Contingent Workforce Best Practices: What You Need to Know

Discover the essential best practices for managing a flexible workforce efficiently and effectively.

In today's dynamic business landscape, companies are constantly adapting their workforce strategies to meet the ever-evolving needs of the market. With diverse requirements and changing demands, businesses are turning to innovative solutions such as leveraging a contingent workforce to drive strategic objectives.

What is a Contingent Workforce?

A contingent workforce refers to a group of workers who are not permanent employees but are hired by a company on a temporary, project or flexible basis. These workers, independent contractors, freelancers, or temporary workers, are engaged to fulfill specific projects or tasks for a predetermined period. They may work on-site or remotely, depending on the nature of the work. Whether working on-site or remotely, contingent workers are vital in helping companies adapt to changing demands and achieve goals efficiently. 

Companies often rely on a contingent workforce to supplement their existing workforce during busy seasons, fill skill gaps, or manage fluctuating workloads. This workforce model offers a dynamic solution to the ever-changing demands of the business world. With the ability to scale up or down quickly, companies can easily adapt to market trends and project requirements, making it a practical and cost-effective solution. 

Contingent workers can be hired directly by the company or through staffing agencies. Hiring contingent workers directly gives companies more control over the recruitment process and the selection of candidates who best fit their business needs. On the other hand, utilizing staffing agencies can provide access to a larger talent pool and streamline the hiring process by leveraging the agency's expertise in sourcing and screening candidates. Most companies utilize a workforce strategy that encompasses both contingent and non-contingent workers.

Managers can effectively leverage this workforce model to meet their business needs by understanding what a contingent workforce is.

What is Contingent Workforce Management?

Contingent workforce management involves strategic planning, sourcing, engagement, and oversight of the contingent workforce. It includes all managerial activities such as recruiting, on-boarding, performance management, and offboarding contingent workers. Contingent workforce management is ultimately how the company treats its workforce. This treatment can be distinguished as either inclusive, where the contingent workforce is included in normal practices, or exclusive, where they are treated as a separate entity, often having to abide by different processes.

Effective contingent workforce management requires strong leaders, clear and well-defined policies and processes, and efficient systems to ensure all workers understand their roles and place within the company while complying with labor laws and minimizing risks. This management involves establishing strong relationships with staffing agencies, stakeholders and workers. A key aspect of this is maintaining open and effective communication channels with the contingent workforce, which is crucial for successful management.

By creating robust contingent workforce management practices, managers can maximize the benefits of a flexible workforce and minimize the associated risks and challenges. This approach can lead to a more efficient and productive workforce, benefiting the company at each level. A manager can take many different methods to create an effective workforce. 

Why Use a Contingent Workforce

Now that a comprehensive understanding of the contingent workforce and its management processes have been formed, you must ask yourself why you should implement this into your company today. There are several reasons why businesses such as yours choose to use a contingent workforce:

Flexibility: Contingent workers offer the flexibility to scale the workforce up or down based on changing business needs. This allows companies to quickly respond to market demands, project requirements, or seasonal fluctuations by ensuring an adequate supply of workers to fill these positions. Businesses benefit from this flexibility by avoiding unnecessary expenses on idle workers and ensuring that resources are allocated efficiently to meet workforce demands.

Cost Savings: Hiring contingent workers can be more cost-effective than hiring full-time employees. With the ability to scale up or down based on changing business needs, companies can reduce costs associated with employee benefits, training, and overhead expenses that must be paid to full-time employees. By strategically aligning goals to meet market demands, project needs, and seasonal variations, businesses can prevent unnecessary expenses on labor, ultimately reducing costs associated with employees. 

Access to Specialized Skills: Contingent workers often possess specialized skills and expertise that may not be available within the permanent workforce. These workers have unique expertise and knowledge in specific areas, which makes them highly valuable in tackling short-term projects or assignments. Hiring them allows businesses to tap into distinguishable knowledge or capabilities that contribute to a project's success.

Increased Agility: A contingent workforce provides companies with the agility to adapt to rapidly changing business environments. It enables them to quickly assemble teams with the right skills and experience to address emerging challenges or opportunities. This dynamic workforce model allows companies to swiftly respond to market trends, technological advancements, and shifting consumer demands by leveraging a diverse and innovative pool of talent on an as-needed basis. 

Scalability: This adaptability gives businesses the flexibility to adjust their workforce according to evolving needs, enabling them to optimize resource allocation and efficiently handle fluctuating workloads. By swiftly expanding for busy periods or contracting during slower times, companies can guarantee they have the appropriate workforce to fulfill project requirements without incurring unnecessary expenses.

Increased Productivity: Contingent workers are often motivated, committed to their tasks, and focused on achieving results. Their temporary nature catalyzes them to excel and enhance productivity levels. This drive to prove their capabilities and make a significant impact within a limited timeframe often results in heightened productivity levels. Importantly, with a clear understanding of the temporary nature of their roles, contingent workers are committed to delivering exceptional results, demonstrating their value and contribution to the company. 

Challenges of Managing a Contingent Workforce

While a contingent workforce offers numerous benefits, there are also challenges associated with managing such a workforce:

Compliance: Compliance with labor laws, tax regulations, and contractor classification can be complex when working with a contingent workforce. Each worker has a unique background and qualifications, making verifying these credentials challenging and ensuring compliance with legal standards. This issue is particularly prevalent in healthcare staffing, where workers must meet specific requirements to operate legally. Companies must ensure they have the proper technology to provide appropriate classification of workers, adhere to employment laws and handle tax and benefits appropriately.

Communication and Engagement: Building strong relationships and effective communication with contingent workers can be challenging due to their temporary status and remote work arrangements. These workers often flow between different jobs with different companies, and thus, managing all these relationships can be time-consuming and tedious. However, with the help of a software solution such as a Vendor Management System (VMS), companies can establish clear communication channels and implement strategies to engage and motivate contingent workers.

Knowledge Transfer: When contingent workers leave, knowledge transfer becomes crucial to ensure business continuity. Companies must have processes to capture and transfer knowledge from contingent workers to permanent employees. Without this process, key workplace knowledge will be lost and ultimately become a cost burden. 

Integration with Permanent Workforce: Integrating contingent workers into the existing workforce can be challenging, especially when fostering seamless team collaboration and ensuring a strong cultural fit. The knowledge and experience gap may create a divided work environment that does not encourage good collaboration. Companies must prioritize building an inclusive work environment that values diversity and provides the necessary support for effective integration.

Best Practices for Creating a Successful Contingent Workforce

To create a successful contingent workforce, companies should consider the following best practices:

Clearly Define Roles and Expectations: By clearly defining the roles, responsibilities, and expectations of contingent workers, companies can ensure that the contingent workforce understands their scope of work. This not only helps them deliver the desired outcomes but also boosts their productivity.

Streamline On-boarding Processes: A streamlined on-boarding process is designed to integrate contingent workers into the company quickly and efficiently. Providing them with the necessary resources, training sessions, tools, and information ensures they can start their assignments smoothly, giving managers the confidence to manage new workers effectively.

Establish Effective Communication Channels: Effective communication channels are the lifeline that connects the company to the contingent workforce. Building a robust communication pipeline through regular updates, feedback, and collaboration ensures everyone knows key business processes and feels connected and part of a cohesive team working towards the same business objectives. 

Provide Training and Development Opportunities: Offer training and development opportunities to enhance the skills and capabilities of contingent workers. The opportunities will further enhance their understanding of company expectations, benefit their professional growth and improve their contributions to the company.

Monitor Performance and Provide Feedback: It is essential to consistently evaluate the performance of contingent workers and offer valuable feedback. This practice empowers the contingent workforce to meet and exceed expectations while aligning with the company's objectives. Continuous feedback is the key to fostering ongoing improvement and growth within the workforce.

Foster Collaboration and Teamwork: Encourage collaboration and teamwork between contingent workers and permanent employees. By fostering collaboration, managers can cultivate a culture of teamwork where every team member can pool their unique skills to achieve common goals and ultimately benefit the business. 

Recognize and Reward Contributions: By acknowledging their hard work and dedication, employers motivate workers to continue delivering their best and show appreciation for their valuable input. This recognition can boost morale, increase job satisfaction, and foster a positive work environment for all team members. Additionally, rewarding contingent workers for their efforts can help build loyalty and commitment, leading to higher retention rates and a more engaged workforce.

Strategies for Maintaining Engagement and Productivity

Now that a successful, contingent workforce has been implemented, how do managers maintain engagement and productivity? To maintain engagement and productivity within a contingent workforce, companies can employ the following strategies:

Regular Check-ins and Feedback: Schedule regular check-ins with contingent workers to provide feedback, address concerns, and ensure they feel supported. These check-ins help to maintain open lines of communication and foster engagement while making the workers feel like an integral part of the company.

Provide Clear Goals and Objectives: Communicate goals and objectives to contingent workers, ensuring they understand what they are working towards. This clarity helps them focus efforts, align their work with business priorities, and avoid tedious and irrelevant tasks.

Offer Professional Development Opportunities: Provide opportunities for professional development and upskilling to enhance the capabilities of contingent workers. This continuous push for improvement shows a commitment to their growth and encourages them to invest time in their work. Making training and development sessions mandatory ensures all workers are keeping up with required qualifications and developing new skills to make them more valuable in the future. 

Encourage Knowledge Sharing: By fostering a culture of knowledge sharing, companies can harness the collective expertise of their diverse workforce, leading to increased learning opportunities and continuous improvement. This exchange of ideas enhances individual professional growth and drives innovation and efficiency. Embracing a culture of open communication and collaboration enables team members to leverage each other's strengths, address challenges collectively, and drive positive outcomes for the business.