What Are the Advantages and Disadvantages of Using Contingent Workers?
Like most things in life, contingent labor has upsides and downsides. Our companion post examines the pros and cons of being a contingent worker.
Today, we’re approaching this topic from the employers’ perspective, exploring the question: what are the advantages and disadvantages of using contingent workers as part of an organization’s workforce strategy? Find detailed answers from our experts on every factor you need to consider in the following sections:
The Advantages of Hiring Contingent Workers
Not surprisingly, cost savings are one of the primary benefits employers can expect when using contingent labor as part of their overall workforce mix, particularly in industries where workloads tend to fluctuate due to seasonality or other factors. In instances like these, a long term contract is often deemed unnecessary.
Contingent labor can help a business ramp up quickly to address spikes in customer demand, which not only helps avoid losing business but also allows for such rapid expansion at a lower cost than would be incurred using full-time resources. Companies can save on sourcing costs using a staffing supplier for temporary workers. They also save on the cost of benefits because contingent workers don’t typically receive employee benefits like full time employees.
Skills & Expertise on Demand
Another advantage of hiring contingents is the skillset that contractors can bring immediately to bear on your projects (often offering a fresh perspective)—and on a project by project basis. Contingent laborers are typically hired for a specific project and often need training only for project-specific skills.
In some cases, specialized contingent laborers don’t need training at all. Moreover, hiring managers often report that ICs and other contingents often bring new ideas, techniques, and experiences to their projects, helping achieve better-than-expected results.
Talent Pipeline Development
The final key advantage of using contingent labor we want to address exists in organizations that harness a contingent staff to develop an ongoing talent pipeline.
Contingent workers can demonstrate their skills and abilities as well as their alignment with the company culture, and managers—recognizing exceptional talent among the contingent workforce—often promote contractors to fill vacant full-time positions. This “try-before-you-buy” capability helps reduce turnover and onboarding/offboarding expenses.
The Disadvantages of Hiring Contingent Workers
On the other hand, there can be downsides to employing contingent laborers at your organization.
Underperforming Contingent Workers/Employees vs. Direct Hires
One of the disadvantages most commonly voiced by employers using contingent workers is that it can be hard to ensure contingents stay engaged and motivated; this may be true for several reasons. One is that the transient nature of temp work may discourage contingent workers from devoting their effort, knowing they won’t be at the job for long.
Contractors may underperform for any number of reasons, but it is usually because they don’t qualify for employee benefits; contingent workers are not fully invested in your company’s success and mission because they don’t have an obligation or motivation to do so.
Poor Fit for Skills and Training
Sometimes, staffing agencies feel spread thin, serving many customers besides your company. As a result, they don’t always dig deep into your company culture or detailed job requirements, making it difficult for them to ensure a good fit among the candidates they put forward.
Other times, the gap is internal. When managers aren’t confident in the abilities of the contingent workers they’ve engaged, it leads to a trust deficit, micromanaging, and poor interaction between your company and its contingent workforce, all of which can tank productivity.
Also, contingents must be up-to-date on current safety practices and other training. The absence of proper safety training during onboarding contingents can lead to injuries and liability claims.
Cultural Misalignment with Core Employees
Contingent workers feel isolated from their full-time cohort, who often view these workers as expendable and interchangeable. While no one expects contract workers to grow overly committed to the workplace, feelings of alienation can impact their effectiveness on the job.
In any organization, facilitating cohesion among your workforce—for both your full-time and contingent workers—is essential for productivity and success.
Experts in Engaging Contingent Workers/Independent Contractors
If you’re an organization thinking about adding contingent labor to your workforce mix or one of the many job seekers out there, you need an experienced guide to help develop your strategy or find the cultural fit for you. At nextSource, our workforce management and training experts ensure organizations like yours worldwide maximize these advantages of utilizing contingent labor and minimize the disadvantages.
Thanks for reading! For more insights on driving success in the workforce for your individual career or organization, check out our other blog posts.