Overcoming the HR Challenges of Contingent Workforces

When it comes to supporting a contingent workforce, HR faces many challenges. But contingent workforce management done right is a great way for HR leaders and teams to support organizational agility and competitiveness. With contingent professionals now accounting for 49% of the average company’s total workforce, it’s more important than ever for HR to overcome these challenges and seize every opportunity that flexible staffing provides.

With over 17 years in recruitment solutions, I’ve seen firsthand the complexities of contingent workforce management. We’ve come a long way since the Great Recession of 2008-2009, when contingent labor only made up roughly 10-12% of the average company’s workforce. In fact, today, 41% of companies are looking to increase their use of contingent workers, according to Deloitte.

Contingent workforce management refers to the strategies and practices HR teams use to oversee and improve a company’s non-permanent workforce. By non-permanent, I mean the freelancers, independent contractors, and seasonal or temporary staff who supplement traditional, full-time employees to fill skills gaps or deliver specialized support for particular projects or time periods.

The fact that contingent professionals are only with your company for a set amount of time is why you need to use different management strategies than those used for full-time employees and why there are particular challenges to overcome.

The challenges of managing contingent workforces are multifaceted. And, in my experience, HR’s task is to overcome them and strike a balance between:

You’ll see why as we work through the main challenges of managing workforces made up of contingent workers:

There are lots of different types of contingent workers and each has specific legal and tax implications that you need to get right for tax, payroll, and compliance needs.

Misclassifying workers can lead to fines, lawsuits, and penalties. In fact, according to the U.S. Department of Labor, worker misclassification costs employers billions of dollars each year in back wages and unpaid taxes.

Working with different types of contingent labor can also cause visibility challenges, particularly if they work remotely or in a hybrid model.

For example, consultants or independent contractors in professional services may work remotely and will use their own equipment. This can make it hard to understand performance metrics and properly document contributions.

However, even on-premises contingent workers can be challenging to manage. If you’re trying to manage seasonal staff in retail or hospitality, managing timesheets can be complicated and lead to errors in payroll, etc.

Cost control is an interesting part of contingent workforce management. While contingent workers are often hired for cost savings, without a centralized strategy, businesses risk overspending on contingent labor.

According to SIA, 70% of HR and executives see integrating contingent workers into their workforce as a challenging process.

This is because you need to create different onboarding processes for contingent workers than your permanent staff. Because contingent workers need to be productive quickly, your onboarding processes need to be efficient in every way. This will allow them to quickly familiarize themselves with company policies, tools, and team expectations.

Similarly, HR professionals need to take contingent workers’ experience of onboarding into account. Feeling rushed and underprepared for their role and your company will impact their ability to perform, hit KPIs, and contribute to company performance. This could also lead to negative feedback which could impact your reputation as an employer.

Unsurprisingly, using technology strategically can overcome many of the challenges associated with contingent workers. A well-designed tech stack can help HR teams streamline compliance, improve visibility and productivity, and support onboarding.

Here are a few ways technology can help:

In my opinion, it’s amazing how far we’ve come with technology and contingent workforce management. It’s really helping to close the gaps in managing, supporting and improving contingent talent strategies. Making those contingent workforce challenges much easier to address.

I’ve worked with lots of HR teams over the years, helping them develop the right strategies to see the most value out of their contingent resources and to create processes that truly benefit both parties.

These are my five best practices:

Yes, there are challenges for HR when it comes to managing temporary workers, independent contractors, freelancers, and seasonal staff, but with a strategic approach, they’re easily overcome. The gig economy isn’t going anywhere, so companies that invest in their HR processes to manage contingent workforces will continue to benefit from this cost-effective talent pool of specialists, experts, and flexible resources.

If you’re looking for support with contingent talent attraction, onboarding or management, Pierpoint can help. Learn more about our Contingent Workforce Solutions, or chat with me or my team today to discuss your talent needs.