The Contingent Worker: A Full Guide
Increasingly, the contingent worker has become a familiar face in organizations. In this article, we’ll zoom in on the contingent worker; what are the benefits and drawbacks of hiring contingent employees and how do you create a great contingent worker experience? Here goes!
What is a contingent worker?
A contingent worker is someone who is hired for a fixed period of time, often on a project basis. Examples of contingent workers are freelancers, consultants, part-timers, on-call workers, independent contractors, and people in other types of alternative work arrangements.
Interestingly, and contrary to what the coverage of the gig economy suggests, the percentage of workers on temporary contracts in the US and in Europe has not changed significantly over the past 15 years (see image below).
Also surprisingly, the use of temporary workers is much higher in Europe than it is in the United States, according to the same data from Eurostat and the Bureau of Labor Statistics; 14.3% in the EU compared to 3.8% in the US in 2017.
However, the growing need for (digital) upskilling and the continuous outflow of baby boomers leave many organizations with vacancies to fill. According to a 2018 report by ManpowerGroup, 45% of employers can’t find the skills they need. For organizations with more than 250 employees, this number is even higher; 67% of them report talent shortages. Tapping into the market of contingent workers can be one way to address these issues.
The benefits of hiring contingent workers
This brings us to the benefits of hiring contingent workers, including:
- Flexibility. Imagine your organization has just won a big new client – and the project that comes with that. This creates an instant need for a project team including some subject-matter specialists. Hiring one or more full-time employees will probably take too long, but finding a contingent worker with the right skills and expertise can be done in a matter of days.
In terms of upskilling, you may find that there are certain (digital) skills your workforce currently lacks. Building those skills in-house can take a while, especially if the business needs them to stay ahead of the competition, or at least to not fall behind. Hiring a contingent worker can be a great way to kill two proverbial birds with one stone; you will have access to the right skills immediately and the temporary employee can transfer (part) of their skills to your current employees. That way, by the time the continent worker leaves, you have had the opportunity to build the capability you previously lacked.
Another, more typical example of when employing contingent workers provides you with the flexibility you need is during seasonal peaks in business activity.
- Additional talent pool. Both the contingent worker and the organization they temporarily work for can look at this period as a test phase. Do they see a fit? Would they like to turn their temporary contract into a more permanent one? For organizations, contingent employees can be a valuable additional talent pool, one they’ve already had (a great) experience with. They know how those people work, what their strengths are, and whether or not they fit in the company culture.
- Fewer costs. Of course, there is a financial reality too. Hiring a contingent worker is financially interesting for companies. They usually pay fewer taxes for contingent employees and no employee benefits. According to the Bureau of Labor Statistics, benefits for private industry workers in the US account for 29.8% of total employer compensation costs. In other words, choosing for a contingent worker instead of a full-time employee saves American organizations almost 30% in benefit costs alone.
- No need to train/highly specialized. Contingent workers are often highly specialized in what they do. Organizations may need these specialists every now and then for certain projects, but not on a permanent basis. Rather than spending (a lot of) money on training people in-house, companies can hire a contingent worker to help them out.
Another benefit of working with a contingent expert is that they tend to have a lot of experience. This means that they don’t need a lot of training to get started. They know how to get the job done and are able to do so autonomously.
Drawbacks of hiring a contingent worker
Working with contingent employees comes with its own set of challenges, or points of attention. Drawbacks include:
- Lack of commitment. Compared to ‘classic’ employees, contingent workers are often not as committed to the organization they work for. This is, among other things, due to the temporary nature of their relationship with their employer and the fact that it can be difficult for them to integrate into the company.
- High turnover. Naturally, contingent workers remain with the company for a fixed period of time only, which leads to more turnover. This constant coming-and-going of people can also make other employees less inclined to fully welcome their contingent colleagues into their team.
- Security risk. The hiring process for a contingent worker – if there is any – is often not as thorough as the process for a classic employee. Certain screening processes, for instance, may be skipped. This can present a security risk since contingent workers often have the same access to company information and resources as core employees.
The contingent worker experience: 3 best practices
We all know about the importance of a great employee experience for our people. To make the most of working with contingent employees and to minimize the drawbacks, it’s important to create a great contingent worker experience too. In this section, we’ll share 3 best practices.
1. Get your processes in order
Just like you want to have the processes related to every stage of the employee life cycle in order, you also want to have the processes related to the contingent worker life cycle to be spick and span. This includes:
- Recruitment and selection. We briefly mentioned the recruitment process regarding potential security risks. But your hiring process is also important for your contingent worker experience. While the way you hire contingent employees can be different from the way you hire core employees, you still need to have a structured process in place.
- Onboarding and new employee orientation. To make a contingent worker feel welcome and part of the team and to help them get to know their way around the organization quicker, it’s important to give them an onboarding. This also includes new employee orientation.
- Project management. Someone, most likely the contingent worker’s manager, should check in with them regularly to see how the project is evolving. Milestones should be praised and celebrated with the team.
- Offboarding. When the project is done and the temporary contract has expired, it’s time to offboard your contingent worker. Here too, you need to have a process in place and again, this can be based on your regular process. In any case, thank the temporary employee for their time and effort and make sure to have a (short) list of exit interview questions ready for them. If both of you were satisfied working together, you can add the contingent worker to one of your talent pools.
2. Pay people on time
Yes, this is a process as well but since it’s also something that (too) often goes wrong when it comes to contingent workers, we mention it separately. Few things are more frustrating than having to ask for your money, especially when you’ve already done the work. Not paying your contingent employees on time doesn’t help with making them feel ‘part of the team’ either, nor does it boost their commitment to the company. In other words, ensure timely payments.
3. Culture, technology, and physical space
These three elements are, according to Jacob Morgan, enablers for a great employee experience. Since your contingent workers are your employees too, albeit for a fixed period of time, these three environments need to be on point. A quick reminder of what this means:
Related (free) resource ahead! Continue reading below ↓
HR Analytics Resource Library
Download a collection of some of the best HR Analytics resources we’ve come across.
- Technology is key. As an employer, you need to provide your people with great tools in order to build trust and engagement.
- Physical space. Whether this is an office or other environment, it needs to enable employees to perform optimally. Since the COVID-19 crisis, many people have been working from home. If this is still the case and will continue to be for the foreseeable future, you may want to allocate a (small) budget to your employees that they can use to invest in their home office.
- Culture is about creating an environment where people – contingent workers included – want to work. Involve contingent employees in team meetings, add them in team chats, invite them to informal team gatherings, etc. If there’s a team training, ask if your contingent worker wants to join. In other words, treat them like you treat all your other employees!
On a final note
Given the current state of the global workforce, it’s safe to say that the contingent worker is here to stay. Companies will continue to tap into the market of contractors, freelancers, on-call workers, and what not to meet their people needs. To fully benefit from working with contingent employees, however, it’s good to keep the best practices for a great contingent worker experience listed in this article in mind.
A contingent worker is someone who is hired for a fixed period of time, often on a project basis. Examples of contingent workers are freelancers, consultants, part-timers, on-call workers, independent contractors, and other types of outsourced, non-permanent workers.
Benefits of working with contingent employees include increased flexibility, an additional talent pool, fewer costs, and no need for extensive training to get them up to speed.
Disadvantages of working with contingent employees include the fact that they can be less committed to the organization, integrate less easily, create a higher turnover, and can present a security risk if they haven’t been screened properly.
Best practices for creating a great contingent worker experience include getting your processes in order (recruitment, onboarding, project management, offboarding, etc.), making sure you pay people on time, and having your technology, physical space, and company culture on point.