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Contingent Worker - A Permanent Solution

Contingent Worker - A Permanent Solution
Naveen Narayanan - Global Head ? Talent Acquisition | June 7, 2013

One could not agree more with Heinz Rudolf Pagels, the renowned American physicist, who aptly remarked, “The world changed from having the determinism of a clock to having the contingency of a pinball machine. Contingent, come to think of it, means subject to chance. The word itself encompasses the state of the world economy, nature of the job market and the current approach taken by employers across the world.


With the economy expanding in spurts, employers are not willing to add permanent workers in what one would call ‘big helpings’. In fact, temporary employment is one of the sectors of the labor market that is growing rapidly and extensively. According to the Aberdeen group, 1 in every 4 employees across the world is a contingent worker and this number is forecasted to jump to 30% of the workforce in 2013. A contingent worker receives payment or commission for the completed work and unlike a full-time worker does not receive a fixed amount as salary. Consequently, a company's focus is not on how the work is done; the focus is on the outcome. This is in the background of the rise of the Generation Y, who are expected to make up a big part of the contingent pool in the next 15 years, their primary motivation being they want to be their own bosses.


Traditionally, contingent workforce trends have played the role of a lead metric during an economic downturn or when recovering from a recession. Many instances of economic downturn have often been characterized by the layoff of temporary employees before the layoff of full-time employees to cushion the fall. A significant exception to this trend occurred during the recovery phase of the recessions in 1948, 1991 and 2001, which witnessed the hiring of contingent workers before the hiring of full-time employees. It is evident that contingent staffing is the time-tested safety net organizations used when they were in the mood for acrobatics in the fluctuating markets.


From the specter of recessions to today’s business fluctuations, not much has changed. Contingent workers continue to insulate businesses from demand fluctuations and companies are embracing this fact across industries and geographies. As globalization is considered the root cause for almost everything good and bad happening in the world today, it would be safe to assume it has a significant impact on contingent workforce trends.


The elastic growth of the global economy demands agility and flexibility from organizations in order to stay in the game and in contingent workforce organizations have found the right elastic to keep their pants up!


A contingent or temporary workforce gives organizations the freedom to deploy resources to a specific project or take a call on renewing the contract once the project is completed. A Cornell HR Review found that 67% of senior executives were planning to maintain less full-time staff by outsourcing work or hiring contract workers.


Used strategically, contingent workforce planning could be the solution to cost optimization, workforce utilization, right fit of candidates and various other HR problems that ails organizations. A contingent worker is not entitled to tax, healthcare or other benefits. This provides enormous savings for the company. Therefore, it makes sense for an organization to focus on the objective of the employee for being in the organization and how to enable them to achieve it quickly. This approach also leads to precise focus on the kind of skills required to execute the job.


Why buy the whole toolset when screwdriver is all that is required? Contingent or contract staffing gives a pool of candidates who have worked in multiple projects, have the required expertise in the field of work, and are ready to come, see and conquer. The time invested in orientation and training is reduced significantly due to the expertise and experience of most of the contractors. A contractor will cause only a minimal amount of disruption to the existing operation when they are hired and even lesser when their contract ends, thus reducing administrative and HR friction. Contingent workers also bring with them the option of flexible work schedules and the option of working onsite. There are many instances when contingent workers have outperformed the company’s permanent staff because they feel the need to prove themselves on the job, in order to land either an extended contract or a fulltime position. They often boost innovation in an organization as they bring in fresh ideas and knowledge, which could be leveraged by using them as change agents for organizational initiatives.


On the flipside, the very reasons, which make them attractive to organizations, can also make them unattractive. For instance, contingent workers are ineligible for health insurance, sick days, unemployment benefits, overtime pay, and tax deductions discourages one from being a temporary employee. In addition, job insecurity and the looming danger of contract termination, make them modern day Bedouins perpetually in search of jobs, a state of existence, which is not relished by everyone.  Moreover, what creates insecurity among contingent workers provides security for full-time employees, because full-time employees know they will not be the first casualty. To maintain the balance, an organization needs to keep an eye on where it will find the exact fit and number of temporary workers, when it needs them, to ensure they are not left hanging when the chips are down. Putting a process in place to manage intelligence, hiring, training, and managing of contingent labor will definitely allow your organization to meet constantly changing business demands in the best possible manner.


In certain GEOs like India, being a part of the contingent workforce also has a social stigma attached and many are reluctant to take it up as they consider it to be beneath them.


In conclusion, the contingent worker, irrespective of the fact he is a millennial, baby boomer or generation X, has arrived and is here to stay. They are not looking to be cooped up from 9 to 5 every day doing the same thing for years. They want the freedom to cherry-pick projects of their choice regardless of the fact that they are at the start or in the twilight of their career. In addition, as I mentioned in my earlier blog “Remotivation”, contingent workforce planning epitomizes the same philosophy being adopted by organizations across the world today- giving employees the space and freedom to do what they do best, and in turn symbiotically benefit the organization.

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