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How to Scale Up and Manage Your Contingent Workforce

While the world still grapples with the COVID-19 pandemic, many organizations are trying to navigate how they will go about staffing in both the short term and the long term. In the short term, organizations need to become more flexible in order to adapt to a world that is dramatically changing on a weekly basis. In the long term, organizations are trying to create a workforce strategy that accommodates the new ways of approaching work. Key to both these short- and long-term challenges is a contingent workforce.

While steadily growing in popularity over the years, the contingent workforce has been thrust into the limelight during the COVID-19 pandemic, with many such workers taking on important jobs that suddenly saw huge demand as a result of the crisis.

But many, if not most, organizations approach to their external workforce has been cobbled together over the years, as agencies, freelancers, consultants, and other contingent workers are brought on as-needed. All of these contingent workers may utilize different pay structures. None of their data may be kept in the same place. Policies toward these workers may not be consistent or, worse, compliant with local laws.

As organizations move to make external workers a larger percentage of their workforce, the need to manage these workers grows. This requires changes on several fronts: technology needs to be implemented that provides an accurate picture of the organization’s entire external workforce, internal policies and workflows need to be adapted to accommodate external workers, and external workers need to be factored into the overall workforce strategy and not be made an afterthought.

The Post COVID –19 Workforce is Contingent

As of writing, the US and Europe are seeing spikes in Coronavirus cases, prompting some to reconsider the loosening of shelter in place orders. This comes after weeks of progress in reducing the number of cases related to the virus. Each new week brings with it a new political, social, and business reality, forcing organizations to be able to adapt at speeds that seemed inconceivable six months to a year ago.

Organizations looking to ramp up their efforts to something close to normal need to acquire talent quickly but also be able to scale that workforce down should their situations change. Hiring a regular, internal takes an average of 36 days to fill a position, according to research by SHRM. It then can take months to train that employee and get them up to speed. For some organizations, that timeframe can simply be too long. Alternatively, a contingent worker can be hired and brought in within days.

For organizations that were negatively impacted by the Coronavirus pandemic, keeping overhead costs low is naturally another major concern. With the average cost per hire sitting at $4,425 and the cost of providing health insurance to that employee averaging around $15,000 per year, hiring a full-time employee can generate a lot of additional overhead. Since these overhead costs are either eliminated or greatly reduced by using external workers, building out an agile workforce is the more prudent option.

Contingent Workforce Management

Ensure Visibility into Your Contingent Workforce

Even organizations with modern, cloud-based HCM systems tend to have trouble knowing how many external workers they have on payroll and who all those individuals are. HCM systems simply don’t extend as far as the contingent workforce. While traditional employee data may live in the HCM, external worker data may exist in various locations, from a vendor management system to a Microsoft Excel spreadsheet. This makes it near impossible for organizations to have a clear view of their total workforce. Eliminating this opacity, therefore, needs to be a top priority. A contingent workforce management solution can extend the reach of an organization’s existing HCM to include all external workers.

When Workforce Planning, Include Your Extended Workers

While it may make sense to bring in contingent workers in response to a sudden shift in organizational priorities or challenges, organizations should take a more long-term approach to hiring and managing these workers. This means incorporating an extended workforce into the organization’s workforce planning efforts. To that end, human resource departments will need to know what skills and resources will be required for future initiatives, how that compares to the existing internal and extended workforce, and whether they should look to hire either a full-time or non-employee worker.

Data accuracy is a concern when it comes to workforce planning. For external workers, data accuracy is especially challenging since most organizations use a patchwork of different solutions (Vendor management systems, Excel spreadsheets, etc.) to manage extended worker data, which are often spread across the globe and may or may not be owned by the organization itself. In this situation, since there is no single source of truth, data is not standardized, full of gaps, and, in some cases, missing altogether. To remedy this, data needs to be standardized and put into a single system, one that connects to the organization’s existing Human Capital Management platform so that all worker data exists in the same place.   

Build Out a Streamlined Onboarding/Offboarding Pipeline

As mentioned earlier, one of the key benefits to contingent workers is that they can often be brought into projects more quickly than a typical full-time employee. This allows organizations to quickly change course in response to large industry changes. The speed in which an organization can bring a contingent worker onboard is dependent on how well developed its onboarding pipeline is. Are there processes in place to quickly assign the contingent worker the access/permissions they will need to effectively do their job? What system will that worker’s data live in and how will they be identified?

When a project is done, organizations need to be able to either offboard these external workers quickly or, should a worker prove to be a good fit, bring them into a full-time position.

A Bigger Place Within the Organization

As a result of increasing their reliance on their extended workforce, employers can no longer consider contingent workers a tertiary part of their organization. Failing to do so effectively creates a hidden workforce that, when considered on a global scale, can become costly and potentially risky from a compliance standpoint. By increasing your organization’s visibility into its extended workforce and establishing technology and processes to manage these workers, however, you will improve your overall operational agility while cutting costs and reducing risk.

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