7 ways to strike the right balance between employees & contractors
Businesses get more done, more cost-effectively, by leveraging a combination of both employees and contingent workers . Many organizations leave this decision up to managers who often lack the data or ability to make the best decisions. Consider the following research by Staffing Industry Analysts:
How
companies/organizations
make decisions on worker type:
11%
support function recommends decision made by consensus manager makes decision independently 17% manager follows policies 34% other method 22%
16%
1
Choose for task at hand
While there are no fixed rules, it’s wise to look at all options when you need to staff for a new project or initiative.
Contingent labor is a great way to cut costs and boost workforce agility. Contingent workers are often better suited for:
Shor t-term projects
Urgent business needs
Seasonal projects
Hard-to-find skillsets
Statement-of-work (SOW)
Employees can make more sense when:
Specialized training or knowledge of your company is imperative
Conflicts of interest or security are major concerns
Valuable or controversial internal resources are involved
Leveraging a contingent workforce can benefit your organization in many ways. But if you treat the choice of contingent vs. permanent workers as simple arithmetic, you might overestimate the benefits of one over the other.
It’s not easy to directly compare permanent and temporary labor. Here are just some of the factors that go into the equation:
— Supplier markup
Productivity levels
Project delays due to unexpected loss of temporary workers
Cost and risk of onboarding and offboarding contractors
Variation in regional rates and by supplier
To weigh all these factors, you need to be able to go beyond hourly and per-project pay rates. You can do this with a vendor management system (VMS) that enables you to track all contingent workers and provides analytic tools that let you compare available work models head-to-head.
3 Understanding employment laws
Misclassifying workers can expose you to significant liability, which could outweigh any cost savings gained in the process of hiring contingent workers. You need to make sure your worker classification lines up with country, and regional employment laws. This means you need to stay on top of tax and labor legislation – such as the Fair Labor Standards Act (FLSA), IR35, and DBA – in every country or region where you have workers.
Clearly, it’s no small task staying familiar with and applying guidelines and regulations handed down by multiple entities. If you’re not already using a VMS, now might be a suitable time to reconsider.
Use predictive analytics 4
It can be difficult to anticipate all your labor needs. Basics like selecting needed skillsets or titles can get tricky, as your HR and procurement teams work to allocate tasks in the most economically advantageous way.
You need to consider different suppliers, regions, and address a host of other issues. This includes everything from who will offer the most competitive rates to where it makes sense to divide up procurement between suppliers, and where it’s more rational to go with one partner.
This is where the power of predictive analytics and up-to-date market intelligence comes into play. With this technology and information at hand, you can more easily understand what your organization needs from its contingent workforce, choose the right suppliers, price contracts more competitively, and make sound staffing decisions.
Understand your contingent workforce options 5
You want to balance cost, risk, performance, and flexibility when using a contingent workforce. But no contingent hiring model is right for all positions.
In many situations, temporary workers supplied by staffing agencies is the most cost-effective solution. In other cases, deliverables-based service projects governed by statements of work (SOWs) may be more efficient. Using independent contractors (ICs) for specific assignments may also offer benefits.
Ideally, your total workforce management program weighs the benefits of each type of staffing—including SOW-based workers and temporary workers—selecting the right labor model to meet each need.
Consider the effects of supplier management 6
A contingent workforce doesn’t only change the way your organization works. It can fundamentally shift administrative burdens and costs within your business.
To achieve the highest savings possible, you need to effectively build and manage supplier relationships. This is another area where a VMS can make a difference. It gives you the means to evaluate your suppliers, and automates all the key tasks around sourcing, implementing, and managing a contingent workforce program.
7 Strive for total workforce optimization
As your non-employee workforce continues to evolve, your organization is likely revisiting the employee vs. contingent worker debate. There’s simply no way to stay competitive without maximizing the cost savings and flexibility that non-employee workers of all types provide. At the same time, your company will always need loyal, motivated, and highly trained employees to perform mission-critical assignments. Your job is to find the best balance of the two.
For over 20 years, Beeline has empowered businesses worldwide to achieve competitive advantages with their extended workforce. Beeline Extended Workforce Platform gives companies the visibility needed to mitigate risk, achieve cost savings, and meet dynamic business needs. With tailored solutions that solely focus on the complexities of the extended workforce, clients leverage Beeline products that fit their unique requirements. Through thousands of integrations, clients can connect their extended workforce data from all technology stacks, including major procurement and HR systems. Join the list of renowned brands benefiting from Beeline’s deeply seasoned experts, collaborative innovation, and industry-leading partner network.
