Does Your Contingent Workforce Hiring Strategy Need Work? 4 Ways to Fix It

April 18, 2017
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More Americans are in business for themselves than ever before. By 2020, more than 40 percent of the U.S. workforce will be contingent.

What do HR leaders think of the shift? They love the gig economy for the heightened flexibility, reduced labor costs, and broader access to talent it brings. Seventy percent of businesses recognize that contingent labor helps control costs, and 69 percent acknowledge such workers have improved their organizations’ agility.

They’re not so enamored, however, with the managerial challenges this burgeoning workforce presents. Nearly two out of five organizations lack efficient management structures for their contingent workers. Even more — 47 percent — point to streamlining their gig worker hiring processes as a top priority.

Time for a Tuneup

Is your contingent hiring process running smoothly? Business processes, just like car engines, need tuneups now and then for peak efficiency. You may even need to call a professional mechanic sometimes.

Follow these four steps to bring your hiring process up to speed:

1. Explore new roads.

Contingent workers can be found everywhere! Look beyond temporary staffing agencies and local job boards. Check with HR providers, consulting firms, or online freelancer marketplaces.

For example, at Innovative Employee Solutions, we work with a global auto manufacturer that hires fresh college graduates on a temporary basis for its engineering team. If workers succeed in training, they are then hired directly by the client

How does IES come into play? We hire and become the employer of record for those self-sourced contingent workers, providing the manufacturer with flexibility and cost savings compared to prior temp agencies.

2. Look ahead for speed bumps.

Too many companies have a shortsighted hiring mindset. They look for gaps in today’s teams without considering future needs.

Rather than scramble for help during a dry spell, keep high-performing contingent workers’ contact information on hand. Better yet, implement a freelancer management system (FMS). 

We recently worked with a Fortune 500 defense company to hire self-sourced employees for surge periods. When the company receives a big contract, it uses the FMS program we created to tap talent. As a result, the company can respond quickly to the unpredictable and dynamic needs of a military research lab.

3. Perform regular maintenance.

In business, nothing beats a well-oiled workforce. Compared to peers, highly engaged team members display a 41 percent reduction in absenteeism and a 17 percent increase in productivity.

Broaden those benefits to your contingent workers, embracing them as part of your culture. By instilling in them a sense of belonging and purpose, gig workers will cheer your organization’s success as much as full-time staffers do. After the contract period is up, they’ll want to return for future projects.

What’s the best way to bring contingent workers into the fold? Partner with vendors with a reputation for treating people well. Be warned: These often aren’t the cheapest providers.

Remember, too, to build a contingent worker onboarding process. They’ll appreciate information on issues like daily dress, parking, performance expectations, scheduling, and harassment policies.

4. Find a good mechanic.

There’s a reason why HR is a growing, highly paid field: Managing people is complex, and mistakes can be costly. Penalties prescribed by the Fair Labor Standards Act, as well as state laws, make worker classification a particularly risky part of the job.

In Maryland, for example, misclassifying an employee carries a civil penalty of $5,000 per worker for the first violation and $10,000 per person for subsequent violations. By the way, that doesn’t include the payroll taxes, penalties, and interest charged by federal organizations such as the IRS. California companies can even be held liable for errors and oversights made by their staffing vendors.

Rather than seek the cheapest source of short-term labor, do your homework. It’s your responsibility to understand relevant laws and ask questions to ensure compliance — both within your organization and by external vendors. Stephen Dwyer’s “Less Than Meets The Eye: Potential Liability When Using Temporary Workers” provides a nice primer on the subject. Work only with vendors as concerned with legal compliance as you are.

For example, a recent IES client was unsure of its healthcare responsibilities regarding contingent workers under the Affordable Care Act. It partnered with us to handle the complex tracking and reporting requirements, meaning IES owns the compliance liability and administrative burden, helping the client avoid tens of thousands of dollars in potential ACA violations. 

Still worried about worker classification? Certain vendors will vet qualifications for you. For a premium price, they’ll even assume the risks of misclassification.

The Road Ahead

In today’s economy, one thing is clear: As the talent pool tightens for skilled workers, the contingent workforce will continue to grow.

Particularly at the state and local levels, expect employment legislation to grow alongside it. In the past five years, governments at the state, county, and city level have mandated paid sick leave, minimum wage increases, paid family leave, and “ban the box” initiatives. At least two bills are threatening the use of temporary workers in general: California’s AB 5 and Illinois’ HB 690.

To gain a supplemental talent pool and peace of mind, consider partnering with a payroll provider. Beyond avoiding litigation and maintaining your reputation, companies utilizing payroll services can save up to 50 percent compared to full-service staffing agencies.

A contingent workforce brings benefits, but it also carries risks. Before taking a road trip to temp worker territory, be sure your hiring strategy protects against them.

Tania Fiero is vice president of human resources at Innovative Employee Solutions, a leading nationwide employer of record that specializes in human relations and payroll services. Founded in 1974 in San Diego, California, IES has grown into one of the city’s largest women-owned businesses and been named one of its "Best Places to Work" for nine years in a row. 

An expert in joint employment and the Affordable Care Act, Tania helps employers embrace contingent workers in their staffing strategy and culture. She is a Society of Human Resources Certified Professional (SHRM-CP) and a certified Professional in Human Resources (PHR) via the Human Resources Certification Institution. Tania previously served on the Board of Directors for the National Human Resources Association of San Diego. She was recognized in 2016 by the San Diego Human Resources Forum Board of Directors at its 2016 HR Executive of the Year event and in 2011 by the San Diego Business Journal as San Diego’s HR Professional of the Year.
Does Your Contingent Workforce Hiring Strategy Need Work? 4 Ways to Fix It
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