What Is Contingent Workforce Management?

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In recent years, a combination of factors has led to organizations increasingly relying on contingent workers to support growth. The latest SIA gig economy report estimates that 31 percent of U.S. workers in 2017 (48 million workers) are contingent workers. (Europe and much of Asia Pacific are tracking similarly.)

Furthermore, the report found that $864 billion in revenue was generated from U.S. contingent work, a growth of nearly 10 percent from 2015. With almost $1 trillion at stake in the United States alone, many leading organizations have embraced a more strategic approach to these workers: contingent workforce management.

What Is Contingent Workforce Management?

In short, contingent workforce management is the hiring and managing of non-permanent employees, including temporary agency workers, independent contractors, SOW consultants, human cloud workers and other temporary “gig” workers. (Read more on the gig economy.)

Many of these laborers – particularly in the fields of arts and design, computer and information technology, and media and communications – are professional knowledge workers who are working independently by choice. While these knowledge workers offer unique skillsets that are valuable to organizations, they also bring with them increased risk of exposure to tax, misclassification and labor laws.

To help address these issues, contingent workforce management includes, but is not limited to:

  • Contractor Compliance: Providing proper classification of 1099 workers, self-employed workers, etc., as well as co-employment risk management.
  • 3rd Party Payrolling: Serving as the employer-of-record alternative for client self-sourced professional project workers. (Learn more about self-sourcing.)
  • Managed Services Provider (MSP) Services: Delivering strategic workforce management recommendations, while also serving as an outsourced extension for HR and procurement functions.

To best manage a contingent workforce, organizations typically pair an MSP with a vendor management system (VMS). The VMS centralizes contingent workforce management into one cloud-based platform, where users can perform actions such as initiating talent or project requests, evaluating project bids and hiring workers, reviewing timecards and expenses, onboarding and offboarding workers, and much more. (Learn more: What Is a VMS, and Why Use It?)

Assessing Your Contingent Workforce Management Needs

An organization’s contingent workforce management needs can vary depending on several core factors, such as:

  • Organization Size: Generally, larger organizations will have more complex contingent workforce management needs, especially if they have workers in multiple countries
  • Number of Contingent Workers Engaged: An organization’s industry, hiring approach and other factors can impact whether it has a higher or lower percentage of contingent workers versus the norm
  • Amount of Time Workers Are Engaged: Longer-term assignments can blur the lines between temporary and permanent workers, creating legal and compliance issues that are best tackled with the help of an expert MSP

Given variance in the areas listed above, a one-size-fits-all services approach to contingent workforce management doesn’t work. For example, some organizations may want an MSP to oversee all aspects of their contingent labor programs, while others may not be ready for or need all these services. (Learn more: Positive Business Outcomes of an Integrated MSP and VMS Solution.”)

Benefits of Effective Contingent Workforce Management

With the right managed service provider, VMS technology and strategic approach in place, an organization can increase the effectiveness of its contingent workforce management program, yielding benefits such as:

  • Risk Management: Mitigates worker misclassification risk and reduces the potential for rogue hiring/management practices regarding contingent workers
  • Cost Savings: Helps ensure competitive supplier bidding and drives increased self-sourcing
  • Process Efficiency: Reduces average requisition process without a drop-off in worker quality; offers omnichannel access to key workforce tasks
  • Workforce Visibility: Deepens an organization’s understanding of its workforce while yielding insights that fuel even greater effectiveness. (Listen to our business intelligence podcast.)
  • Talent Quality: Provides supplier management assistance and helps organizations build private talent pools.

Bottom line? As the battle for talented knowledge workers ratchets up, developing a cohesive contingent workforce strategy supporting total workforce management will help ensure your organization is leveraging proven best practices to access talent, drive savings and efficiencies, and mitigate risk.

If you’d like to learn more about how PRO is helping organizations implement winning contingent workforce programs globally, please contact a PRO representative at 800.291.1099 or email at info@prounlimited.com.

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of PRO Unlimited and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.

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  Industry InsightsWorkforce Management
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