The Impact of Hiring Contingent Workers
contingent-worker-at-desk

The Impact of Hiring Contingent Workers

Economic times continue to be challenging, and employers are faced with determining new ways to manage their workloads, their workforces and their labor costs. With the gig economy in play, more and more companies are looking to hire freelancers, consultants or other types of outsourced workers to share the load and reduce the cost of doing business, such as skyrocketing health care premiums.

Organizations such as Macy’s, JC Penny and many other retailers have taken advantage of contingent workers during the seasonal holidays for decades, and it’s paid off big time for their bottom lines. However, in order to know whether this strategy is advantageous to your businesses you must first understand both the positives and the negatives of hiring contingent workers.

Let’s take a look at some of the advantages and disadvantages:

Advantages of Hiring Contingent Workers

  • For some businesses, workloads can fluctuate significantly and contingent employees can help combat unexpected customer demands.
  • One of the major reasons these workers contribute to cost savings is because they do not typically receive employee benefits.
  • Independent contractors can bring unique ideas, perspective or techniques to projects that you may have not considered.
  • Because they get a chance to prove their expertise through contracted work, managers often promote them, with great confidence, to fill full-time positions.
  • Organizations usually partner with a placement agency to cut down on recruiting time and paperwork. This also shifts the hiring compliance burden to the agency, putting the responsibility on them to make sure their recruiting and hiring processes are legal. Any claims of violating government regulations would be levied against the agency and not the business using contingent labor.
  • They don’t require companywide training, instead they only require training for skills that are crucial to the project they’re working on. (Some instances don’t require training at all.)

Disadvantages of Hiring Contingent Workers

  • Managers don’t always feel comfortable leaving contingent workers to perform tasks alone for the first few weeks, which leads to unhealthy micromanaging and the waste of time and money.
  • It’s hard to keep them engaged and motivated. While this can be true of any employee, of course, many contingent workers are only in it for the paycheck.
  • Since they don’t receive employee benefits, these employees may not be totally invested into your company culture and mission.
  • Because they know that their time with the company might not be long, they don’t build lasting relationships with other members of the organization.
  • Since a temporary agency works with many different companies, they don’t always have the opportunity to immerse themselves in those companies’ cultures, making it nearly impossible for them to understand how good a fit an interviewee might be.
  • They are usually expected to be up-to-date with safety regulations but without proper safety training during onboarding, contingent employees can become a liability if they are injured on a worksite.

workforce-planning

If you currently hire contingent workers or are considering this option, employers need to fully understand the impact and costs of contracted work. After all, the goal of hiring contingent workers is to cut down on labor costs, so analyze this strategy before pulling the trigger. For organizations that go forward, understand that you should develop policies for contingent workers that outline expectations as you would for any newly hired employee. Without this, you’re setting up contracted employees for immediate failure within your company.

No matter the type of employee you’re hiring, you need a trusted HR and payroll partner to support you along the way. For nearly 30 years, Paycor has maintained a core expertise in payroll, tax filing and compliance. We established our expertise in the Cincinnati tri-state area, one of the most complex tax jurisdictions in the country, so we’re able to handle payroll and tax complexities in a way our competitors can’t. Contact our team to learn how we can support your business.


Subscribe to Our Resource Center Digest

Enter your email below to receive a weekly recap of the latest articles from Paycor's Resource Center.

Check your inbox for an email confirming your subscription. Enjoy!

More to Discover

How Businesses are Managing the New Reality of Work: A Paycor Survey

How Businesses are Managing the New Reality of Work: A Paycor Survey

COVID-19 changed the way nearly everyone works and left a lot of unknowns about how to budget and make plans to move forward. To understand exactly how coronavirus impacted medium and small-sized businesses and their workforces, Paycor surveyed nearly 600 HR and finance leaders.Did they need government funds? How many workers did they furlough or layoff? Are employees working from home now? How’s team morale? And perhaps more importantly, what are their plans for the future?This guide offer a pretty good idea of how business leaders are feeling, what keeps them up at night, and what approaches they’re taking to solve problems.

Paycor’s streamlined HR and Payroll solutions coupled with a flexible Recruiting platform impressed Taste Buds Management

Paycor’s streamlined HR and Payroll solutions coupled with a flexible Recruiting platform impressed Taste Buds Management

Pandemic Response Paycor’s immediate product updates in response to new coronavirus legislation helped Michelle stay compliant and keep track of employees. “From a technical standpoint, being able to put someone on furlough in the system was great,” she said. “You created custom codes – that makes a big difference. Before it was either you’re hired or you’re not. Now, I’ll be able to sort these specific dates and it will help me make more informed decisions.” “We didn’t know how to handle COVID-19 and Paycor very quickly figured it out. As a partner, you definitely stood out as an authority—you navigated the messiness and gave us direction. Whatever you’re doing to keep your staff focused on the client, it’s working. You have a winning...

Virtual Interviews: Best Practices for Remote Recruiting

Virtual Interviews: Best Practices for Remote Recruiting

Remote recruiting makes everyone a little nervous, at least at first. Conducting interviews by video conference just doesn’t sound appealing—can you really read someone’s body language on video? What if the internet connection is bad? All these obstacles and more might make you long for the days when in-person interviews were the norm. But don’t give up on remote recruiting. Here’s how to make it better. The Benefit of Virtual Interviews Remote recruiting has advantages. It’s cost-effective, saves time and broadens your pool of candidates to include people who live out of state or even out of the country. If you commit to remote hiring, there’s no reason for it to be any less effective than in-person interviews. Before the Remote...

How to Achieve Diversity in the Workplace

How to Achieve Diversity in the Workplace

Cultural Diversity Organizational Diversity Diversity in Recruiting Elevate Onboarding Defining Diversity and Why It Matters Having tough conversations about diversity and working towards a more inclusive environment is a part of any successful business. But what, exactly, is diversity? We define diversity as understanding, accepting, and valuing differences in races, ethnicities, genders, ages and more. Diversity can also include recognizing and respecting differences in education, skill sets, abilities and experiences. In order to address diversity in the workplace, you have to be intentional. You have to get comfortable with being uncomfortable and accept that achieving diversity isn’t easy. But it will be worth it in the long run—a...