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With a record-setting number of resignations hitting managerial desks over the past year, workers who can quickly and effectively step in to help short-staffed teams and address skills gaps can be lifesavers. For that reason, contingent workers, freelancers, or contractors who are not employees but provide companies with support in a variety of disciplines are growing exponentially around the globe.
Over 62% of organizations report that contingent workers now make up more than 40% of their total workforce, and 73% plan to increase this number in the next year.1 As there is no sign of labor shortages slowing down, employers need to better understand how to best leverage contingent workers’ skills and seamlessly incorporate them into the workforce. Here are four ways to build an agile contingent team.
Beyond the obvious benefit of filling talent shortages, contingent workers can also offer ways to compensate for organizations’ skills gaps, as it is nearly impossible for most companies to have subject matter experts in all areas of their permanent workforce. But strategically planning for contingent workers – not just reacting to conditions – is vital to avoid having too much work and not enough workers or vice versa: too many workers with not enough to do. Yet only 23% of senior leaders perform this advance planning.2
Engaging outside contract workers can be risky, especially when organizations do not have policies in place to guide decision-making. Bringing in talent who may not be fully qualified to work independently can potentially result in costly mistakes. To prevent this, ensure that SoW agreements are implemented so expectations and timelines are agreed upon in advance. Then, make sure to outline an action plan, set feasible goals, and consider the ROI of using contingent workers vs. hiring additional employees.
For many years, companies focused on hiring contingent workers primarily for administrative support and backfilling for leaves of absence. But that has changed significantly in recent years, as more organizations are appointing contract workers to compensate for labor shortages, especially in highly technical roles such as data scientists and web developers.
Particularly, information technology, healthcare, and manufacturing are industries that have seen major growth in leveraging the contingent workforce.3 In general, roles that revolve around short-term projects would be better suited for contract workers than those responsible for ongoing corporate initiatives.4
Dow Chemical, a multinational chemical corporation headquartered in Midland, Michigan, uses contingent workers for massive plant-building projects. Nearly 25% of Dow’s 43,000 employees are contingent workers. “Our business is cyclical, with multiyear cycles of peaks and troughs,” explains Mark Bachman, global director of Dow’s HR Center of Expertise. “We use contingent workers across all staff functions, but primarily in manufacturing, engineering, and office staff.”5
Leveraging a contingent workforce enables employers to react quickly to the changing needs of teams that can be rapidly expanded and quickly dismantled based on ever-changing demands. But some companies that support contingent workers also report challenges from performance management and worker engagement to regulatory compliance.6
In many organizations, the labor engagement process is managed by individual hiring managers, which can blur transparency and lead to higher spending on contingent workers and decreased oversight of projects. When a contingent workforce is managed by a single entity such as a managed service provider, the process becomes more efficient and cost-effective.
Global companies hiring contingent workers in labor markets around the world must understand that regulations and economic conditions vary by country. Using a tool like Total Workforce Index can help businesses better assess the ease of hiring contract workers in various countries by exploring real-time data around workforce availability, cost efficiency, regulations, and productivity. These types of insight help companies align their contingent worker hiring plans with their business strategies.
To ensure that contingent workers contribute their maximum value to companies, organizations must take a holistic approach to every aspect of their experience from onboarding to the performance management process. The employer’s mindset should be that any contingent worker possesses the qualifications to become a valuable full-time employee down the road.
Engaging the right internal and external experts with both global presence and local market know-how can help to streamline the processes that support the identification, onboarding, and management of contingent workers.7 Integrating digital tools and technologies can also offer support on a variety of fronts from data assessment and hiring forecasting to addressing language and cultural barriers that arise when working in multiple markets.
Providing organizations with the leadership coaching support they need to improve communication with a contingent workforce can also help prevent misunderstandings and help establish clearer performance expectations.
To learn more about how to create a successful contingent workforce, read the Future of Work Report II: Who Will Do the Work?.
1. Everest Group Future of Work Report – Who will do the work 2022
2. Everest Group Future of Work Report – Who will do the work 2022
4. Everest Group Future of Work Report – Who will do the work 2022
6. Everest Group Future of Work Report – Who will do the work 2022
7. Everest Group Future of Work Report – Who will do the work 2022