Everything you didn’t know about the Contingent Workforce
There was a time once when getting a full-time job was the main goal for workers, however, this decade has seen the average worker hold up to 10 different jobs. Although, today, holding a full-time job is still appealing and preferred by most people, a rapidly increasing number of Millennials and Gen Z are deciding when and where they want to work. They are the generation of the contingent workforce and their view is having a huge impact on the world’s economy as the companies realise there are a number of benefits they can gain from hiring contract workers. This new world of work is creating an agile workforce for the employers and attracts the best talents for the exact timeframes that they are needed.
What does Contingent Workforce mean?
Contingent workforce means hiring workers on an as-and-when-needed basis. These include freelancers, independent contractors, and temporary employees. This workforce comprises of experts who are in demand, millennials who see contingent work as the future of work, skill development and short skilled workers. Whether the company has seasonal demand or it simply needs specific expertise for certain projects, hiring contingent talent will help the company to be more efficient, boost profits and lower the company’s bottom line.
Although there is a misconception that the contingent workforce is entirely made up of low-paid, unskilled workers, to the contrary, companies are also engaging highly skilled professionals, 25% of whom are working, full time, as independent contractors and earning more than $100,000 a year.
The contingent workforce is large and growing.
From the supply side, it’s an understatement to say that the contingent workforce is large and growing. In the last decade, it was predicted that as much as 40 percent of the U.S. workforce would be a part of the contingent labour pool by 2020. Nevertheless, America is on its way to reaching that level. Today, there are 41 million contingent workers who represent about 31% of the U.S. workforce.
According to a survey report, 74 percent of companies plan to contract with more contingent workers, while 28 percent plan to hire a greater number of contingent workers than full-time employees by the end of 2020. Nearly half of the respondents reported that they expect to accelerate their contingent worker hiring rate by 30 percent or more.
What are the advantages of engaging contingent workers?
There are so many advantages to emerging contingent workers. First, there is unprecedented access to expertise, allowing companies to fill skills gaps. It’s easier and less expensive for them to find the exact talent they need and quickly bring the talent on board to get a project completed. Working with contingent workers is even more attractive when you add in the significant administrative cost savings.
Cathleen Nilson, Head of Finance Innovation and On-Demand Talent at Samsung says that traditional staffing models no longer fulfills many of their business needs. One of the most important factors in remaining competitive in the market means being agile and getting the projects and work done in days or weeks; instead of months. Provided with the proven operational excellence and expertise, the contingent workforce is really the future of work.
Additionally, companies could reduce their usual on-costs, as they do not have to pay workers a fixed salary. The company doesn’t have to provide any employee benefits like paid annual leave, sick leave and superannuation, although from the contingent workers’ point of view, these amounts should be incorporated in the hourly or daily rate. Instead, payment to the contingent workers are off the balance sheet entirely and are deductible expenses. Hence, it can become a much more cost-saving option for the companies than hiring an expert for each and every role in the company.
As staffing solutions go, the contingent workforce is the best possible option that gives companies the level of flexibility and agility. Moreover, as a contingent workforce is available anytime on-demand, they are eligible to empower a business quickly and efficiently to staff up or down in order to meet shifts in demand and changing business circumstances.
What are the challenges engaging with contingent workers?
The biggest challenge to engage the contingent workforce is whether the worker can be classified as an employee. If by any chance, the workers are actually deemed employees, then the employer will face fines and penalties as well as having to pay the taxes owing for each person who is now considered as an employee.
To check and avoid risks for viewing your worker as an employee or contractor, make sure you read our previous blog here…
However, one major drawback to using a contingent worker is that the company has less control over its employees. Contingent workers can set their own hours and do things their own way.
Finally, there is the challenge of integrating contingent workers with the company’s full-time workforce. From an HR perspective, it can be difficult fitting the worker into the company’s culture. If they are working remotely, managers have to make sure that the worker is a part of the team.
The contingent workforce presents a range of opportunities for both workers and companies alike. Although it remains to be seen how well the companies adapt to this new way of working, access to on-demand talent and significant cost-savings make engaging contingent workforce more attractive.
If you are looking for a better way to engage in the contingent workforce, please feel free to discuss your ideas, thoughts, trends and challenges with us…