The workforce has changed over the past few years, with an increase in contingent workers becoming common. This change has sparked interest in HR departments worldwide, especially with the changing workforce and the rise of the gig economy. Let's discuss what a contingent worker is, the various types available, and their importance to businesses.
What is a Contingent Worker?
A contingent worker is a person who is not a regular employee of a company but is hired on a temporary or contract basis to perform specific functions within a company. You'll find this type of worker in various industries, including healthcare, technology, manufacturing, and finance. They may work on a project basis or be hired for a certain period to fill a temporary gap in the workforce.
Types of Contingent Workers
Freelancers are probably the first thing that comes to mind when considering contingent workers. They're usually individuals who provide services to companies as needed.
Independent contractors or 1099 workers are also common contingent workers. They have a particular skill set and usually specialize in an area such as accounting, IT, or marketing. These workers typically have more autonomy and contract for specific projects or periods.
Temporary or contract employees are hired through a third-party employment agency, and their services are provided for a specific period. These workers are an excellent solution for those needs that can't be easily predicted or for seasonal work. This type of contingent worker comes in handy when extra hands are needed or when filling in for absences.
Consultants come in as subject-matter experts and provide specialized knowledge to organizations. They often work with management to solve specific business problems or run projects from start to finish. Typically, this type of contingent worker has specialized knowledge in a particular field and requires high technical or functional expertise.
What Are the Benefits of Hiring Contingent Workers
Hiring contingent workers has many benefits that can help businesses achieve their goals and maintain flexibility. Here are some of the benefits of hiring contingent workers:
Cost savings: Hiring a contingent workforce can save companies money on expenses like healthcare, retirement benefits, and office space.
Specialized skills: Companies can tap into a pool of talented professionals with technical skills to help them achieve their goals.
Increased flexibility: Contingent workers can be brought on board quickly to handle urgent tasks, and their contracts can end when the project is completed.
Challenges of Managing a Contingent Workforce
While there are many advantages to hiring a contingent workforce, some challenges come with managing these types of workers. One of the most significant challenges is compliance. Companies must ensure that they comply with labor laws and regulations to avoid any legal problems. Managing a contingent workforce can also be challenging, especially regarding communication, training, and collaboration.
Integrating contingent workers into the company culture and making them feel like part of the team can also be challenging. Additionally, contingent workers may have different benefits and work arrangements than permanent employees, which can lead to issues with morale and retention.
Managing contingent workers can lead to operational inefficiencies and fragmented management processes across the business. The business may have less control over the activities of contingent workers, as they are often self-managed.
The rise of contingent workers tells where the future of work is heading. While there are some challenges to managing a flexible workforce, their benefits often outweigh the disadvantages. By embracing contingent workers, you can create a more agile business that can adapt to market demands quickly and stay ahead of the competition.
Return to the HR Glossary