What is a Contingent Worker? The Pros and Cons of Hiring

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And toward the use of a contingent worker. Independent contractors are finding it more rewarding and more meaningful to contribute specialized skills to a specific project – that can be better aligned with what their client is looking to achieve.

A contingent workforce allows companies to enjoy freedom and flexibility so that they can remain agile and avoid unnecessary fixed costs. In this article, we’re going to explore the benefits and drawbacks of contingent workers, as well as provide some tips about how you can leverage contingent workforce management to push your company forward.

What is a Contingent Worker?

A contingent worker is someone whose skills are hired on an ad-hoc, temporary basis for specific projects without becoming permanent employees. These contingent workers can also be referred to as freelancers, temporary workers, self-employed, or independent contractors.

 It’s worth noting here that the legal definitions here can be tricky depending on the state that you’re in – and so it’s worth consulting with labor law advice to ensure that you’re defining your staff in the right way and remaining compliant across the board.

What are the Advantages of Contingent Workers?

Compensation is better aligned to outputs.

Contingent workers are only paid for specific tasks and the outcomes they deliver, meaning that labor costs are more tightly linked with what the company is getting - ultimately helping them make more money. This is very different to permanent staff where the costs are fixed and not always aligned to the productivity and results being delivered.

Increased flexibility thanks to skills on demand.

One of the most significant challenges that can stifle company agility is the inflexible nature of full-time employees. Hiring contingent workers allows an organization to flex their staff complement up and down according to the current state of growth and seasonal fluctuations, thus ensuring that they are not carrying unnecessary fixed costs when they have over-hired or losing on the opportunity cost of new opportunities when they have under-hired.

Using contingent workers, thread that needle and deliver extremely valuable flexibility and agility.

Remote workers can help to expand to new markets.

A significant proportion of contingent workers work remotely, thanks to the internet’s expansion of the gig economy and self-employed workers, and companies can take advantage of this contingent workforce to explore and expand to new physical locations and markets across the globe.

Hiring expert advice and the right skills.

The nature of the gig work ecosystem is that you can access highly niche and specialized skills that are aligned to solve your specific problem. Good examples include graphic designers, brand ambassadors, security services, maintenance services, construction workers, IT professionals, and more. The global talent pool is vast, so companies can be very precise with the type of contingent worker they are looking for, leverage those skills for a period of time, and then re-structure the workforce again for new challenges.

Not to mention the fact that it greatly reduces the burden of training costs because you can close the skills gaps from day one.

Fewer legal, tax, and HR obligations.

Taking on a permanent employee can be burdensome because of the legal implications and having to pay payroll taxes. To hire contingent workers, you don’t have to deal with any of that baggage because an independent contractor has to pay their own taxes and handle their own social security. This helps to mitigate risk and avoid hefty fines that can come if they are incorrectly treated on the company's payroll.

What are the Cons of Temporary Workers?

You have less control over a contingent worker.

Unlike a traditional employee, you are at the whims of their availability, timelines, and working culture when you work with a contingent worker. You simply aren’t able to pull the management levers you normally would be able to – and so you have to be ok with letting go of that sort of control.

You need to be very careful with how you deal with employment law and income tax.

If you don’t classify a contingent worker correctly, according to employment laws, you can find yourself on the wrong side of several compliance and tax issues that come with distinguishing between regular employees and temporary workers.

You face increased security risk.

By inviting a third party into your organization, there are additional security risks that come along with it. Contingent workers will have access to internal company information and resources, and they are not necessarily aligned with your company in terms of values, incentives, and objectives. As such, it is important that the vetting and interviewing of any gig workers is watertight so as to minimize these risks.

You don’t build up internal knowledge and capabilities.

When you stop working with a contingent worker, they leave with all those learnings and it is very difficult to codify those in your company’s internal knowledge base. As a result, you don’t end up building those capabilities and experience in your permanent staff – potentially leaving you reliant on external assistance whenever you require skills and expert knowledge.

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How Does Working with a Contingent Workforce Differ to Working with Employees?

From a human perspective, you should treat your contingent workers with the same grace, respect, and professionalism that you would your full time workers. However, from an operational perspective, there will be some differences with contingent work due to the nature of how they perform specific tasks.

Time Tracking for Contingent Workers

In many cases, contingent workers can be paid on an hourly basis and this might necessitate sophisticated time tracking – something that is not often required for the regular workforce. Use your judgment here and try to focus on outcomes-based compensation where possible, but if a project-based model is required, time-tracking is a crucial step in ensuring you get the most of your paid time.

How You Pay Contingent Workers

Contingent workers are not your traditional employees and, therefore, are not entitled to or expecting employee benefits, health insurance, social security, or other benefits over and above the agreed-upon fee. This is why it’s important to agree on the fee upfront and establish that they are not an employee so that there is no miscommunication when it comes time to process the paid time.

Searching for Contingent Workers

Hiring contingent workers can be very different to full-time employees, and you’ll have to look in different places to find those people looking for more ad-hoc employment. Often, it can be good to use a specialized staffing agency that recruits, vets, and trains nonpermanent workers (like we do at Conneq) because the attention to detail there is going to get you better results over the long term – reducing the risk of a poorly executed contract.

These are just a few of the key differences when it comes to contingent workforce management – but you’ll discover there are others when you start working on a specific project. Try to reach out to experts along the way to help you navigate these new waters and you can make the most of your contingent workforce.

How Should You Onboard and Manage a Contingent Worker?

Onboarding and engaging contingent workers can be slightly more challenging than with a permanent staff member, but it is still a crucially important step for ensuring that they have the context that they need to perform their tasks. Your onboarding process should be bespoke and very specific to the unique role that you’re asking them to take on, helping them to understand the overarching mission, goals, and objectives.

In addition, you want to be very clear about setting expectations in terms of working culture, communication, timelines, and their contract so that your contingent workers are on the same page about how the job is going to unfold. Don’t leave anything to chance, ensure that all the nuts and bolts of the engagement are noted down and agreed upon in advance so that there is no miscommunication.

Once you’ve finished the onboarding and the contingent worker has begun, then you’ll need careful contingent workforce management. As mentioned above, you won’t have as much control as usual (because the contingent workers are independent contractors) so the key is to ensure that you have regular communication where you can follow up on progress and help to guide the work as needed.

Employers should try to create a safe space for the contingent worker to ask any questions so that they feel comfortable with clarifying parts of the brief that may be unclear. This goes a long way to alleviating some of the risks of a contingent worker delivering something far away from what you were expecting or anticipating.

More organizations are choosing to use external service providers that specialize in vetting, training, and recruiting skilled contingent workers on your behalf because that can save time and significantly ease the transition.

Hiring Contingent Workers to Supercharge Your Growth

We hope that this article has shed some light on how contingent workers can help take your business to the next level if you utilize their services effectively. Aligning your immediate goals with the benefits of contingent work and avoiding hiring more employees can help you stay agile and deliver the outcomes that you need while keeping fixed costs low and not encumber your organization with further legal, tax, and employee complications.

If you are a business owner and are looking for cost-effective contingent workers to assist with your audiovisuals, then Conneq is here to help. We are a staffing agency that helps to get you high-quality candidates with relevant skills quickly while also reducing the risk of hiring the wrong people.

If this is something that you might be considering, be sure to get in touch with us today, and let’s see how we can help!