During times of economic uncertainty or widespread market disruption, it is not uncommon for organizations to impose some form of hiring freeze for full time employees or full-time equivalents. Freezing hiring for all non-essential positions can give an organization the opportunity to consolidate current employee rosters and restructure departments to minimize labor costs while protecting core operational capability. However, operating during a hiring freeze doesn’t have to hamstring your ability to optimize workforce efficiency. Leveraging contingent workers offers a good workaround during a hiring freeze. Here are a number of ways how contingent workers can help bridge the gap.
Engaging contingent workers first and foremost helps to maintain continuity of operations in an uncertain environment. When it is not permitted to bring full time resources on board to address exigent business needs (new customers, unexpected orders, etc.) the ability to engage contingents like ICs, gig workers, project workers, etc., provides a cost effective alternative. Contingents are by nature transitory and expect to work for a finite period. Depending on classification type, many do not incur the additional tax, benefits and administrative burden of full-time staff.
Next, the use of contingent labor during an FTE hiring freeze enables an organization to retain their ability to scale to meet fluctuations in demand. Not all organizations are equally affected by market events. Some industries see a large drop off while others see an acute if temporary spike during a market-wide event. Think Hospitality versus manufacturers of PPE during the current pandemic disruption.
Another positive use case for hiring contingents during an FTE hiring freeze is a strategic one – developing a pool of talent, trained in your operation and ready to source from when the freeze is lifted. When the disruption ends and the hiring freeze is lifted, having contingents already partially trained and integrated into your culture and operations can provide competitive advantage while others start from scratch to ramp up their workforces.
Similarly, from a longer-term perspective, the hiring freeze and the decision to engage contingents in the interim can spur an organization to take a deep dive into identifying which roles are truly core versus those that are non-core to functional operation. Making this distinction during normal times is often an afterthought. But during a time of disruption it takes on a more critical urgency – and one that yields more efficient workforce utilization in the long term as the company can reduce more costly full time labor in non-core functions once normal operations resume.
The last consideration focuses on the intangible but no less important effect of a hiring freeze on employee morale among the remaining full-time roster. Protect FT employee morale by avoiding (even the perception of) leaning on the full timers to do more work for less pay. Employees may resent having to take on more work, without the benefit of more pay. Engaging contractors during a freeze demonstrates to the full-time workforce that your organization is committed to equitable observation of their existing working agreements.
Want to learn more? Contact your nextSource contingent workforce expert today.
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