The Irresistible Rise of the Contingent Worker
One of the biggest trends that is currently affecting the HR and recruiting arena—which will impact it heavily throughout 2013—is the continuing and seemingly relentless rise of the contingent worker, or temps, part-timers, interns, consultants, contractors and outsourced workers. It has reached a point where many commentators suggest that at some point in the next 10 years, the contingent worker may become the new “normal workforce.”
But, for the moment, we must settle for the fact that the use of contingent workers is a growing and irresistible trend that the modern hiring and HR professional cannot ignore. They must begin to respond to this trend by redeveloping their outlook and approach to HR and resource management – that is, if they want to keep up with the game this year.
Let’s review the statistics, for starters. There is pretty much a consensus among researchers and commentators that the use of contingent labor is on the rise industry wide. One such study, the Workforce 360 Annual Study by Randstad, revealed that 66 percent of employers were using contingent workers at the third quarter point of 2012, with 21 percent planning to increase their number of contracted positions in 2013. Between 2011 and Q3 2012, the contingent workforce increased at a rate of 25,000 jobs per month and now accounts for 8.3 percent of all U.S. employees. This means the wave of contingent labor will soon be lapping at the HR professional’s door, if not already. I expect this trend to be replicated in the UK, Germany and many parts of Europe.
So, why is this happening? The use of contingent labor has been rising for decades, largely as a result of more liberal attitudes to the working relationship, but there was a more recent and noticeable surge in the use of contingent labor after the financial crisis, which introduced high levels of volatility into the market. As a result, businesses began to see contingent labor as an excellent way of making their business financially flexible in what was, and still is to some degree, a volatile and unpredictable environment. Even though our economic nerves are nowhere near as jangled as they were post 2008, we are still in a nervous post-recessionary climate and contingent labor remains the cautious, learned and progressive way forward.
It is not all bad though, as there is research emerging to suggest that worker attitudes toward contingent labor are also changing. While once the idea of temporary/contingent work was a dirty word and reserved for those who could not get permanent work, in many respects, the roles have reversed and many permanent employees are envious of contingent workers who have managed to cultivate high paying, lucrative, engaging and highly flexible careers built around their own lifestyle. Suddenly, the idea of permanent work is starting to feel a little bit like shackles. Yes, the Randstad research revealed that (and I have seen similar research from other sources) 78 percent of contingent workers consider their time as a contingent worker to be a positive experience, and the majority of contingent workers have high levels of job satisfaction, advancement opportunities and compensation.
What is also interesting is that contingent labor is not just confined to the lower ranks anymore; it has become pervasive and the Randstad research shows that almost a third of contingent workers are in managerial and supervisory roles. Also, 40 percent of companies reveal that they are finding their top talent through the contingent labor model.
I propose a call to action. In my mind, the message is clear: HR and recruiting professionals need to begin to fully engage with the idea of the contingent labor model if they are to effectively tune in to and understand the desires and motivations of the modern labor force.
Even now, employers who are fixated on a more traditional, fixed, permanent workforce model will be confined to sourcing talent from a labor pool that is reducing in size and becoming harder to satisfy. This is why I think it is time for HR and recruiting teams to open the doors and begin fully engaging with contingent labor and seeing its as a progressive and effective talent management strategy that is synergistic with the dynamics of the modern labor market.
Yes, there are risks, but these are easily surmountable. Of course, the contingent labor model does come with risks, such as the room for misclassification of workers leading to taxation issues. The workforce may be a little more volatile too, as employees are less attached to the organization and the higher turnover may make it harder to build a coherent company culture. You can risk developing a them and us culture between contingent workers and permanent staff, although this could be regarded as healthy competition (I have seen both scenarios).
But, these risks are easily surmountable and can be mitigated by careful planning and management, which creates an environment that can effectively manage and retrieve value from contingent labor. This would include interventions such as:
- Setting targets for your ratio of contingent labor to fixed labor
- Designing contingent labor policies, which set out standard procedures for hiring and using such staff
- Training and designating staff to effectively manage, motivate and lead contingent labor
- Developing a more results-focused style of management more aligned with the contingent labor work ethic
- Monitoring the cost and effectiveness of your contingent labor programmers
2013 is the year where I feel that organizations need to really start embracing the contingent labor model in order to stay in touch with or reconnect with a talented and highly engaged section of the labor force.