The Great Reshuffle and the Great Recession provided a welcomed push for companies embracing more workforce participation from contingent labor. The nudge could have been by choice to keep supply chains running or the flexibility of on-demand talent was needed at a certain place and certain time to fill a gap. It is concluded that in the past 8 quarters, corporations welcomed contract talent to satisfy roles that were once occupied by full-time employees (FTE).
Progressive owners and senior management are analyzing data sets to justify if the growth of their extended workforce justified the compliance risk and cost of on-demand talent. Budget allocations for hiring, workforce management, project/hourly rates, and training are typical costs for temp workers and are unfortunately described as expensive, in the short term. The argument against concluding hiring contractors comes with a premium price tag is contingent workforce programs and their partners possess tools to reduce unwanted spend. Some of those tools are experience, efficiencies, and innovations to reduce costs and the actual spend per hire be a comparable budget allocation to hiring of FTEs.
“I’m not sure I agree with the notion that temp workers are necessarily more expensive than FTE’s when you consider the overall burden that comes with employing people directly- equipping, HR support costs, management expense, technology etc,” says Bryan Peña, CCWP, Principal, Defiant Solutions, who has duel experience managing contingent workforce populations on behalf of corporations and their partners. “Those expenses should be considered to create a total cost of ownership perspective as opposed to comparing hourly to hourly fees. But that being said, the best way for companies to increase efficiency in these situations is to develop a comprehensive direct sourcing approach that focuses on building a bench of on-demand resources.”
Peña added for corporations to be ready for “peaks and valleys in demand, pulling contingents from this on-demand channel can ensure there is a population of vetted and trained resources.” The bench or channel that Peña refers to is a talent pool of on-demand workers sourced and managed internally by the company with help from consultants. This project-based talent can be assessed quickly and whose compliance risk is low due to the relationship already established since being directly sourced by the company.
The key phrase “vetted and trained resources” refers to the compliance and lawful management of a contingent workforce population, which possesses upfront and recurring talent management spends. Those costs can be viewed simply as insurance premiums protecting against worker and government claims of wrong-doing or procedure violation. However, managing a contractor population is much more complicated and will require agreement from senior management to assemble the required total talent management resources.
“The first program move is to obtain buy-in that you will remain flexible in worker classifications with all stakeholders. Then, it is imperative to find a partner who will consider your employment-related legal compliance issues in any country where you hire workers,” said Bjorn Reynolds, CEO of Safeguard Global, a PEO that primarily helps companies with an EOR solution however is called upon to manage contractor populations globally. “Not all countries have the same standards and rules regarding the hiring of contingent workers. One of the primary challenges for managing this kind of flexibility is keeping up with and maintaining compliance. This can become burdensome for HR teams who generally provide more value to the organization when they are focusing on workforce strategy and recruitment related work.”