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Contingent Workforce Management: Definition, Challenges, and More

by Brian Jaenke, on December 01, 2022
Utilizing a contingent workforce is becoming a more common strategy due to the ever-changing labor and economic markets. To survive and succeed in taking on a growing contingent workforce, organizations must learn to master contingent workforce management.

Contingent workforce management refers to the process of utilizing and managing non-permanent employees. To appropriately manage a contingent workforce, you must be aware of laws and regulations that cover non-permanent employees and properly engaging this extended workforce to achieve organizational goals.  

Our guide below will tell you what contingent workforce management is, how it’s managed, common challenges, and how to successfully create and maintain a contingent workforce management program.

What is Contingent Workforce Management?

As noted above, contingent workforce management is the process of utilizing and managing non-permanent employees.

While the specific tasks will vary for each company, the contingent workforce management process can include:
  • Recruiting and hiring
  • Processing payroll
  • Drafting and maintaining contingent/temporary worker contracts
  • Training and safety instruction
  • Assigning roles and responsibilities
  • Performance evaluation and management, including end-of-contract assessments
  • Employee engagement and retention activities
  • Managing the employee lifecycle
Non-permanent employees refer to temporary employees, contractors, etc. Contingent Workforce Management works to address the challenges inherent in utilizing these types of employees.

Should a Contingent Workforce Be Managed Internally or by an External Partner?

A contingent workforce can be managed either internally or externally. An internal employee will always be involved in a contingent workforce in some form. The level of involvement depends on whether an external partner is engaged.

Many companies utilize an external vendor or partner to manage their contingent workforce thanks to additional benefits. One key aspect of outsourcing this function is that it increased internal bandwidth. This means that on-site staff has more time to focus on the core business and other critical tasks.

Outsourcing your contingent workforce management can help you better allocate your resources and in-house employees to other important organizational activities. An external partner also will aid company leadership in focusing on important business goals such as on-time delivery, safety, employee engagement, retention, etc.

If you’re a manufacturer and looking for more information on managing your workforce, check out our recent blog on manufacturing workforce management.

Challenges of Contingent Workforce Management

If you’ve never utilized a contingent workforce, you may wonder what challenges to expect. We’ve worked with numerous clients on their workforce management strategy, and the following challenges are what we see most often with new clients.

1.Employment Law Compliance

There are specific laws in place that cover contingent workers. The wage and hour laws set by the Fair Labor Standards Act (FLSA) don’t cover contingent workers.

For instance, suppose you misclassify one of your employees as a contingent worker and don’t pay them the minimum wage or overtime pay. In that case, you will be responsible for paying the amount of those unpaid wages, liquidated damages, and attorneys’ fees. If an employer willfully violates the wage and hour laws, they can be charged with criminal penalties.

Staying on top of these changing regulations and statutes can require a significant amount of effort and resources for many businesses.

2.Employee Engagement

Attracting and engaging with contingent employees is challenging as they aren’t embedded in the corporate culture like your other employees. They generally don’t have the same benefits as permanent employees and aren’t as protected by labor laws.

Since they are typically hired for short-term work, it can be difficult for them to work with employees who have been with the company for a long time, leading to a higher turnover and lower productivity.

To deal with these issues, employers must create an effective communication strategy to use with their contingent workforce. Implementing this strategy will ensure that contingent workers feel welcome and engaged. In turn, this will lead to higher levels of productivity and performance.

Read more: How To Motivate Production Line Workers

3.Forecasting Accuracy

Planning when you will need to scale your workforce up or down and when to use contingent workers can also be a challenge. If you have utilized this type of worker in the past, you’ll have a better idea of cyclical trends and other indicators to help project workforce numbers over time.

There can be other forces, however, that make your historical data challenging to use in predicting future workforce levels. For example, COVID-19 was an unforeseen challenge that caused an upset in hiring in general, thus making contingent workforce data difficult to decipher.

If you haven’t needed a contingent workforce in the past, an external partner like Landrum Workforce Management can help you in predicting workforce levels based on past demand and orders.

Creating and Maintaining a Contingent Workforce Management Program

It’s imperative to create standard operating procedures (SOPs) for managing a contingent workforce. From recruiting and onboarding to end-of-contract evaluations, having the SOPs documented will make the job of managing workers much simpler. This process also gives employees a clear objective and set of standards to be evaluated against.

Keeping records of everything that went into hiring, recruiting, and managing the contingent workforce will give you accurate visibility into your extended workforce and help you accurately predict future workforce levels and trends.

Working with an experienced workforce management provider will help you simplify this process and give you more flexibility to meet demand without adding permanent headcount and cost.

Landrum Workforce Management Can Help

Landrum Workforce Management is here to help you and your organization with contingent workforce management. We’ve supported businesses for over 50 years in solving critical workplace challenges, including contingent workforce management.

Contact us today to learn more about our workforce solutions and how we can help you maximize the effectiveness of your contingent workforce.
Brian Jaenke

Brian Jaenke currently serves as the Director of Continuous Improvement for Landrum Workforce Management. He received his degree in aeronautics from Embry-Riddle Aeronautical University and has over twenty years’ experience working in a variety of industrial and operational settings. His passion is laser-focused on improving efficiency at all levels of manufacturing using Key Performance Indicators as a measure of success around People, Safety, Quality, Productivity, Delivery, Inventory, and Cost. He has developed his own tailored approach toward lean manufacturing—piggybacking off the Toyota Production System and Six Sigma principles that has proven to be quantifiably successful with several of our existing clients here at LandrumHR. He believes that this customizable lean approach bridges the gap between people and processes which is a critical component of a solid foundation of stability and cost predictability.

View more blogs by Brian Jaenke