Contingent staffing

From CEOpedia | Management online

Contingent staffing (also called contingent workforce) is a broad term used to describe various relationships between service providers and those services` recipients. Since it's been coined in 1984, it has been used in various contexts, but traditionally it means any form of alternative workforce arrangement.

Equal Employment Opportunity Commission provides this definition (Enforcement Guidance... 1997): "workers who are outside an employer’s `core` workforce, such as those whose jobs are structured to last only a limited period of time, are sporadic, or differ in any way from the norm of full-time, long-term employment".

Types of contingent workforce

There are many types of agreements between employer and employees which could include contingent workforce. Note that some types below might interleave and be used interchangeably. This list could also be extended or further subdivided.

  • Part-Time Employees - regular employees who work less than full-time basis, that is usually less than forty hours per week
  • On-Call Employees - persons who work only on request from employer. Upon call, they may be working for some period of time (days, weeks or more) on full-time employer's workload
  • Temporary Employees - this term usually means (but is not limited to) one of two roles: employer who is hired from external company to supplement firm's temporal staff or skill deficiencies or employer who is hired for relatively short time
  • Contract (Outsourced) Employees - employees from external entity that provide services to a firm. Usually that includes specialized personnel
  • Contract Technical Employees - generally high skilled contract staff who provides services for long-term project, including specialized know-how, like engineers or computer specialists
  • Leased Employees - a company called "professional employer organization" - who manages administrative and financial work associated with employment - "leases" an employer to an entity for an agreed fee. This employer's job is supervised by company where he is leased to.
  • "Master Vendor" Employees - a company called "master vendor" provides necessary temporary employees (sometimes by subcontracting) to other company. "Master vendor" handles all administrative work and billing while and might also direct employees’ work.
  • Independent Contractors - self-employed worker who has an contract for finite time or until an assignment is completed. They are often very independent and usually are accounted for solely result of their job (with employer not interfering in their processes). This type of contract is popular among specialists.

Motivation

From business’ point of view, contingent staffing is primarily a way to lower labor costs. Increasing financial pressure is driven by factors both internal and external nationally. Internally - more and more industries become deregulated. Externally - globalization puts even more pressure on all pricings of goods and services. Mixing full-time workers and contingent staffing allows flexibility in complying to local laws while maintaining competitiveness.

From employee's point of view contingent staffing might be beneficial. Cost control (taxes, insurance, equipment, etc.), better productivity and adapting to industries’ needs could result in much higher earnings compared to traditional workers. Less liabilities connected to strict work arrangements of full-time workers give contingent workers more freedom in planning and adjusting work schedule. It must be noted that some employee's benefits apply only to contract or self-employed individuals.

Dangers

There are disadvantages to contingent staffing for both employers and employees. Companies might suffer from following drawbacks when using contingent staffing:

  • reducing company - or project-specific knowledge among regular employees,
  • decreasing performance due to motivation and commitment issues,
  • lowered effectiveness due to high turnover.

Employers might experience following downsides:

  • compromised job security,
  • little to no promotional opportunities,
  • lower pay,
  • fewer benefits (health insurance, retirement plans).

Examples of Contingent staffing

  • Temporary staffing: Temporary staffing is when an employer hires workers on a short-term basis to cover needs such as seasonal increases in demand, additional projects or vacation coverage. Employees may be hired for a specific project or for a period of time.
  • Project-based staffing: Project-based staffing is when an employer hires workers on a short-term basis to complete a specific project or task. This type of staffing is often used for special projects, such as website design or software development.
  • Freelance staffing: Freelance staffing is when an employer hires workers on a short-term basis to do a specific set of tasks. This type of staffing is ideal for highly specialized skills, such as copywriting, graphic design, web development, and legal services.
  • Outsourced staffing: Outsourced staffing is when an employer contracts with a third-party firm to provide a specific set of services. This type of staffing is often used for roles such as customer service, accounting, finance, and IT support.

Advantages of Contingent staffing

Contingent staffing offers many advantages to companies and organizations. These advantages include:

  • Cost savings - Companies can save money by using contingent staffing because they don’t have to pay the same wages and benefits as full-time employees. Additionally, they don’t have the same overhead costs associated with hiring and training full-time employees.
  • Flexibility - Contingent staffing can provide a company with the flexibility to quickly increase or decrease staffing levels as needed to address changing workloads.
  • Increased productivity - Companies can benefit from utilizing contingent staffing because it allows for more focused, specialized skills that help increase productivity.
  • Access to specialized skills - Companies can access specialized skills that they might not have access to if they were only hiring full-time employees. Contingent staffing allows companies to access experts in their field, without having to commit to a long-term relationship.
  • Improved customer service - Companies can benefit from utilizing contingent staffing because it allows them to quickly respond to customer demands and provide a higher level of customer service.

Limitations of Contingent staffing

Contingent staffing can be a great solution for companies looking to fill immediate staffing needs, however there are a few drawbacks to this approach. These include:

  • Uncertainty: There is no guarantee that the contingent worker will be able to stay for the duration of the project or how much work they can produce in the given timeframe.
  • Lack of commitment: The contingent worker may not be as invested in the success of the project as a permanent employee, leading to a lack of commitment or consistency in their work.
  • Cost: Contingent workers may be more expensive than permanent employees due to their lack of benefits and the cost of recruiting them.
  • Limited control: The company may have limited control over the contingent worker, as they are not employed by the company and can choose not to take certain assignments.
  • Risk: There is a risk that the contingent worker may not meet the company's standards or expectations, leading to additional costs or delays.

Other approaches related to Contingent staffing

Contingent staffing is a broad term that describes the relationship between service providers and those services' recipients. Other approaches related to contingent staffing include:

  • Outsourcing: Companies outsource certain tasks to third-party service providers, such as web development, accounting, or customer service. This allows companies to access specialized expertise without having to hire and train internal staff.
  • Contract Staffing: Companies can hire contract staff to fill a specific need for a set period of time. This helps companies meet short-term demands or complete specific projects without having to commit to a full-time hire.
  • Temporary Staffing: Companies can hire temporary staff to fill in when full-time staff are on vacation, maternity or paternity leave, or out sick. This ensures that the company can continue to operate at full capacity without having to commit to a full-time hire.
  • Freelancing: Companies can hire freelancers to complete specific tasks or projects. This is a great way to access specialized skills without having to commit to a full-time hire.

In summary, contingent staffing is a broad term that encompasses a variety of approaches, including outsourcing, contract staffing, temporary staffing, and freelancing. These approaches can help companies access specialized skills and meet short-term demands without having to commit to a full-time hire.


Contingent staffing — recommended articles
Alternative staffing — Flexible staffing — Employee leasing — Multi skilling — Business process outsourcing — Advantages of outsourcing — Overtime premium — Craft union — Prime contractor

References

Author: Karolina Próchniak

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