Many medium to large companies rely on a contingent workforce (an on-demand labour pool) to bolster their ability to quickly adapt to market conditions. Approximately 21% of Canada’s labour force is composed of contingent workers (temporary or fixed-term contract employees). To handle this growing trend, many businesses have adopted contingent workforce management; a strategic approach to the governance of contingent workers.
What is a contingent workforce?
A contingent workforce (also referred to as a gig workforce) is a labor pool composed of people who are hired on an on-demand basis. This workforce consists of:
- Freelancers
- Independent contractors
- Consultants
- Online platform workers
- Contract firm workers
- On-call workers
- Temporary workers
Contingent workforce laborers often have a niche skill or a high level of expertise in a particular area. They’re employed on a short-term, long term or project basis, are hired directly or through a recruitment agency, and may work on-site or remotely.
Contingent workers usually receive few or no benefits and lower wages than full-time workers. They provide the skills/experience required to execute a project efficiently. As they’re not staff members, there is no employer responsibility to provide continuous work. Companies rely on a contingent workforce to aid management flexibility (hire when necessary and terminate when the need is met).
Businesses need to be aware of regulations on contingent workers before hiring them. Contingent workers make up approximately 21% of Canada’s labor force. More Canadian men (55%) than women (43%) engage in this type of employment and the majority of this workforce is composed of younger people.
Why hire a contingent workforce?
Hiring a contingent workforce reduces staffing issues, aids in covering short and/or long-term absences, provides a specific skill set for a short time, reduces payroll/administrative costs, covers specific/short-term needs, allows rapid scaling of resources, aids the ability to meet seasonal demand and improves access to top talent.
Contingent workforce management definition:
Contingent workforce management (CWM) is the process of managing contingent workers. It involves hiring, worker assignment, provision of equipment, allowance for system access, development of policies/guidelines, enforcement of policies/guidelines, training, compliance programs and workforce management software. Contingency workers offer unique knowledge and skills that are valuable to companies but bring an increased risk of exposure to tax problems, misclassification and difficulty with labour laws. An efficient contingent workforce management (CWM) program is critical.
What does contingent workforce management include?
Contingent workforce management often includes the following:
- Third-Party Payroll services: An outside organization provides a payroll program to meet the complex requirements and diverse needs of contingent workers, creating contingent workforce management solutions for non-core employees.
- P.E.O./A.S.O. Services: Strategic workforce management is outsourced for HR and procurement functions.
- Strategic Consulting: An outside company offers expertise to help with program assessment and assist with decision-making.
- Contractor Compliance: Providing proper classification of workers and co-employment risk management.
Contingent workforce management solutions often involve the services of an outside company such as a recruitment agency.
What are the benefits of effective contingent workforce management solutions?
Effective contingent workforce management solutions result in:
- Reduced risk: CWM reduces the risk of misclassifying workers, decreases the tendency of mismanagement of contingent workers and assists compliance with relevant worker and tax regulations.
- Cost savings: Effective contingent workforce management ensures competitive bidding by suppliers. reduces human resources overhead, lowers payroll management costs, increases direct sourcing, enables payment for talent only when required, accelerates project progress, reduces employee benefit payments and allows a company to focus their resources on key projects and business functions.
- Greater efficiency: Efficient contingent workforce solutions provide a company with expert workers who have the specific skills necessary for a project, accelerating progress.
- Workforce insights: A good CWM enables an understanding of a company’s workforce, providing insights that increase efficiency.
- Increased quality of talent: The specialized skills of contingent workers allows for the delivery of superior output.
- Flexibility: A well-developed CWM allows a contingent workforce to be hired and let go with ease, enabling a company to scale labour up or down when needed.
- Enhanced vision: New workers bring fresh ideas, new experience, knowledge and expertise to a business problem/project.
It’s beneficial for a company with a contingent workforce to adopt effective contingent workforce management solutions.
How to assess contingent workforce management needs?
The contingent workforce management required by your company is determined by a number of factors:
- Size: Large businesses have complicated needs while smaller companies often have simple requirements.
- Number of contingent workers: Fewer contingent workers results in less complex management needs than those necessary for a large contingent workforce.
- Length of employment: Long contingent worker assignments can cause confusion regarding classification (temporary or permanent). The longer the assignment the greater the need for effective contingent workforce management.
Each company’s contingent workforce management needs are unique and require distinct solutions.
Effective contingent workforce management is critical to a company’s success, ensuring flexibility to adapt to market needs, increasing the quality of hires, promoting efficiency, reducing risk and saving money. With an increasing number of people desiring flexible employment, an effective CWM program is no longer optional. It’s also essential to help contingent workers feel that they belong, keeping them motivated and ensuring increased productivity. If your HR team is already overtaxed, consider the services of a recruitment agency. They have the knowledge, skill and talent pool to provide the contingent workforce you require and assist in its management.
Which Age Groups Make Up the Contingent Workforce?
Younger generations are often drawn to joining the contingent workforce due to their distinct perspective on work. While previous generations may prioritize work above all else, Generation Z and certain millennials prioritize achieving a work-life balance.
This change in mindset has prompted the workforce to seek out flexible work arrangements and has resulted in more individuals opting for freelance or contract-based careers, granting them greater autonomy.
Incorporating Technology Into the HR System to Effectively Manage the Contingent Workforce
It’s crucial that the technology and tools utilized for managing your contingent workforce seamlessly integrate with your core HR system. This integration enables your team to deliver a consistent and positive experience for contingent workers. As the contingent workforce expands, organizations must devise innovative methods to engage and attract such workers, potentially offering additional perks alongside bonuses.
However, providing comprehensive support remains essential. With the ongoing talent shortage, organizations must prioritize enhancing both the contingent worker and employee experiences to remain truly competitive in the market.
Challenges In Managing a Contingent Workforce
Bringing contingent workers into your company can present several challenges that need to be addressed:
- Managing a diverse workforce. Selecting contingent workers comes with its drawbacks. While you can outline their tasks, you may not have control over their methods, potentially leading to additional costs due to unregulated work hours. Moreover, juggling permanent and non-permanent staff can be complex. Seek contingent workers with positive feedback regarding their reliability and adherence to work schedules.
- Legal compliance. All employees need to comply with relevant laws to maintain order within the company. Failure to do so can result in severe legal consequences, tarnishing the company’s reputation. Improper classification of employees as contingent workers can lead to lawsuits and penalties.
- Difficulty in performance evaluation. Selecting contingent workers loses its advantage if their performance cannot be effectively assessed. Simply having a skilled workforce for a project doesn’t absolve the employer of responsibility. Regular tracking and evaluation of contingent workforce performance are crucial. Placing workers in suitable roles is essential to maximize productivity; otherwise, the business may incur costs for subpar work.
- Integration between contingent workers and employees. Smooth integration between contingent workers and full-time employees is vital for fostering a productive work environment. Seamless integration encourages collaboration within the organization. When contingent workers feel valued and included, they are more motivated to perform. While contingent workers offer fresh perspectives, full-time employees contribute in-depth knowledge of company operations. A unified approach minimizes misunderstandings and helps achieve common goals.
When it comes to maximizing talent resources within organizations, the importance of managing the contingent workforce cannot be emphasized enough.
Сontingent Personnel Management in Canada
Looking for a recruitment agency to help you hire contingent workers? Call the Calgary recruiting agency, Equation Staffing Solutions at 1-844-367-9618. We are a reliable, innovative, collaborative agency here to support you in your search for a position and/or personnel. Our experience will assist you! Contact us today.