comprises tasks involved in handling the contingent workers. Broadly, there are two approaches – inclusive and exclusive management. The former includes the contingent employees in the regular workforce and follows regular HR practices, while the latter treats them as a separate group of employees, bypassing formal HR processes. Some organizations also follow a combined approach balancing elements of both.
Some of the best practices for contingent workforce management are:
When the contingent workforce is not a part of the traditional HR process, your organization may miss out on the ways to improve their performance and speed of delivery. Companies that follow an inclusive approach include contingent employees in their HR cycle. The employees and the organizations benefit from the optimized HR processes for onboarding, managing, performance enhancement, and offboarding.
Better Employee Experience
Another component of the inclusive approach to contingent hiring to sustaining a superior employee experience for everyone, irrespective of their contract type. Workspace, technology, and culture must be optimized for both permanent employees and the contingent workforce.
Organizations must measure and manage the performance of contingent employees in line with the company’s performance management process. This helps to gain valuable data and insights showing their contribution to the organization. This can enhance the performance of full-time as well as contingent employees. By capturing contingent workforce data through your performance management process, you can make more effective decisions about hiring temporary employees on a permanent basis.
Given the current global workforce scenario, it is safe to stay that contingent workforce services are here to stay, and organizations must leverage its benefits. Companies will get an opportunity to tap the cream of talent in the industry, save time, eliminate stress, and save costs in the long run.