What is Contingent Workforce Management? - An Ultimate Guide

JULY 12, 2023

Contingent workforce is a smart employment choice that is rapidly becoming more popular in the modern business world. Contingent talent includes non-permanent or part-time staff, which consists of contractors, freelancers, consultants, and other third-party workers. They get hired for a fixed amount of time, on a project basis, or during surplus work seasons in business.

As per a report from the U.S. Government Accountability, contingent workers constitute a significant portion of the U.S. workforce, accounting for 40%. Furthermore, it reveals that, on average, organizations have 18% of their workforce engaged in temporary employment arrangements.

Despite its increasing popularity, many people are still unsure of what contingent workforce management really entails and how to implement it effectively in businesses. But with the right processes and understanding, you can ensure your business is making the most of this valuable resource. In this blog post, we will demystify contingent talent management and provide you with everything you need to know about it.

What is contingent workforce management (CWM)?

Contingent workforce management refers to the strategic approach of hiring, effectively managing, and optimizing the utilization of contingent talent within an organization. It encompasses the processes, policies, and strategies aimed at sourcing, onboarding, engaging, and retaining the gig workforce during specific projects. CWM involves understanding the organization’s workforce needs, aligning them with business objectives, and implementing tailored strategies to ensure the right talent is available at the right time. It focuses on establishing efficient systems for workforce planning, talent acquisition, performance management, compliance, and fostering positive relationships with contingent workers. The goal of successful contingent workforce management is to leverage this flexible workforce to enhance productivity, adapt to changing business needs, and gain a competitive edge in the dynamic marketplace.

Best 7 strategies for successful contingent talent management

Contingent workforce management requires a thoughtful and well-planned approach to ensure that your organization is getting the most value out of your contingent labor force.

Here are some strategies that can help you manage your contingent workforce more effectively:

1. Comprehensive workforce planning- Define your needs clearly

Successful contingent workforce management begins with a solid foundation of workforce planning. Organizations need to clearly define their short-term and long-term goals, identify the specific roles and skills required, and determine the optimal blend of permanent and contingent workers. Determine the specific tasks and skills required and then find workers who can meet those requirements. This enables effective resource allocation, ensures seamless project execution, and minimizes any skills gaps within the workforce.

2. Strategic talent acquisition- Implement a screening process

Developing robust talent acquisition strategies involves building a diverse talent pool and leveraging various recruitment channels. Also, it focuses on establishing strong relationships with staffing agencies or online platforms. Organizations should focus on attracting and selecting candidates who align with their culture, possess the necessary skills, and demonstrate the ability to seamlessly integrate into the existing workforce. It’s also essential to implement a screening process to ensure you are selecting the best contingent workers for your needs. Conduct background checks, evaluate their experience, and verify references.

3. Seamless onboarding and integration- Streamline and automate processes

To maximize the value of CWM, it is crucial to provide the consultants with a seamless onboarding and integration process. This includes clear communication of job expectations, access to necessary resources and training, and integration into team dynamics. Effective onboarding ensures that contingent workers feel valued, connected, and equipped to contribute meaningfully from day one, leading to increased productivity and job satisfaction. Additionally, streamline and automate your processes where possible. This can help you avoid manual errors, eliminate redundancy, and save time, which is crucial when working with temporary workforce.

4. Performance management and engagement- Provide feedback and recognition

Managing the performance and engagement of contingent laborers is essential for driving productivity and maintaining a positive work culture. Establishing clear performance metrics, regular feedback loops, and recognition programs can help align their goals with organizational objectives. Engaging contingent workers in team-building activities, promoting open communication, and recognizing their contributions foster a sense of belonging and encourage a collaborative work environment. Create a feedback mechanism and recognize the efforts and contributions of your contract workers.

5. Compliance and risk management

Compliance with labor laws, regulations, and contractual obligations is a critical aspect of contingent workforce management. Organizations must ensure they have robust processes in place to manage legal and financial risks associated with contingent workers. This includes proper classification of workers, adherence to wage and hour regulations, contract management, and data privacy compliance.

6. Continuous improvement and evaluation

To enhance contingent workforce management optimization, organizations should engage in regular evaluation of their strategies, processes, and outcomes. Also, gathering feedback from both permanent and contingent workers to get valuable insights, highlighting areas that may benefit from improvement. By utilizing data analytics and performance metrics, organizations can identify trends, measure return on investment (ROI), and make well-informed decisions to optimize their workforce management practices.

7. Cultivate positive work culture to enhance retention

Create a positive work culture that values and respects all employees, including contingent workers. Foster an inclusive environment, encourage collaboration, and promote work-life balance to enhance engagement, productivity, and retention. The act of fostering a positive and inclusive work environment will improve employee retention and hence the percentage of redeployment. You will be able to begin and project go live with the same team!

Related Read: Advantages of utilizing a contingent workforce

Benefits of an efficient contingent workforce management program

1. Enhanced flexibility and scalability

With a readily available pool of contingent talents, organizations can seamlessly adjust the size of their workforce to meet specific project demands, accommodate seasonal fluctuations, and adapt to sudden market shifts. This inherent flexibility empowers businesses to swiftly assemble the right team for any project without the need to start the talent search from scratch. Effective contingent workforce management systems create a giant database of qualified professionals, enabling companies to quickly identify and engage suitable talent from within their network.

2. Cost efficiency and operational savings

Effectively managing temporary staffing systems through a structured program allows organizations to optimize their workforce costs. By strategically evaluating the need for full-time employees versus contingent workers, businesses can reduce overhead expenses associated with benefits, training, and long-term commitments. Furthermore, a contingent workforce management program helps mitigate risks related to misclassification and compliance, ensuring proper adherence to labor laws and regulations.

3. Increased agility and time-to-market

A well-designed contingent workforce management program enables organizations to expedite project timelines and accelerate time-to-market for products and services. With the ability to swiftly onboard contingent workers who possess the necessary skills, businesses can efficiently allocate resources and manage project deadlines. This agility translates into faster innovation, improved customer satisfaction, and a competitive edge in an ever-evolving business landscape.

4. Improved workforce productivity and engagement

When managed effectively, a contingent workforce management program promotes higher levels of productivity and engagement. By aligning the goals and expectations of contingent workers with the overall organizational objectives, businesses can foster a sense of purpose and belonging. An effective CWM will lead to future re-engagement. Companies can tap into previously engaged independent talents for future projects, minimizing onboarding time, cutting costs, and accelerating project kick-off.

Methods of contingent workforce management (CWM)

Traditionally, many companies have tackled the management of their contingent workers and staffing agencies without a structured program in place. They relied on scattered spreadsheets and disjointed processes across their organization, which, let’s be honest, is a recipe for disaster. To address these challenges, organizations have two viable options. One option is, they can overhaul their in-house contingent workforce management practices, and the other one is to refine processes and systems to streamline operations or regain control. Alternatively, they can opt to outsource this crucial management program to a trusted third-party provider who possesses specialized expertise in the contingent staffing domain.

Here are the 4 methods that companies can leverage to optimize their resource planning and management.

1. Outsourced contingent workforce management options (Business process outsourcing)

Outsourcing contingent workforce management entails collaborating with dedicated external agencies or providers who specialize in the management of contingent workers. These expert partners take charge of crucial aspects including talent acquisition, onboarding, compliance, payroll, and performance management. By engaging these third-party companies, businesses can efficiently access the contingent talent pool that aligns with their specific project requirements. This way, organizations can ensure an adequate supply of skilled gig workers as per their contractual agreements while effectively overseeing and managing the entire team with the support of these providers.

2. Utilizing a Managed Services Provider (MSP)

A Managed Services Provider (MSP) is a specialized third-party vendor that acts as a central point of contact for managing an organization’s workforce. MSPs streamline the entire contingent workforce management process, including VMS, vendor selection, contract negotiation, worker onboarding, compliance management, etc. They provide end-to-end solutions, ensuring consistent practices, standardized processes, and cost optimization. Working with an MSP offers enhanced visibility, centralized control, and increased efficiency in managing the contingent workforce.

3. Opting for a Vendor Management System (VMS)

A VMS is a software platform that enables businesses to efficiently manage their contingent workforce by centralizing various processes and workflows. With a VMS in place, organizations can seamlessly handle vendor selection, contract management, onboarding, time and attendance tracking, invoicing, and compliance. This system provides real-time visibility into the contingent workforce, allowing for better decision-making and resource allocation. The comprehensive functionalities and automation offered by a VMS empower organizations to effectively manage their contingent workforce and maximize the value derived from this essential workforce segment.

4. Managing your contingent workforce in-house

In-house contingent talent management involves establishing and implementing internal processes and systems to effectively handle your contract workers. By taking on the responsibility internally, businesses have greater control and visibility over their contingent workforce. This approach requires developing streamlined procedures for talent acquisition, onboarding, compliance, payroll, and performance management. It also involves establishing clear communication channels and fostering strong relationships with the contingent workers. With in-house management, organizations can align their workforce strategies with their overall business objectives and culture, ensuring a seamless integration of contingent workers into the company’s operations.

Bottomline

Businesses today are increasingly relying on contract talent to complement their in-house teams and drive project success. Employers must develop a comprehensive understanding of CWM, including its practices, advantages, and methods, in order to gain a competitive edge in the market. By implementing the right contingent workforce management (CWM) practices, companies can streamline their workforce and propel themselves toward success.

With Denken Solutions as your trusted contingent staffing agency for IT and engineering staffing needs, you can bid farewell to the complexities of managing contingent talent.

Partner with us to find the perfect fit for your open positions and expand your talent pool with top-quality resources equipped with advanced skills and expertise. Together, we can optimize your contingent workforce and drive your organization’s growth.