HR Managers Guide to Understanding a Contingent Workforce

Flexibility, it’s one of the largest priorities for workers. It’s also something that businesses can benefit from too. To cater to both this growing priority for job seekers and shifting business demands, a contingent workforce may be ideal. 

This article will explore what a contingent workforce is, along with the benefits and challenges it brings, and tips for best managing this workforce type.

By understanding these aspects, you as a manager can make informed decisions about integrating contingent workers into your teams and enhancing overall productivity. Ultimately, to drive better business performance and recruit the best talent for the job.

Table of Contents

• What is a Contingent Workforce?

• Contingent Workers vs. Employees

• Benefits & Disadvantages of Contingent Workers

• Best Practices for Managing Contingent Workforce

• Final Thoughts

What is a Contingent Workforce?

A contingent workforce consists of non-permanent workers who are hired on a temporary or project basis. Typically, this type of workforce includes temporary or contractor workers. Sometimes, part-time employees are included if it’s considered non-permanent, like in the case of seasonal businesses. 

Common industries that utilize contingent workers include tourism, hospitality, manufacturing, and retail sectors. For example, a catering and events company may have a contingent workforce of caterers, bartenders, and hospitality staff to provide food and beverages during the different conferences throughout the year.

Contingent workers vs. employees

While traditional employees are hired on a permanent basis with salaries and benefits, contingent workers are hired under different terms. Here are the key differences:

• Employment Terms: Employees have long-term commitments, while contingent workers are hired for specific projects or periods. The keyword here is temporary.
• Benefits: Employees typically receive health benefits, retirement plans, and paid leave, whereas contingent workers may not have access to such benefits.
• Work Hours: Employees have regular work hours, while contingent workers may have flexible or varying schedules.
• Tax and Legal Implications: Employers are responsible for certain pay implications like taxes and payroll. But contingent workers are usually responsible for their own taxes, depending on the situation. 
• Salary: Many times, contingent workers are offered higher hourly wages to compensate the absence of benefits and ensure a certain level of equity.

Benefits & Disadvantages of Contingent Workers

This type of workforce provides teams and organizations with the flexibility to scale the workforce based on demand. While also presenting challenges if you’re not ready to manage this type of workforce. 

Benefits

With a contingent workforce, your company can access specialized skills, without labor costs getting out of hand.

Cost Savings

Since contingent workers are not considered full-time employees, you can save a significant amount on vacation pay, benefits, and other obligatory employer contributions.

Flexibility

Flexibility is one of the biggest benefits for implementing a contingent workforce. Not only does it allow for greater employee flexibility, it gives the employer utmost flexibility, too. Peak business demands can be met with larger contingent workforces, helping to support any full-time staff that may be there year-round.

Access to Specialized Help

With a contingent workforce, you can access specialized help without the need to have a full-time hire. This allows you to adjust for customer demands, invest in your business, and manage costs more effectively. 

For example, as a retailer, you can bring on specialized help such as merchandisers or other experts, for short-term projects or promotional events. 

Disadvantages

While the benefits can easily add a ton of value to the business, there are disadvantages you’ll need to consider before implementing a contingent workforce. 

Less Team Cohesion

While a contingent workforce can add flexibility when your full-time staff need it most, there can be reduced team morale or cohesion amongst workers. This is mainly driven by the temporary nature that doesn’t allow for regular bonding among more committed part-time or full-time employees. 

Inconsistent Quality

Having new workers come into the business to help can also create inconsistent product quality or experiences for your customers. This is again mainly due to the challenge of training and integrating a contingent workforce. A common solution to this is to implement comprehensive and effective training programs.

Difficulty in Scheduling & Coordination 

Not only can scheduling be an admin headache with regular employees, add in a contingent workforce and scheduling could be a full-time job itself. It’s important to consider how you’ll schedule, manage, and pay out all these workers to avoid any headaches down the road.

That’s why it’s best to consider using a workforce management software that can help you coordinate all your workers schedules in a few clicks. Departments or employee types can be coded to schedule certain workers for certain locations or times. Making it easy to add a contingent workforce and skip over these other disadvantages.

Final Thoughts

If you’re a manager, implementing a contingent workforce can bring major wins to your organization and department. It also can bring some challenges that you’ll need to address.

If you can understand these nuances and overcome these challenges, you can expand your workforce to get more done, without the large overhead labor costs typically associated with hiring those employees full-time.

Guest writer.