What is Contingent Workforce Management?

In recent years, a combination of factors has led to organizations increasingly relying on contingent (temporary) workers to support growth. The latest SIA gig economy report estimates that roughly one-third of U.S. workers (53 million) are contingent workers. (Europe and much of Asia Pacific are tracking similarly.)

Furthermore, the report found that $1.3 trillion in revenue was generated from U.S. contingent work alone. With so much money at stake, 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, Statement of Work (SOW) consultants, human cloud workers and other temporary “gig” workers. 

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.
• Third-Party Payrolling: Serving as the employer-of-record alternative for client self-sourced professional project workers.
• Managed Services Provider (MSP) Services: Delivering strategic workforce management recommendations, while also serving as an outsourced extension for HR and procurement functions.
• Strategic Consulting: Offering subject matter expertise and best practices to help with program assessment and make better decision-making.
• Diversity, Equity & Inclusion: Driving cultural inclusion and promoting worker and supplier diversity through a data-driven approach

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: “Why Use an MSP and VMS?”)

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 and workforce redeployment 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 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: The Benefits of Pure Vendor Neutrality.”

How do organizations benefit from centralizing contingent workforce management?

Centralized program ownership typically requires establishing a unified coalition between procurement and HR departments, but it’s well worth the effort. Managed strategically, it enables the development of a cohesive program with clear definitions and guidelines, seamless integration into the broader workforce strategy, and a consistent and engaging experience. (Learn more about contingent worker user experience as a competitive advantage in our blog).

Here are some of the key benefits to this centralized approach that I’ve observed in my two-plus decades in the industry:

• End-to-End Lifecycle Management: By assigning one dedicated team, businesses can much more effectively track, manage, and oversee their entire contingent workforce program. This includes managing any supporting technology systems as well.
• Seamless Integration: Nesting contingent workforce strategy within the overall workforce strategy enables smoother integration with overall company needs and objectives. This allows companies to respond more effectively to fluctuations in demand, scaling up or down as needed in a more agile, strategic manner.
• Comprehensive Experience: By considering the total worker experience, not just that of full-time employees, organizations can create an inclusive and supportive environment for all workers, including contingent talent.  (Learn more about how to empower contingent workers within your organization in our DE&I research)
• Streamlined Communication: Having a single point of contact for all stakeholders within the organization, including managers and executives, enhances communication and facilitates effective collaboration. This simplifies processes and ensures consistent engagement across the organization, helping to align on and reach program goals.

Benefits of Effective Contingent Workforce Management

With the right MSP, VMS 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 direct-sourcing.
• Process Efficiency: Reduces average requisition time 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. (Learn more: “Agility Powered by Business Intelligence.”)
• Talent Quality: Provides supplier management assistance and helps organizations build private, highly motivated, contingent 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 levering proven best practices to access talent, drive savings and efficiencies, and mitigate risk.

To learn more about evaluating an MSP, check out Ardent Partners’ “MSP Solution Advisor Report.”

If you’re interested in learning more about how Magnit is helping organizations implement winning contingent workforce programs globally, please contact a Magnit representative at info@magnitglobal.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 Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.