Contingent Workforce
From OrgChart.net
Contents |
Overview
Temporary and contractual employees have become very important where meeting the staffing needs of organizations today is concerned. The contingent workforce is increasingly becoming a significant chunk of an organization’s people resource. It provides a low cost, flexible staffing option in an environment where salaries and wages form the single largest operational cost for an organization.
Category-wise, those who fall in the ambit of contingent workers are - temporary employees or temps, part-time employees, independent contract workers, consultants, and interns. It must be noted that the full-time, permanent employees frequently are generally referred to as core employees.
Types of Contingent Workers
Temporary employees also known as temps, are aligned with temporary employment agencies that place them in companies for short-term assignments. They usually earn less than their full-time counterparts and do not receive benefits that would accrue to a core employee.
Part-time employees work fewer than 35 hours a week. They stand to receive few or no benefits, which results in a cost savings for the company. These employees can be engaged specifically to meet particular peak needs (during a particular season or part of day) of the organization.
Contract workers are employees who enter into a relationship directly with an employer. It is for a particular project or for a specific period of time.
Consultants are individuals usually with strong skills or professional knowledge who are engaged by the company on a project basis. The company may not feel the need to have a specialist as a core employee as it may be a one-time need.
College interns are students who are interested in having a hands-on experience in a career, who work for a company for either no salary or a reduced salary. They work for a short period but the do provide a company with staffing flexibility.
Drivers Fuelling Rise of Contingent Workforce
- Globalization: it has outlined a need for a more flexible staffing option
- Cost: Contingent workforce is an option that helps organizations bring down the operating costs
- On-demand access: Contingent workforce gives a company the benefit of tapping a resource on a need basis and not having to engage them permanently
- Technology innovation: Special areas of knowledge have triggered the need for specialist intervention and this may be done as required
- Choice of people also, who may prefer to work in an arrangement that facilitate more personal time.
Advantages of Contingent Workforce
- Flexible staffing option: the firm can hire when in a phase of growth and can fire without complications if costs need to be reduced further
- Save costs: Contingent workers are often paid lesser than core employees and may not receive any benefits. Companies save on salaries and benefits
- On demand access: Talent that is not available in–house can be brought in immediately for a short while as the need arises without the complex procedure or costs incurred for recruitment
- Since Contingent workforce is a temporary arrangement, the company does not have to contribute anything or plan for their retirement benefits.
Disadvantages of Contingent workforce
- The contingent worker may not have loyalty or commitment to the organization that temporarily hires him/her
- The morale of the core employees may be hit if the contingent worker is being used to perform what was earlier a core function
- Sometimes a firm may have to incur training cost for the temporary employee.
Contingent Workforce Management
Recent research indicates that most organizations are unaware of the costs they are incurring simply due to mismanagement of the contingent workforce. Savings to the tune of millions of dollars can be made if there is a control over maverick spending. Not only that, expensive lawsuits can be avoided, compliance issues can be handled and revenue leakage can be plugged.
There are software solutions available today that can facilitate rapid location of certified resources, automate the recruitment process, take compliance requirements into account, schedule interviews, alert if capabilities exist within the organization itself and much more.
Moreover, there is the option of outsourcing payroll and HR for the contingent workforce. It is a highly effective solution, as the third party has already reached a certain level of expertise and achieved economies of scale, where it naturally results in time and cost savings to the firm. It eliminates chances of non-uniform pricing as hiring is now done at one point instead of multiple nodes.
