How do you start your contingent workforce strategy: Effective contingent workforce strategies

Introduction

In today’s rapidly evolving business landscape, traditional workforce models can only get you so far, especially when catching up with the demands of a dynamic market. Organisations increasingly turn to contingent workforces to access specialised skills, scale operations, and reduce costs to stay competitive.

But where do you start? Building a successful contingent workforce strategy requires careful planning and execution. 

You can start here—this article will discuss the essential steps to launching your contingent workforce initiative and positioning your business for long-term success.

Understanding the need for a contingent workforce strategy

Today’s workforce is all about flexibility—both for employers and employees. Companies must adapt to this by adopting a contingent workforce model.

Changing workforce dynamics calls for a more flexible workforce model

Here’s a quick rundown on why companies turn to a contingent workforce model:

• Flexibility: Freelancers and contingent workers help companies scale their workforce up or down according to project needs.

• Skills on demand: Access specialists with the latest in-demand skills for specific projects without the commitment and overhead costs related to full-time hires. 

• Project-based focus: Contingent workers are perfect for project-based work, allowing companies to assemble the right team for each initiative.

• Global reach: A wider talent pool transcends geographical limitations, allowing companies to hire highly skilled experts.

• Economic ups and downs: Scale the workforce up or down quickly based on financial conditions, optimising resources and mitigating risk.

Benefits of a contingent workforce

• Businesses save on benefits, can scale the workforce flexibly, and pay per project, reducing long-term risks.

• Companies can adjust workforce size based on need, access specialised skills quickly, and adapt to changing markets. This agility helps them compete and get products to market faster.

• A global talent pool allows companies to source highly specialised skills and diverse perspectives for innovation.

• Companies gain access to specialists’ deep knowledge and fresh ideas, sparking creativity and challenging existing norms.

• Clearly defined project goals and motivated contingent workers lead to efficient work, faster project completion, and improved overall company efficiency.

• Streamlined processes, less recruitment time, and standardised onboarding reduce HR workload, freeing them for strategic initiatives.

Importance of strategic planning

Building a successful contingent workforce strategy hinges on aligning it with your company’s goals. This focus ensures you attract and utilise the right talent. Clear business objectives guide your decisions about the specific skills and expertise needed within your contingent workforce.

Ensure your contingent workforce strategy aligns with your business goals

A more targeted approach maximises your return on investment by avoiding an unnecessary influx of talent and strategically allocating resources to acquire contingent workers with the perfect skillset for priority projects.

When contingent workers understand the desired outcomes, they’re more likely to contribute to project success. Additionally, clear goals allow you to establish metrics to measure your contingent workforce’s performance and overall effectiveness in driving business objectives.

Always ensure compliance and efficiency

Ensuring compliance and efficiency with your contingent workforce strategy will reap the following rewards:

• Risk mitigation: Adhering to labour laws and regulations reduces the risk of lawsuits, fines, and penalties.

• Brand protection: A strong compliance record enhances the company’s reputation as an ethical and responsible employer.

• Talent attraction: Compliance attracts top talent who prefer working with companies prioritising fair labour practices.

• Operational efficiency: Streamlined processes and clear guidelines improve efficiency and reduce administrative burdens.

• Cost savings: Avoiding legal fees and penalties associated with non-compliance leads to cost savings in the long run.

• Employee morale: Compliant practices foster a positive work environment, boosting employee morale and productivity.

Failure to ensure compliance will incur financial and reputational consequences such as:

• Financial penalties: Misclassifying workers as independent contractors can result in significant tax penalties, back wages, and overtime pay.

• Legal battles: Non-compliance can lead to lawsuits and legal disputes, damaging the company’s reputation and incurring legal fees.

• Brand damage: Public scrutiny and negative publicity from compliance failures can erode customer trust and loyalty.

• Operational disruptions: Compliance issues can lead to audits, investigations, and potential business disruptions.

• Talent acquisition challenges: A reputation for non-compliance can deter top talent from working with the company.

Developing the core contingent workforce strategy

Assessing business needs

Evaluate your current workforce

• Skills inventory: Conduct a skills audit to assess the skills and experience of your existing full-time employees. This can involve surveys, skills self-assessments, or performance reviews.
  
• Skill gaps vs. strengths: Compare your skills inventory to your business goals. Are there any critical skills you need to add to progress your company towards your objectives?

Determining future skill requirements

• Future goals and initiatives: Evaluate your company’s long-term goals and future initiatives. What new markets do you plan to enter? What products or services are you planning to develop?
  
• Skills for future success: Based on your plans, identify the specific skills and expertise needed to achieve these goals. These skills might not be readily available within your current workforce.

Project-based needs

Seasonal demands

• Analyse past trends: Analyse past data to identify recurring seasonal peaks and valleys in workload. This helps predict future staffing requirements.
  
• Project pipeline review: Review upcoming project timelines to anticipate periods of increased staffing needs. This allows for proactive planning.

Specialised projects

• Skills gap analysis: Clearly define the skills and expertise required to complete the project. Do these skills currently exist within your full-time workforce? 
  
• Project duration: Consider the project timeline. Is it a short-term project with a well-defined scope? If so, a contingent workforce offers focused expertise without long-term commitments and costs.

Defining roles and responsibilities

Types of contingent workers

There are different types of contingent workers that you can call upon based on your company’s current needs. Here’s a brief rundown of the critical kinds you need to know:

• Freelancers

They’re self-employed individuals who offer their services to multiple clients on a project-by-project basis. They have complete autonomy over their work, including when and where they work. 

• Independent contractors

Independent contractors are also self-employed but typically work for a single client or company on a specific project or for a defined period. Compared to freelancers, they often have a more structured relationship with the client. Independent contractors are typical in fields like IT, engineering, and consulting.

• Temporary employees

Companies hire temporary employees for a specific period, often short-term, to cover specific projects, seasonal peaks, or absences of permanent staff. Tier employment is based on a temporary contract with a defined end date. As the job is short-term, temporary employees usually have limited or no benefits.

• Part-time employees

They work fewer hours than full-time (typically under 35 hours per week) but continuously with a regular schedule. Part-time employees may receive some benefits, but often with reduced coverage or eligibility compared to full-time employees.

Job descriptions and requirements

• Clear role definitions

To ensure alignment between the company and contingent workers, create clear and comprehensive job descriptions by outlining roles, responsibilities, and expectations. These descriptions should include deliverables, qualifications, reporting structures, performance metrics, and compensation details.

• Specific skill sets needed

Develop a skill matrix to help match contingent workers with projects aligned with their expertise. This way, companies optimise their resource allocation and boost project success—additionally, a skill matrix aids in talent management, performance evaluation, and strategic workforce planning.

Building a recruitment plan

Aside from developing a compelling EVP for attracting top contingency talent, you must maximise your reach by leveraging online platforms and partnering with the appropriate agencies. Furthermore, you’ll need to make use of effective interview techniques and skill assessment processes to find the talent that best fits your company:

Sourcing contingent talent

• Utilising online platforms: Online platforms are your go-to for finding contingent talent. To expand your reach, use freelance marketplaces (Upwork and Fiverr), social media (Linkedin and Facebook), and industry-specific platforms (Toptal and Guru).
  
• Partnering with staffing agencies: Agencies offer industry expertise, access a broader talent pool, and handle the screening process, saving companies time and resources. They also mitigate compliance risks and provide flexibility to scale the workforce based on project needs — like CXC Global.

Screening and selection processes

• Interview techniques: Focus on behavioural interviews to assess past performance and check references thoroughly. Additionally, evaluate cultural fit for long-term projects and review portfolios when relevant. This comprehensive approach ensures you make informed hiring decisions.
  
• Skill assessments: Companies should identify core skills, create relevant assessments, and standardise the evaluation process. By integrating these assessments with other evaluation methods and continuously updating them, companies can make data-driven hiring decisions, improve workforce quality, and enhance project outcomes.

Onboarding and integration

Effective onboarding programs

Initial training should include the following:

• Clear communication of project goals, expectations, and the worker’s role
• Introduction to company culture and values
• Comprehensive project-specific training
• Introduction to the project team
• Establishment of communication channels
• A clear outline of performance expectations

Company orientation should cover the following:

• Company mission, vision, and values — This helps contingent workers understand the company’s goals and how their work contributes.
• Organisational structure and communication channels — Highlight the company culture and expectations for behaviour.
• Employee handbook, code of conduct, and security protocols — Provide a digital or physical copy of the employee handbook outlining company policies, procedures, and benefits (if applicable).
• Emergency procedures — Outline emergency procedures and contact information in case of emergencies.

Integrating contingent workers into teams

Collaboration tools

• Project management software: Platforms like Asana, Trello, or Monday.com can assign tasks, track progress, and facilitate communication among team members, including contingent workers.
• Communication tools: Instant messaging platforms (Slack and Teams), video conferencing (Zoom and Google Meet), and email are crucial for real-time communication and collaboration.
• Document sharing and collaboration tools: Cloud-based platforms like Google Drive, Dropbox, or SharePoint allow shared access to documents and collaborative editing.
• Virtual whiteboards: Teams can use Miro or Mural for brainstorming, mind mapping, and collaborative problem-solving.

Collaboration techniques

• Regular check-ins: Schedule regular meetings or check-ins to discuss project progress, address challenges, and ensure everyone is aligned.
• Clear communication channels: Establish clear communication protocols and expectations to avoid misunderstandings and delays.
• Virtual team building: Organise virtual team-building activities to foster relationships and collaboration among team members.
• Knowledge sharing: Encourage sharing and collaboration through forums, wikis, or knowledge management systems.

Building a supportive culture

• Open communication: Foster a culture of open communication where contingent workers feel comfortable asking questions, sharing ideas, and providing feedback.

• Inclusion and belonging: Make contingent workers feel valued and part of the team. Organise social events or virtual gatherings to build relationships.

• Mentorship and support: Assign mentors or buddies to support contingent workers during their initial period and provide guidance.

• Recognition and appreciation: Acknowledge and appreciate the contributions of contingent workers. Celebrate their successes and contributions to the team.

• Equal opportunities: Ensure contingent workers have equal access to resources, training, and development opportunities as full-time employees.

Expanding and optimising your contingent workforce strategy

Performance management and evaluation

Setting performance metrics

• Key Performance Indicators (KPIs)

Companies can use KPIs to measure the performance of their contingent workforce by setting clear and measurable goals, tracking key metrics such as productivity, quality, and adherence to deadlines, providing regular feedback, and using the data to make informed decisions about workforce optimisation and rewards.

• Regular feedback mechanisms

Companies can use tools like performance dashboards, one-on-one meetings, and project-specific feedback sessions to track progress, identify areas for improvement, and provide timely recognition. This continuous feedback loop helps ensure contingent workers are aligned with project goals and delivering the expected results.

Evaluating success and areas for improvement

• Performance reviews

By evaluating performance against project goals, identifying skill development areas, and documenting findings, companies can optimise workforce utilisation, reward top performers, and make data-driven decisions for future projects.

• Continuous improvement plans

Companies can create a dynamic environment that drives performance, innovation, and overall business success by providing regular feedback, fostering skill development, optimising processes, and encouraging collaboration.

Legal and compliance considerations

Understanding labour laws

• Contractual obligations: Businesses must meticulously draft contracts with contingent workers to avoid legal and operational pitfalls. These agreements should clearly outline the worker’s status as an independent contractor, freelancer, or temporary employee. The contract must also explicitly define the scope of work, including deliverables, timelines, and intellectual property rights.

• Worker classification: Proper worker classification is crucial for companies using a contingent workforce. Misclassification can lead to severe legal and financial consequences, including tax penalties, labour law violations, and unintended employer-employee relationships. Factors like behavioural control, financial control, and the nature of the relationship influence classification. Companies can mitigate risks, ensure compliance, and maintain positive relationships with their contingent workforce by accurately determining worker status.

Ensuring regulatory compliance

• Health and safety regulations: Companies must prioritise the health and safety of their contingent workforce—key regulations like OSHA mandate safe working conditions for all employees, including contingent workers. Compliance with worker’s compensation laws is crucial for protecting these workers in case of injuries. Additionally, companies must adhere to equal employment opportunity laws and wage and hour regulations to prevent discrimination and ensure fair compensation.
  
• Data privacy and security: Protecting data is vital when managing contingent workers. Companies must minimise data collection, encrypt sensitive information, control access, regularly assess security, and have a plan for data breaches. Worker data privacy training and compliance with data protection laws are also crucial.

Leveraging technology and tools

Workforce management software

• Tracking time and attendance: It provides accurate records of hours worked, aids in payroll processing, ensures compliance with labour regulations, and offers valuable data for project management and resource allocation. This software also improves transparency and accountability, benefiting the company and the contingent workers.

Popular options for you to consider:

• Truein: Specifically designed for contract worker attendance management.
• Workforce.com: Offers time tracking and attendance management for the modern workforce.
• Replicon: Provides time tracking, attendance, and workforce management solutions.
• Other HRIS or Payroll Systems: Many comprehensive HRIS or payroll systems include time tracking and attendance modules.

Managing contracts and payments

Effective contract and payment management is crucial for a smooth-running contingent workforce. Here are some specialised software that can streamline these processes:

• Contract Lifecycle Management (CLM) platforms: These tools facilitate contract creation, negotiation, approval, and storage. They ensure compliance with legal and company standards.

• Payment and invoicing systems: Platforms like these automate payment processing, track invoices, and manage payment schedules, reducing manual effort and errors.

• VMS (Vendor Management Systems): These comprehensive platforms manage the entire lifecycle of contingent workers, including contracts, payments, and performance tracking.

Collaboration and communication tools

• Project management platforms

Here are some of the top platforms to consider for collaborating with your contingent workers:

• Asana: Known for its user-friendly interface and robust task management features, Asana allows for clear task assignments, progress tracking, and collaboration.

• Trello: This visual platform is ideal for smaller teams and projects. Its Kanban-style boards facilitate easy task organisation and visualisation.

• ClickUp: This versatile tool combines one platform’s project management, task management, and document-sharing features.

Communication channels

Aside from traditional email communication, you can consider these channels to ensure smooth communication with your contingent workers:

• Instant messaging: Tools like Slack or Microsoft Teams enable real-time communication and quick information sharing.

• Video conferencing: Platforms like Zoom or Google Meet facilitate face-to-face interactions for meetings, presentations, and collaboration.

Conclusion

Recap of crucial steps in developing a contingent workforce strategy

The best way to start your contingent workforce strategy is to identify your company’s skill gaps by evaluating your current workforce and determining future skill requirements.

Additionally, you’ll need to identify your company’s project-based needs by analysing past trends to determine seasonal workload demands.

Defining roles is also crucial, as understanding the different types of contingent workers can help you find the workers your company is looking for based on its current needs. At the same time, defining roles should help you establish clear guidelines for classifying your contingent workers to ensure compliance with labour laws.

Recruitment, onboarding, and integration

Adopting a contingent workforce is a solution to a modern problem, so starting a contingent workforce strategy will require modern solutions and practices. Leverage online platforms to maximise your reach and streamline the recruitment process.

Onboarding your contingent workers is crucial to syncing their skills with your company’s goals. Finally, utilise collaboration tools to ensure seamless communication and teamwork between your teams and contingent workers who work online.

Future considerations and best practices

Staying agile and adaptable

Keeping your company agile and adaptable is crucial to standing out amongst competitors. Be open to new and fresh perspectives to maintain your company’s steady growth towards its goals and the unforeseeable future.

Continuously monitoring and improving your strategy

There’s no such thing as a perfect or “one-size-fits-all” strategy. Your company will need to make the necessary adjustments to make the contingent workforce model work, hence the need for your agility and adaptability.

Continuously monitor your strategies and note any areas you need to improve. Over time, your contingent workforce will grow with your company, making its benefits all the more apparent.

If you need help starting or improving your contingent workforce strategy, please don’t hesitate to contact us.

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