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Best Practices to Effectively Manage the Contingent Workforce

By Elizabeth Rice, SPHR

Over the past few years the number of people joining the ranks of the contingent workforce - - contractors, temporary personnel, short-term engagement professionals and project-based workers, has increased dramatically. In fact, the Advisory Council of the U.S. Department of Labor (DOL) estimates that contingent workers make up over 30% of the workforce. Since 1990 the number of workers employed as temporary employees alone has tripled from 1 million to 3 million, and is expected to quadruple in size to 12 million over the next 10 years.

As organizations increasingly rely on contingent workers many are finding it a challenge to manage this critical component of the workforce. Some specific challenges faced by companies include; confusion in responsibilities between procurement, which is concerned with price and volume, and HR, which focuses on quality of hire. Moreover, in many organizations, individual hiring managers manage their own contingent workforce needs, resulting in multiple, redundant vendor relationships, non-uniform pricing and tremendous overall losses in time and money.

IES recently interviewed Lowell Williams, HR Practice Leader at Equaterra, a global outsourcing and insourcing advisory firm, to get his expert advice how to best manage contingent employees. According to Williams the contingent workforce has become an important part of staffing and companies often find it easiest to outsource this function and focus on their core competencies.

There are several steps that companies can take to make the best use of contingent employees to ensure mutual satisfaction. Firstly, the morale of the contingent employee is greatly improved if they have access to the same services as regular employees. "Things as simple as being permitted to park in the same lot, get purchase discounts and eat in the company cafeteria can help make the experience for the contingent employee more pleasant," says Williams. Additionally, companies can go a step further and open up company training to contingent workers allowing them to increase their skill-set and enriching their experience.

Williams is a strong believer in providing performance reviews after the project is completed. "Providing contingent employees with a performance review at the completion of a project is a win-win for both parties," says Williams. "Not only does the employee get much needed feedback to improve, but the company also prepares the employee for success in subsequent projects."

While managing the contingent workforce can be challenging it does pose some obvious benefits. Firstly, if a company chooses to outsource their contingent workforce they benefit from the standardization of procedures and administration. Because of the economies of scale reached by outsourcers companies experience cost savings and high service levels. Additionally, because the experts handle the HR administration, the contingent workers can begin working immediately rather than get caught up in reams of paperwork. Furthermore, many HR outsourcers offer thorough background screening checks and security clearances that are required by larger companies.

Companies also benefit by centralizing their HR administration and eliminating redundant relationships and non-uniform pricing amongst contract workers. For example, many larger companies have decentralized hiring managers that bring on contingent workers for specific projects not knowing if the person has worked in other departments or if the job was completed satisfactorily. Outsourcing the contingent employees allows companies to have a centralized database whereby companies can see which employees have worked for the company in the past and were successful within the company. Additionally, many states have laws limiting 1099 contract workers to work no more than 1000 hours per year or risk penalties for misclassification. By having employees centralized this risk is mitigated.

Once companies understand how to manage contingent workers and give them the same respect that they would impart on full time employees, it becomes apparent that the benefits of outsourcing far outweigh the risks.