Across industries, contingent workers are helping savvy companies decrease costs, tap into specialized talent, build their brand, and vet talent for full-time positions. They are the secret weapon of many organizations, yet many companies underutilize or neglect this growing and job-hungry segment of the workforce. If you haven’t effectively tapped into this labor pool, you could be overlooking substantial savings and a sharp competitive edge.
What Is a Contingent Worker, Exactly?
Contingent workers are typically hired in a temporary or per-project capacity as part-time, seasonal, temp or contract workers. When that project or season is over, they are paid and the contract or term is completed. A business hiring contingent workers is not obligated to offer that worker the benefits that come with full-time employment (e.g. health insurance, sick/vacation time, etc.).
Contractors are legally working for themselves (or their own business), so they are also responsible for paying their own employer taxes. If they are hired through a temp agency, the employer pays the temp agency a flat hourly contract fee (which is typically higher), and the worker remains an employee of the temp agency.
Aren’t Some Gig Workers Upset About Low Pay and No Benefits?
Many people read the news and worry about the baggage of hiring contingent workers. Is it fair to offer them no benefits? Pay no employment taxes for their labor? Aren’t Uber drivers on strike for better pay? Isn’t California enacting legislation to ensure this labor force can’t be exploited by big tech companies for enormous profits?
It’s important to remember that the gig economy is only a small segment of the broader contingent workforce. There is a thriving and work-hungry contingent sector that has chosen and is happy with the flexibility and compromises that come with contingent work. When engaging contingent workers for your business, ensure you agree upon a clear contract or working relationship before starting a project and you can ensure both parties will benefit from the relationship. Typically friction comes from misaligned expectations regarding how many hours will be worked, if there are potential benefits available, and if there is a long term path forward. Transparency and honesty on your part is always the right choice.
Even if you’ve never considered hiring temporary workers or don’t think they apply to your business, you may be surprised at the many ways they can be used to save you money, increase efficiency, and build your brand.
Reduce Costs from Benefits and Taxes
The most straightforward benefit of tapping into the contingent workforce is their cost savings. Full-time employees come with the additional overhead of taxes and benefits. These costs equate to a substantial 18-25% addition to their hourly pay rate. If you’d like to do some back-of-envelope math for your organization, taxes typically add around 10% of an employee’s salary and benefits add an additional 8-15% or more depending on your specific policies. This savings is most realized when hiring temporary or seasonal employees directly, as opposed to going through a service.
Tap into Specialized Talent
A full-time employee gives you weekly access to 40 hours of a single person’s skillset. In contrast, the use of contingent labor enables you to subdivide the underlying skill needs with more precision. As an intuitive example, imagine your construction business choosing between a 40-hour general contractor or hiring a skilled painter, plumber, electrician, and roofer for 10 hours each. In that case, it would be an easy decision: hire the more efficient, specialized labor for singular components of the larger job.
It may not be as intuitive for your business, but if you take time to dig into the specific skills needed across your organization, you will likely uncover many areas that would benefit from a specialized injection of contingent labor. You know your business best, but seeking out your most effective combination of full-time, part time, and contractor labor will help reduce costs and increase efficiency. Additionally, you can set different pay rates for different skill levels, further honing your cost savings.
You probably also have a growing list of labor-intensive tasks you can’t seem to make time for. Many sites now make it simple to find freelancers to get those completed quickly at a reasonable cost. Whether you’re struggling to reformat an Excel spreadsheet, need a video edited, or just need a temporary admin to plow through some paperwork, there are thousands of skilled freelancers who are just a few clicks away.
Flex Labor to Align with Demand
Restaurants are a classic example of flexing labor to align with their current demand. If there are fewer guests one night, some staff can be sent home early. In anticipation of holidays and events, it’s common to briefly staff-up before resuming normal operations the following day. This flexibility maximizes profit by continuously modulating labor to match demand. Many businesses share these predictable swells and lulls in labor requirements, but those with only full-time employees waste hours during downtime and put additional burden on their employees during busy seasons, not to mention increased costs of overtime.
Consider the cadence of your organization: are there seasons or months the team is overloaded? Could engaging an on-demand contractor help smooth out bumps in the road? While you likely can’t match the nimbleness of a restaurant, adding some flexibility to your labor pool can make a consequential impact.
Source Full-time Employees
You can do as much skill testing, interviewing, and vetting as you want before you hire a new employee, but you’ll never know how successful that person will be until they come on board. Contingent workers give you a great opportunity to trial talent before bringing them on in a full-time capacity. Testing in a contract or temp role gives you an employee crystal ball: see how they perform, how well they integrate with your organization, and what challenges they may have in a permanent position. The nature of the contingent relationship also makes it much easier (and cheaper) to part ways if things aren’t working out as anticipated.
Extend Your Brand
Another often overlooked utilization of contingent workers is for brand building. There are many ways to engage a contingent worker to benefit your brand identity or awareness: staff a trade show, manage your social media, write posts for your blog, redesign your website, update your logo, or create some well-designed sales materials. The value of your brand isn’t always as tangible on your bottom line, so many organizations let their assets slowly gather dust and pay a premium for an extensive rebrand years later. Contingent workers are a great way to make sure you’re performing continuous maintenance on your brand persona, even if you don’t have a dedicated resource in house.
Examine all of the ways your brand communicates with the outside world. Your website, newsletter, logo, uniforms, packaging, sales materials, and job postings are all speaking on your behalf. Now identify something that isn’t communicating the right message or is detracting from the way you want others to perceive your organization. Go find a freelancer or a temp employee to help you update it!
Improving your lowest quality assets on a monthly or quarterly basis will decrease the need for a big, expensive update later as well as ensure your brand is delivering a consistent and cohesive message across all touchpoints.