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HRDV 3305 Contingency Staffing

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HRDV 3305 Contingency Staffing

  1. 1. 1ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy Contingency Staffing: A Mainstay in Permanent WorkPlacement Strategy By: Tammy Corn HRDV 3305-Staffing Strategies in HRDV April 27, 2014
  2. 2. 2ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy Contingency Staffing has become more common and more popular over the last few years. Contingent workers are defined as freelancers, contractors, and temporary employees. The beginning of this tread of keeping contingent workers in place at organizations happened during the recession in 2008 and 2009. Though companies have used contingent workers during peak seasons when extra help was needed, a big production needed extra hands or to cover “life events” such as vacations, illnesses, or maternity/paternity leave, it is a more permanent strategy in placed for corporations due to several factors. One of the biggest reasons is cost. Corporations who place contingent or temporary workers in positions do not pay out for benefits or bonuses. They do not need to pay for holiday or vacations for these workers. Administration cost goes down as well since not as much documentation is needed for contingent workers. Secondly, working contingent worker gives employers more flexibility in their workforce and corporations are using contingent workers during their growth or expansion of their company. Lastly, corporations expanding into the global market benefit more from temporary experts, just in time hiring, and virtually remote workers. Jim Link(2012) writes in his article, Companies Making Contingency Staffing a Permanent Strategy, that in 2012, according to the annual Workforce 360 study, 67 percent of companies utilize contingent workers, which make up 8.3 percent of their workforce-up from 8.1 in 2005 and 6.6 in 2009. This is a number increase of approximately 25,000 jobs a month with 84 percent of employers’ state their temporary staffing have either increased or stayed the same. (Link, 2012). Rossheim(2011) in his article, Contingency Staffing Trends for 2011 and Beyond, states that the temporary workforce between 2007 through mid-2009 dropped by 33.7 percent
  3. 3. 3ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy with the total private workforce dropped by just 5.8 percent according to an analysis by the Bureau of Labor Statistics. Then in 2010 the temporary workforce rose by about 300,000 to 2.21 million. The Bureau believed by 2012 that contingent employment would return to 2008 levels. (Rossheim, 2011). As part of the recession, “88percent of employers either maintained their contingent workers or increased them according to a December 2010 survey by staffing firm Yoh.” (Rossheim, 2011). According to Accenture’s 2013 “Rise of The Extended Workforce” report, “to compete in the future, organizations will need to push talent management beyond the confines of the enterprise wall to include the new extended workforce: a global network of outside contractors, outsourcing partners, vendors, strategic partners, and other nontraditional workers.” (Woody, 2013). Also according to Woody’s article, Freelancing in America: Rise of the Contingent Workforce, the Labor Department recent reports show companies are focusing more on filling short-term needs and hiring part-time workers. Woody refers to it as the “just-in- time” model for staffing. It is believed that by 2014 that 60 percent of corporations plan to increase freelance hiring according to research conducted by Tower Lane Consulting. Some factors driving the change are the needs for “just in time hiring, temporary experts, and the virtual reality of remote workers.” (Woody, 2013). The areas of workforce that will see the increase is the financial industry, defense contractors for the US government, construction firms, and natural resource companies. “Professional contingent hiring and staffing opportunities are increasing fastest in the Northeast and in the Southeast, where growth is returning, says Rebecca Callahan, president of staffing firm SourceRight Solutions.” (Woody, 2013). A decade ago, author Daniel Pink stated that the United States was rapidly becoming a “free agent nation”. Researchers from the Aberdeen Group estimated in 2012 that nearly 26 percent of the average organization’s workforce is contingent or contract-based. They also stated they were growing
  4. 4. 4ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy rapidly and jumped by 12 percent that year.(Frauenheim, Contingent Workers, 2012). Christopher Dwyer(2014) wrote 2014: The Year Ahead in Contingent Workforce Management, where the research study: The State of Contingent Workforce Management believes that over the next three years there will be a growth by nearly 30 percent in the contingent workforce in many different categories such as services, consultants, SOW, traditional temporary labor, independent contractors, etc…Organizations will need to realign their approach to their workforce to implement strategies that include the contingent worker. Human Resource departments will need to be prepared to adjust their recruiting, staffing, and training to include these workers. With the understanding the purpose of these workers is to put them to work faster and efficiently for their organization. Human Resource Departments will need to implement strategies to include contingency workers according to the needs of their organization. “In order to restructure an existing workforce and include a permanent contingent worker segment, employers need to start with three critical components to achieve integrated staffing success: collaboration, strategy, and technology.” (Link, 2012). Collaboration should include decision makers, stakeholders, and human resource departments. It will be up to the human resource department to address the issues and create a staffing strategy that shares a unified set of needs and solutions.(Link, 2012). Conor Smith(2011), president of The BOSS Group, in his blog for Cella Consulting he recommends some practices and gives tips in his article titled, The “New Normal” in Staffing Strategies: Contingent Workers. Smith states to first define the strategy and lay out the reasons the company will use contingent labor. This may require a more refined definition for each department who will utilize contingent workers. Some of the reasons may include: need to increase capacity on a project basis or seasonal work, people with specialized skills that may be
  5. 5. 5ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy needed for a time but not a necessity for permanent full time employment, coverage for full time employees during vacations, maternity leave, illnesses, and employee resignation, and budget wise part of the labor force will always remain contingent so more flexibility as the business changes. Human resource departments, after developing a strategy plan, must develop relationship with vendors and freelancers so they are reliable and will provide labor as needed. Dealing with these workers requires creativity in viewing their talents and abilities. As HR manager, you must be able to determine if they are the ones that fit your need at this time. Also do they align with your company’s goals and missions? They cannot simply be a quick fix because this can be disastrous if they are not committed to either the project or company during their employment. Building relationships with them will be the key to determine their drive or motivation. Smith also recommended developing an onboarding plan for contingent workers. “As contingent workers play a greater role in your workforce, it is critical that you have a plan to properly onboard them so they are productive as quickly as possible.” (Smith, 2011). Lastly, Smith recommends that Human Resource and department managers hold their contingent workers accountable. They are to help meet the company goals in whatever project they are working on or position they are filling. Link also recommends that HR create a model for future hiring decisions along with a talent acquisition strategy formalized and documented. Advanced technology can automate manage the strategic acquisition process which includes new and innovative solutions and analytics software that will help hiring and help managers more efficiently with staffing needs.(Link, 2012). Barry Asin, president of Staffing Industry Analysts, that organizations need to stop setting their contingent workforce to the side and add them to their strategic workforce planning. In Frauenheim’s article, Contingent Workers: Why
  6. 6. 6ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy Companies Must Make Them Feel Valued, Steve Youll, human resources strategic planning analyst for Greif, not only sees companies engaging with highly skilled individual but states that it is the HR’s responsibility to “attract them, vet the effectiveness of their work, and woo the good ones back time and again will be crucial.” Companies have purchased software tools called vendor management system to address their contingent workforce strategy. Other companies have turned to third-party managed-service providers, MSPs which are staffing services agency. John Healy, vice president and talent supply chain strategist for Kelly Services Inc, says MSPs have a responsibility to help their client determine whether their need is for efficient contingent workers such as for an assembly line or for more professional talent. Creative and talent professionals will need a more responsive, high-touch relationship. HR needs to look at their contingent workers as they do their regular employees. They still need to assess performance of these workers because mediocre and low quality work threatens a company’s efficiency and productivity. Feedback is crucial especially if the majority of these workers are coming from the millennial generation that requires it to perform their best. As some companies are relying on contingent workers for their customer service representatives they must require excellence in their performance. This is crucial because the customer sees these people as the company’s people. In all aspects how a company handles and deals with their contingent workforce is very important to company success. Human Resources are a key factor in collaboration between the leaders and this part of the workforce along with it is their responsibility to develop a strategic plan. However, company executives and managers play a crucial role in their contingent workforce be beneficial for their company. The reasons behind companies using contingency workers vary from company to company. Companies must deal with the pros and cons of having
  7. 7. 7ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy contingent workers in their organization. The biggest pro for companies in today’s economy is cost. Borowki’s(2008) states in Risk, Benefits of Using Contingent Workers that cost are the most significant motivation for companies using temporary workers and independent contractors. Companies do not provide vacation time, holiday pay, sick leave, or health insurance for contingent workers. The other cost benefit is they are not required to withhold payroll taxes, pay social security and Medicare takes, or make unemployment contributions. Alongside this is administration cost. A company participating in a leased employment arrangement saves time reviewing employment applications, interviewing candidates, and preparing tax withholding forms and other documentation needed for permanent employees. And also contingent workers can be fired or let go without the hassle of documentation of infractions or other forms needed for reasonable cause for firing a permanent employee. As stated earlier, contingent workers can increase efficient during peak hours, days, or periods of demand and for one-time projects. A company experiences periods of low demand than can stop using them. For permanent employees, a feeling of job security: “because workers such as independent contractors and temps allow you to use labor fluidly and adapt strategies for expanding and reducing hours with minimal effect on the employment core workforce, regular employees may feel an increased sense of job security. (Borowski, 2008). Another benefit is recruiting opportunities; contingent workers are a good resource for recruiting for permanent positions. With these workers already working for the company, it is easy to evaluate their work performance along with their work ethics. Do they give this job their all? Are they motivated to give their best for the company? They also offer a broader talent pool. A company may need an individual with a particular talent for a special project with a limited duration that do not required hiring a full time regular
  8. 8. 8ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy employee. Flexibility is a big incentive for companies in hiring contingent workers because they can increase and decrease staff with economic consequences and minimal legal risks. The risks for hiring contingent workers are listed by Borowski as decreased in loyalty and productivity, impact on employees, confidentiality, increased training cost, and status. Employers are concern that contingent workers are not dependent on employer for their livelihood or motivated by advancement opportunities. They feel this makes contingent workers less likely to be loyal, be less productive, and their quality of work will be substandard. In some organizations, regular employees resent contingent workers. They feel these workers rob them of overtime or take a regular full time job from someone else. They may also know someone who was laid off during bad economic times and now that position is being refilled by a temp worker. Companies do not have a contract with contingent workers so they are free to move to competitor. Those with specialized skills and the number of expertise is limited can negotiate with more than one company and can also go to the one who will pay more. Contingent workers can result in higher turnover which also results in higher training cost. Some contingent workers feel they are not treated the same as regular employees and feel left out or isolated from the company and the other employees. They also feel their work will not be recognized or rewarded. Ed Freunheim addresses the issues between employers need to change their outlook on contingent workers and how they need to make them feel valued. “Increasing amounts of work are going to higher-skilled contingent workers-to professionals such as engineers, graphic artists, and nurses-whose talents can be pivotal for organizations.”(Freuheim, 2012). These same people are more likely millennials who need more attention than previous generations. Companies that are going to make contingent workers a mainstay in their organization they must develop a new relationship with them. “That relationship might be called the ‘arm’s length embrace’.” Even
  9. 9. 9ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy though they are independent and need that respect, they also need to feel as part of the organization as long as they are. Ways to make them feel a part of the company are invitations to social gatherings, improved communication, recognition and rewards when applicable. This also means a fair wage for them not lower wages because they are only “temporarily”. Brian Kropp, analyst for research firm the Corporate Executive Board, says, “Organizations need to rethink their approach. If you treat them as ‘hired help,’ then they will behave as ‘hired help.’” (Frauenheim, 2012). As more and more contingent workers become independent contractors with areas of expertise, companies need to value their skills and abilities by paying them what their services are worth and by giving recognitions when it is deserved. Companies who really want to benefit from their contingent workforce than they must develop open and complete communication. If for example, they are working on a portion of a big project, give them the whole picture so they know how to implement their part to coincide with the rest of the project. Companies also need to understand this give and take relationship. The company giving the independent much needed information but also the independent is array of good information and knowledge. Organizations have the potential of misclassifying workers. The Labor Board concluded in their findings that there is no set definition for an employee compared to an independent contractor. Employers need to evaluate their workforce to make sure they are following government guidelines for their labor force including contingent workers. Companies can face significant legal risk if they misclassify an employee as a contingent worker when actually the courts will classify them as a regular worker. The legal risks they can face are tax liability because companies do not withhold taxes nor do they pay social security or Medicare taxes for contingent workers. A company can also face wage and hour violations by not paying minimum
  10. 10. 10ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy wage or paying for overtime work. Contingent workers risk not be covered by the employment discrimination statutes. Companies are not liable for work related or workers’ compensation for contingent workers or do they receive employee benefits. Occupational safety and health issues along with family medical leave issues are not required for temporary or independent contractors. Organizations, when it comes to contingent workers, they concentrate on labor costs and legal compliance. “Microsoft Corp’s landmark $97 million settlement with its ‘permatemp’ in 2000 put the ‘co-employment’ issues on employers’ agenda, and recently the Obama administration has made worker misclassification enforcement a priority.” (Frauenheim, 2012). The state of Texas defines an employee as someone an employer exercises direction or control over and for whom they are responsible for wages and taxes. An independent contractor, however, is responsible for their payroll, social security, and Medicare taxes and is not subject to the employer’s direction or control. There is not a clear definition for an employee and the National Labor Board feels that due to this fact that employers take advantage of the ambiguous definition to have lower labor cost and not pay taxes or benefits for contingent workers. The questions that are arising in companies today are whether it is more beneficial for hiring contingent workers in key situations. “With 56 percent of companies indicating their increasing concern about an impending skills gap, it is even more important to identify talent needs and structure the best workforce based on the supply of qualified talent, including full-time and contingent candidates.” (Link, 2012). Rossheim(2011) also states that industries going through fundamental changes are using professional contingent labor. Also according to Dr. Woody(2013), the contingent workforce is going global as companies use independent contractors in other countries or they outsource their labor such as customer service. According to the collected data, contingency staffing is here to stay and HR departments will be the
  11. 11. 11ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy forerunners in developing staffing strategies along with recruiting techniques for this unique job force. They will need to also have a good training plan in place so these “just-in-time” workers can began producing for the company as soon as possible. They need to build rapport with this much needed talent of professionals who have the talent needed for their company at the time along with developing relationships. Long term relationships does not mean long term employment but it keeps the communication open so whenever this individual’s talent is needed; they are willing to come help out the company. In this sense, the time a contingent employee spends at a company should not only be productive for both but it needs to be a good experience for the worker for their willingness to continue to work there as needed or to come back when needed. In conclusion, motivation is a crucial key in getting quality work from contingent workers. Their personalities may play a part but more so their feeling of belonging and valued. They need to feel as an important member of the organization and not as a “second class” citizen. They need to be implemented into all aspects of the company’s organization as far as the goals and missions of the company. They need to be included in any gatherings the company has while they are employed. Any changes in company guidelines or policies that may affect them should be communicated to them as well. Contingent workers are becoming a mainstay in today’s workforce due to the economy and immediate needs of the company. Companies are finding it makes more sense to hire contingent workers when the job or project does not require a permanent full time employee. Full time employees should look at contingent workers as fulfilling a need of the moment and not as a threat to their job. Contingent or independent work benefits those who want a more flexible schedule. Those who do not want to be a part of any office politics, and treasure the diversity of assignments that comes from working independently.
  12. 12. 12ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy Those who work as contingent workers involuntarily will also give the company good performance because their hope is to be a permanent employee. Finally, as companies are dealing with not only today’s economic issues they are expanding globally. A company who wants to be competitive in the global market will do so have a large array of people working for them from permanent, temporary, contractors, and even outsourcing.
  13. 13. 13 Works Citied Link, J.(2012). Companies Making Contingency Staffing a Permanent Strategy. Retrieved from http://www.thestaffingstream.com/2012/10/18/companies-making-contingency-staffing-a- permanent-strategy/ Rossheim, J.(2011). Contingency Staffing Trends for 2011 and Beyond. Retrieved from http://hiring.monster.com/hr/hr-best-practices/recruiting-hiring-advice/strategic-workforce- planning/temporary-staffing.aspx Woody, Dr.(2013). Freelancing in America: Rise of the Contingent Workforce. Retrieved from http://www.foxbusiness.com/personal-finance/2013/09/30/freelancing-in-america-rise- contingent-workforce Borowski, C. (2008). Risks, Benefits of Using Contingent Workers. Retrieved from http://www.hrhero.com/hl/articles/2008/09/26/risks-benefits-of-using-contingent-workers/ Smith, C. (2011). The “New Normal” in Staffing Strategies: Contingent Workers. Retrieved from http://www.cellaconsulting.com/blog/the-new-normal-in-staffing-strategies-continegent- workers/ Frauenheim, E. (2012). Contingent Workers: Why Companies Must Make Them Feel Valued. Retrieved from http://www.workforce.com/articles/contingent-workers-why-companies-must- make-them-feel-valued Dwyer, C. (2014). 2014: The Year Ahead in Contingent Workforce Management. Retrieved from http://cporising.com/2014/01/25/2014-the-year-ahead-in-contingent-workforce-management- part-i/ Texas Workforce Commission, State of Texas website: http://www.twc.state.tx.us/news/efte/ics_contract_labor.html
  14. 14. 14Works Citied

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