Contingent workers: how to get the benefits without the usual risks

Contractors and temporary staff can give an enterprise skills and flexibility that permanent hiring cannot match. They also bring risks: knowledge that walks out of the door, uneven quality and legal exposure. The organizations that get lasting value from a contingent workforce include contractors fully in the daily work and keep employment matters with whoever actually employs them.

What we mean by a contingent workforce

Contingent workers are people who work for you without being your employees: independent contractors, consultants, temporary staff and workers placed by a staffing supplier. They are usually brought in for a project, a skill gap or a period of peak demand.

Most enterprises use them for three reasons:

• Specialist skills. Some skills, such as a particular integration platform or a niche security area, are needed for months rather than years.
• Flexibility. Capacity can grow for a program and shrink when it ends.
• Speed. An experienced contractor can often start sooner than a permanent hire.

Where the risks are

For the company

Continuity. Contractors can leave at short notice, and their knowledge leaves with them if it was never written down.

Uneven quality. Without a consistent process for selection and onboarding, the quality of contractors varies from team to team.

Legal and compliance exposure. Misclassifying workers, or managing contractors exactly like employees, can create co-employment and tax issues. Contractors also need the same security and data-access controls as staff.

Hidden cost. When contractors are engaged by many managers through many suppliers, nobody sees the total spend or how long each engagement has run.

For the worker

Insecurity. Every engagement has an end date, and the next one is never guaranteed.

Isolation. Contractors are often left out of team meetings, planning and informal communication, which makes it harder for them to do good work.

Inclusive, with clear lines

There are two common ways to manage contingent workers. One treats them as outsiders: separate onboarding, limited information, no part in team life. The other treats them exactly like employees, with the same benefits and the same HR processes. Both cause problems.

The first produces contractors who do not understand the goals of the work and leave as soon as something better comes along. The second blurs the line between the company and the worker’s actual employer, which is where legal risk sits.

The balance that works is simple: include contractors fully in the work, and leave employment matters to their employer.

Include them in the work

• Proper onboarding: systems access on the first day, an introduction to the team and a clear brief.
• The same stand-ups, planning sessions and team channels as everyone else.
• Access to the information they need to make good decisions, within security rules.
• Recognition for good work, said out loud, in the team.

This applies to workers placed through a staffing supplier. True independent contractors are different: manage the deliverables, leave the way the work is done to them, and get advice on classification, because too much control over an independent contractor raises the risk of misclassification.

Keep employment matters separate

• Pay, benefits, appraisals and disciplinary matters stay with the staffing supplier or the contractor’s own company.
• Feedback on performance goes to the supplier, who acts on it.
• Contracts state the deliverables, the term and the notice period.

Practices that make it sustainable

1. One process for engaging contractors. A single intake route, often run through a managed service provider (MSP) and a vendor management system (VMS), gives you visibility of who is working for you, at what rate and for how long.
2. Named owners. Every placed worker has a manager on your side who sets priorities and reviews the work.
3. Documentation as part of the job. Write it into the brief that runbooks and notes are kept current, and check them before the engagement ends.
4. Planned exits. Agree a hand-over period and a checklist for every departure, including removal of access on the last day.
5. Regular review. Look at long-running engagements each quarter. Some should become permanent roles, and some should end.

What to do next

Pick one department and list every contractor working in it, with their manager, supplier, start date and planned end date.

If you run your contingent workforce through an MSP or VMS, we work as a supplier within those programs. See how on our MSP and VMS partners page.