Business leaders understand they need to keep costs low, remain nimble and leverage the latest skills without having to invest millions in employee development. As a result, U.S.-based talent managers are using more contingent workers in alternative employment arrangements.
Rebecca Callahan, president of recruitment process outsourcing for Randstad SourceRight, tells Talent Management magazine what this means for future hiring.
Why did companies rely on contingent workers during the recession?
Companies relied on contingent workers during and after the recession because they weren’t ready to completely reinvest in the workforce. We still see that increasing, and there are a couple of reasons for that. There’s still some uncertainty in some industries, but companies realized they like the “try before you buy” idea. More importantly, they like a more variable cost infrastructure in their employee base.
How does using contingent workers help save money?
Think health care costs; that gets more and more expensive for companies. They usually don’t pay that, or benefits for stock purchase programs, life insurance benefits, paid time off for holidays, or other benefits that start adding up. There are other exit costs. The cost of severance and things like that if you downsize; those can be very expensive. Further, in a full-time equivalent person, if you don’t hire the right person the first time, there’s a cost. You’ve put some training into that person, so you tend to hold onto that person longer.”
How can a contingent labor force help the shortage of workers with critical skills?
More and more professional workers have chosen or will choose to become contractors or professional, white-collar contingent workers. If you want to fill your job with the best IT professional in the marketplace, that’s not always a permanent worker. Many times that’s a contingent worker, and contingent workers are opting to stay contingent workers because they want to work at one project, which they choose, at a time. If you’re an organization today and want to attract some top talent, you’re looking at contingent workers and contract workers, especially in the IT space, to fill jobs you would usually fill with a full-time person.
Are contingent workers replacing full-time employees?
Yes, certainly in IT and engineering. Any industry where you’ve got some highly specialized skills that are in demand or where we have a shortage, you will see this growth. Like I said, if you want to fill the job, you may have to get a contingent worker or contract worker to fill it, and the reason behind that is because the talent themselves are choosing to remain a contingent worker. They command a premium, work when they want and work on the projects they want to for as long as they want to. It’s no longer the market’s choice; it’s the candidate’s choice.
Some of it is generational; Gen Y and those behind them have a different set of values. They want to volunteer four hours a month, and they want time off to do that. They want work-life balance to work in their family lives, so they want flexibility in their schedules. Further, think health care. If Obama passes all of the health care bills the way he hopes, then health care is portable. All of a sudden the reasons to take a full-time job aren’t all there.
How can talent managers help manage this workforce segment more effectively?
If they truly believe contract workers are the best talent fit in the market, the first thing they have to do is attract contingent workers. They have to treat those workers the way they treat other, full-time prospects. They have to create a brand that encourages contractors to come work for their organization. They need to recognize this population is out there and change their thinking and change the thinking of the hiring managers that they support. Talent managers need to encourage contingent candidates to come forward and have their recruiting partners, suppliers and vendors ensure these candidates are part of that pool.
What does it mean to have a contingent workforce outside the United States?
In the U.S. we have one of the lowest penetrations of contingent workers — less than 2 percent. In other countries they’ve used contingent labor more heavily because it’s their only vehicle to downsize their workforce. It’s not recessionary-based as much as it’s based on those countries’ laws and how employee status is governed.
Resources to Boost Contingent Workforce Knowledge and Effectiveness
An effective contingent workforce strategy offers organizations access to specialized talent while granting them the flexibility to meet their overarching business goals. But there’s much to consider when planning and developing a contingent workforce strategy. The following resources can help:
• Industry analysts: Research analyst firms and industry organizations are one place to start when searching for information. Staffing Industry Analysts provides a wealth of information on all aspects of the contingent workforce, offering webinars and white papers, blogs and more. Research and analyst firms including Aberdeen Group, Gartner and Bersin & Associates can provide objective insight on the latest trends, technology and services, as well as industry best practices.
• Social media: Many of the industry’s leading experts, vendors and organizations are active in social media communities. Join conversations online to learn from these experts and from peers. Follow #Staffing on Twitter; join the Contingent Workforce Strategies, Vendor Management Group and Vendor Managed Solutions groups on LinkedIn; and search “contingent workforce management” on YouTube.
• Industry associations and events: Many HR industry organizations hold conferences, seminars and expos that provide opportunities to network and learn from peers, but also to interact with thought leaders face-to-face.
• Legal and risk management consultants: Risk management is an important aspect of contingent workforce management. It’s strongly recommended that talent leaders work with a legal professional whose expertise lies in employment law to help ensure a company remains compliant with government regulations.
• Technology and service providers: Organizations can learn much by working with a contingent workforce services partner. Before you engage with the solution providers, you can search their websites for free white papers, case studies and webinars to learn more about their services, their clients’ results and industry best practices. Check out vendor management systems providers such as Beeline, Fieldglass and IQNavigator. Managed services providers also can help manage contingent workforce suppliers and agencies.
— Rebecca Callahan
Employees’ expectations have evolved, and companies must learn to engage and motivate them. Rebecca Callahan describes how to win the new war for talent here.