May 19, 2020Read More
Roughly one-third of the American workforce already participates in contingent work, and this number was predicted to grow to 40% by 2020. And COVID-19 wasn’t part of the picture when that prediction was made, so we won’t fully understand how today’s crisis will affect those numbers. It’s likely, however, that the coronavirus will act as a catalyst for more contingent work.
When it comes to millennials and Gen Z, who are known to value flexible work practices and a healthy work-life balance, the contingent work trend is hardly surprising. But they’re not alone. In fact, nearly 20% of freelancers are 55 years or older, and 29% of baby boomers freelance, actively participating in the contingent workforce partly because flexible work arrangements empower them to continue earning into their semi-retirement.
As talent shifts toward nontraditional working arrangements, companies have been struggling to find qualified candidates to fill roles. In 2019, nearly 70% of American employers reported talent shortages. To fill in these gaps, organizations have been turning to the growing pool of contingent workers.
And as businesses recover from the economic impact of the coronavirus pandemic and since 83% of business leaders plan to focus on cost-saving and operational efficiency for at least the next year, companies will likely rely more heavily on contingent talent to fulfill business needs.
Even after the job market normalizes post-pandemic, many current contingent workers may not enter into full-time employment, a trend seen after the 2008 recession. It’s become more important than ever to have a plan for managing your contingent workforce program.
The contingent workforce includes many highly-skilled people who can help organizations offset their skills gap. Services like marketing, business consulting, and programming make up 45% of freelance work. Instead of hiring a long-term, full-time employee, organizations can employ skilled talent on a temporary basis. Many even put together dream teams of top professionals for specific projects, and hiring them as contingent workers allows these companies to benefit from their talent at a fraction of the cost. On the flip side, these professionals maintain a higher level of flexibility and autonomy than if they were full-time employees.
Using creative strategies, companies can build a powerful contingent workforce to assist on demand. Robert Bosch GmbH, a German multinational engineering and tech company, manages a large contingent workforce of over 1,700 former and retired Bosch employees all over the world through a dedicated subsidiary. These experts are engaged to consult on projects at Bosch, often at short notice and across a variety of functions. It’s a great way to retain talent with invaluable professional experience without requiring these people to remain on their payroll full-time.
Besides, companies don’t always need full-time employees to cover their needs. Many businesses experience an increased demand for labor depending on market conditions or may need additional help or specialized skills only for specific projects. Hiring contingent talent gives organizations the flexibility to scale up or down quickly depending on business needs.
For instance, when online tech-learning start-up Udacity first began to scale, it needed human experts to quickly review and give feedback on its learners’ coding assignments. Instead of hiring full-time employees, the start-up brought on freelance programmers which quickly reduced review times from a few weeks to a few hours.
Plus, hiring full-time employees is a time-consuming and costly process. Hiring a single full-time employee takes more companies 29 days. And according to the most recently available information on hiring costs, the Society for Human Resources Management (SHRM) estimated that it costs $4,425 on average to hire a single full-time employee. Contingent workers, on the other hand, can be hired faster and more cost-effectively.
And finally, hiring contingent talent is a great way for organizations to identify high-performing workers before bringing them on full-time. Hiring non-permanent workers essentially allows companies to test out new positions in the company or how well an individual fits their culture.
The traditional workforce made up of mostly full-time employees will soon be a thing of the past as, increasingly, workforces are ecosystems comprised of full-time employees blended with various types of non-traditional workers such as independent contractors, gig workers, freelancers, and consultants.
While many organizations recognize the importance of a contingent hiring strategy, only 8% report having a strong and established process for sourcing and managing contingent talent. But without a defined plan, contingent recruiting can become inefficient and haphazard, with rogue spend to top it off. Since both full-time and contingent workforces have their own strengths and limitations, companies looking to optimize their workforce productivity need to clearly outline their talent needs and business goals to decide which roles should be filled by contingent versus full-time employees.
To be at the forefront of the future of hiring, organizations must optimize how they recruit and manage their contingent talent. This begins with comparing organizational talent needs to existing internal capabilities. Once talent needs are mapped, hiring managers can determine which roles are best filled by on-demand hires. Done well, this process eliminates ad-hoc hiring and keeps labor spend in check.
Additionally, companies should integrate cross-functional internal stakeholders, including HR, procurement, finance, and legal to effectively manage their contingent workforce, from onboarding to offboarding. Taking this action has the added bonus of mitigating legal and regulatory risks that come from misclassifying contingent workers.
Finally, companies can take advantage of cutting-edge hiring technology that uses AI and automation to make the entire process of sourcing and managing the contingent workforce much easier and more effective. New platforms on the market not only help organizations staff up, but they also measure contingent worker performance, streamline talent assignment through unified dashboards, assist with compliance, and manage all contingent staffing providers in one place.
Companies that plan to make the most of nontraditional talent will benefit from finding a strategic partner for contingent workforce management--one that can simplify tasks associated with managing multiple if not thousands of staffing providers, overseeing compliance, and coordinating internal teams.
Modern vendor management systems (VMS), for instance, help organizations manage their entire contingent hiring program with ease. Through a VMS, companies can procure and manage contingent workers through multiple staffing agencies and also automate sourcing, payments, and compliance. With a partner like Crowdstaffing, businesses can benefit from thousands of staffing agencies who are then funneled through one point of contact and paid via one invoice. Also, when all data lives in one place, companies can track hiring metrics and create an effective contingent hiring strategy.
For a powerful hiring experience, make use of our AI-powered vendor management platform built for the contingent workforce. Crowdstaffing’s intelligent matching algorithms automatically distribute open positions to the most qualified staffing suppliers in a globally connected crowd, so that you have access to the best candidates. Our Payrolling and Employer of Record services take care of offers, onboarding, payroll, and compliance to give companies peace of mind. And all candidate data lives in one place, and our collaborative features help you stay in sync with all internal stakeholders, staffing suppliers, and candidates.