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Contingent Labor: Here Today, Shaping Tomorrow

Rapidly growing demographics suggest contingent labor will play a significant role in future workforce dynamics. Talent leaders will need to integrate these workers into HR strategies.

February 19, 2013
Related Topics: Talent Acquisition, Candidate Sourcing, Contingent Workers, Talent Acquisition, Staffing
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For public relations professional Lori Marble, there is no such thing as a typical day. She might be hosting a press conference, photographing an event or writing a new product release.

She always rises at 4:30 a.m., but she’s not catching a train for a routine commute. Marble is already at the office for her freelance service, Marble Public Relations. She went independent after working for a community college for 20 years and, most recently, with a state agency for six years.

“The state agency began downsizing in 2011, and my public relations managerial job was set for relocation to a larger city,” Marble said. “I was asked to move with the job, but I declined; my husband’s position and our children’s involvement in school made that an unattractive option. I was asked by my supervisor what I wanted to do. Ironically, she was asking what position I hoped to have within the agency, but what I heard was a much larger question of what I wanted to do with the rest of my life.”

Marble is one of a growing number of professionals who have opted for the independent route and the flexibility of working remotely. According to a May report from the Aberdeen Group titled “Contingent Workforce Management: The Next-Generation Guidebook to Managing the Modern Contingent Workforce Umbrella,” almost 26 percent of the average organization’s total workforce is considered contingent or contract based.

Aberdeen published another report in April 2011 titled, “Contingent Labor Management: The Evolution of the Contemporary Contingent Workforce,” stating that the contemporary contingent workforce has undergone an evolution since 2006, one that forced companies to implement robust strategies to drive value and gain visibility beyond classic temporary labor, such as statement of work-based projects and services and independent contractors.

The trend continues to grow. According to the Bureau of Labor Statistics, the contingent workforce will be among the fastest-growing workforce segments, seeing an increase of 23 percent from 2010 to 2020 — that’s an additional 631,300 jobs.

Talent leaders must figure out how to best utilize this valuable workforce, integrating them into overall HR strategies rather than treating them as an extension of full-time staff. The contingent workforce also will increase as a result of a shift to a more project-friendly corporate culture.

“Before, we had the luxury of developing somebody into that project, with career planning and skill enrichment, and skill and learning development,” said Tom Tisdale, senior vice president of sales for Peoplefluent, a talent management software provider. “We don’t have that cost structure, that data infrastructure which will tolerate that as much anymore. We’ve got to get the right people in the right place at the right time.”

Talent leaders also have to consider today’s culture and infrastructure for collaboration. In an increasingly demanding business environment, fresh support can invigorate organizations and help them stay competitive.

However, this trend accompanies another scenario in which departments settle into tried-and-true practices. “Core teams have been feeling overburdened and almost afraid to do risky or edgy things,” said Ann Webster, president of Aquent, a marketing and staffing company. “They feel like they’ve settled a little bit for that mediocrity.”

A fresh perspective could give teams the boost of creativity they may lack. Organizations also have the power to adapt to market conditions: If business is there, companies can ramp up quickly. If the market slows down, they do not have to fire people — they can scale down their contingent workforce.

While organizations enjoy this model’s agility, contingent workers such as Marble enjoy the freedom of freelancing. It’s a positive, symbiotic relationship that can yield mutual benefits if there is a sound workforce strategy in place. To build that strategy, talent leaders should consider three steps: properly define the work needed and terms of employment, align contingents with overall workforce and business strategies, and create an environment where contingents can reflect their success onto the organization.

Step 1: Define goals and job roles. When implementing a contingent workforce strategy, start by stating the desired end result for contingents’ contributions. The definition of contingent can vary. Organizations should devise their own definition of the term and determine how specifically impermanent labor will be utilized.

“[In the past], temporary was specifically that,” said Gary Campbell, chief operations officer for Lynchburg, Va.-based Johnson Health Center. “You brought in a temporary worker to fill in for a shortage when somebody was going to be out for a week, two weeks, maybe a month. That’s moved to a contingent perspective; it could be longer-term assignment; it could be a critical worker for a key project.”

Defining contingents’ roles in organizations is also important because, with so many different ways to classify impermanent labor, organizations run litigation risks related to a co-employment scenario. Consider Vizcaino v. Microsoft, the historic $97 million class-action lawsuit settlement filed by thousands of temporary Microsoft workers accusing the company of improperly denying them benefits. The lawsuit was about misclassification; contingents hired as freelancers or independent contractors claimed they should have been classified as employees because they were treated as such.

Ed Boswell, U.S. people and change leader for PricewaterhouseCoopers, said to avoid such a scenario, companies must ensure that contingent job descriptions do not mirror those for full-time employees. “You can’t treat them exactly like they’re full-time employees,” he said. “There is distinction there. There’s a whole checklist that the IRS has about how you treat contingents versus full-time employees.”

However, strategy cannot stop at cost savings and legal compliance. Organizations may need full-time staff to handle contingent labor.

Step 2: Align with business strategy. Cary Schuler, CEO of workforce consultancy cfactor, said an enormous amount of potential value is lost when organizations neglect to properly manage contingents.

“They don’t have access to the same kind of information; they can’t as easily collaborate with some of the social tools that you have available,” he said. “You’re not really effectively bringing them into the culture and why you do the things you do.”

Alienating the contingent workforce is an exercise in inefficiency, leaving both sides’ potential unrealized. It is possible for companies to enjoy meaningful relationships with contingents free of disputes. As in any healthy relationship, it is essential that the needs of the organization and the contingent be complementary.

Campbell said organizations should implement a solid on-boarding process to make contingents feel a part of the team. Higher-level contingents should also be invited to project-based meetings where their input is important.

“In the case of remote contingents, a strong orientation and training program with clearly defined expectations and deliverables needs to be in place,” Campbell said. “If able, provide the orientation and training on site.”

As a part of the orientation process, the remote contingent should sign off on safety protocols, data security, intellectual property and any other company-specific policy that may apply.

Finally, communicate regularly to ensure the remote worker feels part of the team. Organizations must listen to contingents and flex to their needs. Talent leaders should foster and support the move to a more freelance-friendly world, where people like more discretion in their day-to-day work.

“Then, the real goal would be to provide rewarding, engaging experiences for these employees so they choose you as an employer-of-choice to accomplish what they want from a career perspective,” Schuler said.

As talent leaders know, the war for talent can be fierce. The same scenario applies to contingent talent these days. Boswell said to prevent highly skilled contingents from seeking greener pastures, companies must offer them competitive pay and ensure compensation aligns with company strategy. “We made sure that we had a good alignment between their skills and experience, and the actual work or project,” he said.

Loyalty is also important. Contingents are in the field every day, often as perpetual job seekers who could potentially “cut a better deal” with other companies — in some cases, with the organization’s own competition or customer base.

Sometimes this is inevitable, Boswell said, but the contingents could be leveraged by asking these remote workers to provide market intelligence, thus turning a potential negative into a positive.

Step 3: Let them shine. Contingents likely will not arrive in an organization beaming with loyalty. They often have no vested interest in the company and may want to get the job done and move on. To gain the most from the best and brightest, organizations must foster engagement for their contingents even though they’re not working under the same roof. Companies must take it upon themselves to support contingents immediately and cultivate relationships, not as expendable contractors, but as valued employees.

“Treat your contingents as a true core extension of your workforce and deliver really personalized experiences, even before the first day of their contract,” Schuler said. “They can start understanding, connecting with the mentor [or] with their other peers so they’re not this island of a certain type of worker. They’re actually folded right in, even before their first day.”

After on-boarding new employees, talent leaders can integrate skills development and social contributions with more traditional types of performance metrics to create a more holistic view of all talent, contingent or not. Schuyler said data can help talent leaders identify the most influential people, the employees who get the most thanks from their colleagues. These individuals may be candidates for other opportunities.

Contingents also want to feel needed. Invite them to onsite presentations to help them feel more engaged and energized to excel and create under their own initiative, like Marble.
“It’s my responsibility to keep knowledgeable, to ask the questions, to be available, to create my own sense of value,” Marble said.

Elizabeth Lisican is a freelance writer based in Chicago. She can be reached at editor@talentmgt.com.

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