Contract work has arrived in a big way, providing a host of benefits for companies. But many organizations are leaving value on the table.
According to a research report from Procurious, a staggering 40% of global workers are now contract (or contingent) workers. That includes gig workers of all stripes—everything from Uber drivers to senior strategic business consultants.
No matter what industry you’re in, contract work is fast-becoming a dominant working arrangement. Companies enjoy the cost savings, flexibility, and speed, as well as the fresh perspectives that contract workers provide. And more workers, especially high-skilled professionals, are choosing contract as opposed to permanent work. According to a recent study from payroll provider ADP, 70% of contingent workers are contractors by choice, rather than because they can’t find full-time employment.
At Argentus, we specialize in recruiting supply chain and procurement professionals for clients in a whole host of industries—food production, financial services, and public sector, to name a few. And a major aspect of our business is high-skilled contract workers. More of our clients have been using them to strategically augment their supply chain workforces over the past few years. They will bring on contractors on 6-12 months assignments for project-based work, technology implementations, and peak periods of activity.
There are a whole host of benefits for companies. But not every company is realizing those benefits. That’s where we step in.
Maybe you’ve never used contract staff before, or even considered that you could use them for procurement or supply chain projects. Maybe you are using contract workers, but only for leave coverages. Or maybe you have a contingent workforce program in place, but aren’t seeing the benefits—or are exposing yourself to considerable risk.
From our perspective as recruiters in the hiring trenches, here are the biggest ways that companies are leaving value from contract staffing on the table:
1. Not using contractors at all
This one is obvious, but bears saying. If your organization isn’t using contract staffing at all, or if you’re only using it to fill parental leaves or admin and general labour roles, then you’re leaving a huge amount of value on the table. Here are a few examples of project-based contractors that our clients use.
Many organizations will hire procurement professionals on contract to:
- Deal with a large volume of Rfx events or submissions,
- Act as strategic consultants to develop category strategy, or
- Develop centralized procurement models
In the supply chain world, our clients use high-skilled contractors to:
- Implement or upgrade ERP systems (goodbye Excel!)
- Organize data to gain better insight into their supplier base, and find value from consolidation
- Identify and implement continuous improvement in manufacturing
The first step to gaining value from contract workers is to identify the areas beyond the day-to-day where your organization must improve. Often, this can be done without adding permanent headcount.
2. Treating contract searches the same as permanent hiring
This one comes up so often that we wrote a whole blog post about it. In short, the hiring and onboarding process for a high-skilled contract worker is different from a permanent employee. Yet so many companies treat them as two sides of the same coin. They’ll get two weeks into a search, and decide to make a contingent hire a permanent one, or visa versa. Or they’ll require a candidate for a contingent role to go through four to five job interviews, stretching the process over weeks.
A search for a contract resource accesses a whole different talent marketplace than a permanent search. Bringing on a contractor is also faster than hiring a permanent employee—or it should be. You shouldn’t need to train them, because they’re pre-qualified. This speed is one of the biggest advantages to using contractors—and treating it like a permanent search leaves a huge amount of value on the table.
3. Not being flexible enough
One of the biggest benefits of contingent staffing is flexibility. Companies can bring on contractors resources for peak demand, seasonal assignments, or major project-based work. Smaller companies (for example startups who are scaling) can hire, for example, a supply chain consultant to help them establish best practices, implement systems, and nail the supply chain fundamentals to build “good habits” as the companies grows. When the assignment is finished, the contractor moves on to another assignment and the company keeps headcount low.
Contingent workers themselves are more flexible. Many of them choose contingent staffing for the increased flexibility and opportunity to work on a diversity of projects. That also means many work remotely, or with flexible schedules. Companies need to use this as an asset rather than a liability, rather than treating the contingent worker the same way they would a permanent hire. Focus on the deliverables, rather than the 9-5.
4. Exposing your organization to misclassification risk
This is a major issue that many companies encounter when using independent contractors. Contract staffing allows many cost savings, but the contractor must actually be independent. They can’t just be an employee by another name.
If a court finds that someone has been “misclassified” as a contractor, the company can be on the hook for income taxes, payroll taxes, and many other penalties. In Ontario, it doesn’t matter whether someone signs a contract stating that they’re a contractor. If their work schedule, reporting relationships and other work arrangements are similar to a permanent employee, the government will see that individual as a permanent employee.
Using a third party staffing agency like Argentus as well as our back office and payrolling partner, People 2.0 can help ensure that your worker classification is compliant with all regulations, and establish the arms length relationship necessary to show that a contractor is actually independent. (Please note, we are unable to offer legal advice. For more information, consult the Ontario Government’s guide to the Employment Standards Act).
These are, of course, just a few of the ways that companies leave value from contract staffing on the table. The world of contingent staffing is evolving, with new strategic use cases for supply chain and procurement arising all the time.
If you’ve never hired contract staff before in these areas, or have and want to get more strategic about it, reach out to Argentus! Call 416 364 9919 or send an email to firstname.lastname@example.org. Whether you have an immediate need for resources, or want to set up a contingent workforce program in the future, we’d be happy to assist.