9 Reasons to Leverage the High-Skilled Contingent Workforce
Filed under: Contingent Workforce.
We’ve talked a lot in the previous months about the benefits of working as a contractor in high-skilled fields like Procurement, Strategic Sourcing, and Supply Chain (Demand & Supply Planning, Logistics, Transportation & Operations) from a candidate’s perspective.
As 2014 starts to ramp up, we’re seeing from existing customers and hearing from many more other companies that they are looking to adopt a stronger quasi-contingent model to augment these increasingly critical business areas. We’re thrilled at Argentus to be gaining a strong reputation as very specialised recruiting experts in this emerging staffing model. 2014 is looking very exciting indeed.
We’ve written quite extensively about the advantages of contract work for candidates in Supply Chain Management – especially most recently in Planning and Strategic Sourcing/Procurement (i.e. trading some perceived job security for increased compensation, more interesting strategic roles and better work/life balance).
Now we want to pass on some market intelligence we continue to gather across many industries about the advantages companies are finding in hiring top-skilled contingent professionals – affectionately touted “super-temps” for some of these functions. The contingent workforce is becoming the new PERMANENT workforce and while it isn’t ideal for every company and every situation when deployed correctly it’s an incredibly powerful and flexible option which is nimble, very strategic, cost effective and can have immediate dramatic effects.
So, why should a company look to hire contingent workers in Supply Chain Management?
1. Leave Coverage
This of course is the traditional reason companies have hired contract workers in the past and it’s certainly on an increase for professionals. This is not something just for support staff nowadays. Obviously, if an employee takes a leave of absence, a contractor specialist steps into a role and keep things running smoothly and has the immediate potential to move an existing role into a more sophisticated dimension if so desired. Traditionally, many companies have often left professional roles like Logistics Managers and Supply Planning Analysts unfilled and have spread the work around during absences. But today, more and more organisations are realizing that there are many fantastic talent resources available to bridge the gap in SCM.
2. Cost Savings
There are many indirect ways that hiring high-skilled contingent workers translates into cost savings for companies (for example through the efficiencies that Strategic Sourcing experts uncover), but there are some direct and simple cost savings to be had through hiring contingent workers. While the hourly rate for SCM contract professionals is typically higher than a full-time employee, the overall financial burden to a company is substantially less.
Benefits for example, which is a large part of an employee’s compensation as well as potential termination costs are factors that need to be considered over and above salary and are very real expenses for companies. Contract staff do not receive benefits nor do companies need to worry about the cost of what happens if and when someone has to be terminated. They are easily terminated if workload changes or they don’t meet the grade with as little as two week’s notice. Contractors only get paid for the hours they work and that makes contractors a cheaper solution all around.
Additionally, hiring ones contractors through a third-party contract staffing firm (like Argentus) that will source and have contractors as their employees rather than hiring direct is smart business. The firm takes on the burden of candidate sourcing, screening, and on boarding, as well as any associated Employment government remittances where appropriate. Companies can also leverage contingent staffing to “rent” high-skilled labour for peak periods without paying out of pocket during downturns – another source of cost savings that companies just can’t ignore.
3. Hiring staff for project-based work / Time Sensitive assignments
The advantage of a full-time employee is that they often tend to take on more and more tasks as they integrate into the organization. But high-skilled contingent workers offer a laser beam focus on project-based work. To use an example from one of our own customers where contractors in Contracts Management were used: A company’s Procurement organization has a high volume of RFP (request for proposal) responses to go through. This is an ideal situation for one or more contingent workers – there are many skilled contractors who are RFP pros, willing to help with the backlog. Yes, the hourly pay rate of a contractor will be higher than a full-time employee, but a specialist contractor will likely complete the work faster, and the overall financial burden to the company is less. The company doesn’t have the issue of trying to find tasks for a full-time worker once the project is complete. And the contractor, once finished can be moved onto another company with a similar need.
4. The ability to staff based on the business cycle
The economic outlook for 2014 is looking fairly strong in Canada. Canada’s unemployment rate is down, and consumer confidence is rising. Demand for contingent workers increases in a bull market. When demand is high, companies are looking to grow. High-skilled contingent workers in Strategic Sourcing, Procurement and Supply Chain provide the expertise to help with growth because they know how to assess supplier strategies, keep costs down, and address inefficiencies – paying for themselves many times over. Hiring full-time employees is also obviously a good strategy when a company is growing, but the long-term cost of compensation can end up potentially hurting a company’s bottom line especially while the economy is still so tentative. Contract workers in SCM make a good alternative.
5. Start-ups / New Companies
Contrary to popular stereotype, it isn’t just large multinationals that are deploying contingent staffing for Supply Chain, Procurement, Strategic Sourcing, etc. It’s almost more important for startups and small companies to utilize Contractors to help define their hiring and talent strategy.
This Globe and Mail article from 2012 outlines reasons why small companies and new businesses are well-served by the contingent workforce. As frustrating as a “make-work” situation can be for a large company that hires a full-time employee for one project only to have trouble finding work for them after, it can be a huge blow to a startup or small business, which often counts labour as the highest cost factor. Contingent experts in Strategic Sourcing can help startups find efficiencies as they scale, while educating existing workers about best practices, which can be tremendously valuable.
6. “Try before you buy” – hiring contractors with the intention of moving them into full-time, permanent work.
Companies have traditionally looked towards high-skilled contingent workers as a way of trying before they buy – An opportunity to assess a candidate’s suitability and long-term viability before moving them into a full-time role is critical. This type of hire usually attracts a different type of talent—individuals who might be out of work and inclined to treat contract opportunities as a stopgap on the way to the right permanent employment – as opposed to career contractors who like the contingent lifestyle and want to go from contract to contract.
This distinction between two types of contractors is worth making because it impacts how employers should plan and market an open role. If you’re hiring for project-based work or business transformation, you don’t want to attract talent who sees contracts as a stopgap – too much of a flight risk. And if you’re hiring with an eye to making the employee permanent eventually, you don’t want to attract talent who approach contingent work as a career in and of itself. Defining this upfront can save lots of headaches later. A good recruiter should be able to work with either scenario.
7. You don’t have to manage contractors in the same way.
High-skilled contingent workers are independent and self-directed – they see themselves as their own bosses and you are their clients, and this can be a boon to managers. They work within a defined role, and because companies bring them in as experts, they don’t need as much direct training and supervision. Many contingent workers appreciate working in a consultant/client relationship as opposed to an employee/employer relationship, and this goes both ways. Contingent workers are hired to deliver a specific service, and this can help make the working relationship more straightforward than with a full-time permanent employee.
8. Business Transformation
This is the major area where Supply Chain contingent workers are making their mark and growing in quite a big way. It’s also the area we’re most excited about. There are a great number of very high-end individuals who work in a consultative capacity as contractors (not as members of pricey management consultant firms – but who deliver the same type of service) to affect change in organizations. These individuals are highly attuned to the fluid, evolving nature of the business landscape and offer huge value to companies by helping them define Strategic Sourcing goals and by developing innovative approaches.
For 2014, Argentus is working with a growing number of some top players at this very high level to bring you exclusive content about how top contingent workers can identify strategic opportunities for business transformation.
9. It’s worth mentioning one reason NOT to hire a contractor: Because you want a full-time, long-term employee but don’t want to carry the legal and cost burden that goes along with it.
We’ve written about this issue before, as it’s had some recent legal attention in the United States. A U.S. 11th circuit court found that having an employee sign an agreement saying they’re an independent contractor is not enough to make them a contractor in the eyes of the law. Whether you’re in the U.S. or anywhere else, you need to evaluate whether a new hire is actually a contractor in substantive terms. It’s a complicated thing to assess, but the big thing is that independent contractors need to be actually independent and self-directed. There are big penalties for misclassifying employees as contractors who are really full-time employees.
This however is really what buys companies safety. Choose a third party to work through that can take any non-fulltime employee on as their own for you. They handle payroll and can help mitigate the legal risk of hiring contingent workers.
This list is of course by no means exhaustive. There are other great reasons to leverage the high-skilled contingent workforce, but we hope this provides a good overview for those of you who are thinking of getting into this exciting hiring strategy.