April 27, 2021

How To Effectively Manage Contingent Workers

Survival has been the name of the game for businesses during the COVID-19 pandemic. As revenues and profits have shrunk along with the economy during the global health crisis, organizations have had to find ways to do more with less.

In the area of talent management, that has meant hiring more contingent workers to meet production deadlines and company needs. It’s a strategy that a large number of companies are using to get by.

“Our research finds that 32 percent of organizations are replacing full-time employees with contingent workers as a cost-saving measure,” says Brian Kropp, group vice president and chief of HR research at Gartner. Beyond the financial benefits, growing the contingent workforce gives companies a greater degree of flexibility when responding to staffing needs. In uncertain times, that agility is critical to survival.

But using this subset of workers isn’t as straightforward as it may seem. Doing so requires significant planning to address the unique needs and expectations of these workers.

“As with many organizational challenges, you need to understand the implications of contingent labor and then put meaningful controls in place,” writes Bhushan Sethi, partner, joint global leader of people and organization at PwC. Leaning on these best practices will help you use contingent workers effectively and maximize their productivity.

Make Contingent Workers Part of the Team

Although they are temporary workers, contingent workers are invaluable assets to your company. That’s why you have to treat them as part of the family. This may be a challenge when other workers see them as only temporary, and hesitate to accept them. Overcoming this challenge starts with early onboarding.

As soon as you know you will be hiring contingent workers for a project or job, onboard them. By bringing them on from the start, you give them the opportunity to feel more connected to the project and company. They also have time to form relationships with coworkers. To help onboarding go smoothly, take the time to facilitate introductions to team members and explain everyone’s role. It may also be helpful to assign mentors within the company to show contingent workers the ropes and integrate them into the company.

Beyond onboarding, find ways for contingent workers to be involved in the company. Encourage them to attend networking events on behalf of the company or volunteer for any community service projects in which employees are participating. Include them in company socials or relevant training exercises so they have opportunities to form closer bonds with coworkers and feel like part of the team.

Forging that bond is important for getting the most out of these skilled workers. “Gig workers are looking to do a good job, get paid well, and become rewarded for success just like everyone else,” says global industry analyst Josh Bersin. “Companies that simply treat them as vendors and do not manage their performance and environment lose out.”

Prioritize Communication to Help With Assimilation

Connecting these workers with the company culture can sometimes prove difficult. Contingent workers “may not necessarily feel the same investment in an employer’s mission and goals that a traditional employee might,” write Kelly Monahan and Kerry Reid at Deloitte.

To overcome this, these workers need to be both seen and heard at the company. Consistent two-way communication is key to ensuring contingent workers feel connected to the brand, the culture, their team members, and their projects.

To facilitate that communication, companies should give these workers access to any internal employee communication systems, like a company intranet or messaging platform, and make sure they receive company newsletters. Invite them to attend meetings relevant to their own projects and to those regarding the company as a whole. Solicit their feedback and encourage them to share their thoughts, ideas, and concerns.

In doing so, you not only share the company culture with contingent workers, you invite them to participate in it.

Why is it so important to make the effort to connect a temporary worker with company culture? An organization’s culture defines who it is and what it stands for as a brand, and contingent workers represent your culture to the outside world. That’s why you want to immerse them as much as possible in the company’s culture — so they become positive brand ambassadors who want to do their best work for the company.

four young hip employees at a conference room table give each other a high-five; contingent workers concept

Clearly Establish Expectations on Both Sides

Both the company and the contingent worker will have expectations regarding the working relationship. Those include compensation, deliverables, length of contract, and additional benefits. Establish a clear understanding of each of these before any contracts are signed. The expectations should be realistic and achievable so that you set your workers up for success.

“It’s good practice to draft a statement that details exactly what you need and when,” writes Amy Gallo at Harvard Business Review. From there, both sides can make changes until everyone agrees on the terms of the working arrangement, which should then be clearly stated in the contract.

As you establish these expectations, be careful not to dictate or try to control the means and manner by which the contingent workers complete their work. Doing so changes the nature of the working relationship and may lead to that worker being classified as an employee instead of an independent contractor.

The legal consequences of such a misclassification is one of the greatest risks of using contingent workers. “An employer who has misclassified its employees is subject to payment of back taxes and insurance premiums, unpaid wages and overtime, late fees and hefty penalties, not to mention civil lawsuits filed by misclassified employees, including class actions,” writes the team at Chicago-based law firm SmithAmundsen.

That’s why a clearly written contract that specifically outlines all expectations within the limits of a legal working relationship between an organization and a contract worker is so important. It also establishes the framework for a productive relationship.

Provide Opportunities for Contingent Workers to Grow

Though contingent workers are typically hired for their specialized skills, they are always looking to hone their abilities and develop new skills to increase the value of their services. If you can offer them opportunities for growth, they are more likely to stay loyal to the company and be available for work in the future.

Talk to your contingent workers and learn more about their vision for the future. Use that information to identify potential future work opportunities with the company and how you can present learning and development opportunities to prepare them for those future roles. While it may seem like a risky move to invest in someone who is a temporary worker, that investment has the potential to pay off in the long run if you don’t have to spend the resources on recruiting and onboarding someone new.

Doing so also encourages loyalty among contingent workers who appreciate you encouraging their growth. They may be more willing to take on more work or contribute innovative ideas for company growth and success.

“By investing time and resource in learning and development provision for their contingent workforce—particularly the basics around compliance and onboarding—organizations aren’t just aiding the personal professional development of these workers, they’re boosting internal skills and helping themselves to attract and retain this talent for the future,” writes Steven Lowenthal, U.S. CEO of workforce training provider Kineo.

two professions work together at a laptop; contingent workers concept

Employ the Right Tech Tools to Manage Contingent Workers

Just as with permanent employees, organizations need to be able to manage the logistics of employing contingent workers and track their performance. Doing so can be complicated because they must be managed in “ways that mitigate compliance risk and lessen administrative burdens,” writes business journalist Dave Zielinski. That’s where technology can help.

For example, you can have permanent employees clock in and out for work, but likely can’t legally do that same with contingent workers. So, tracking their performance is more about assessing where they are with regard to deliverables, and less about how much time they spend on a project. But tracking that information can be very time-consuming if you have to do that for every contract employee on a regular basis.

With the right tech stacks, companies can more easily manage the details of contingent worker contracts, such as onboarding, work frequency, billing, pay, and performance management. By centralizing all of this information, a business can more effectively manage its contingent workforce and plan for future needs from this group of workers.

If properly managed, contingent workers can be an asset to your organization and help you not only survive uncertain times, but thrive in them. That’s why it’s important to go the extra mile to make them feel valued and engaged with the company. Managing them in addition to your permanent workforce will not be easy, but with the right approach, the right plan, and the right tools, you will be able to maximize the value they bring to your company.

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