As the Contingent Ranks Grow, Employers Need to Treat Them Like Employees

The liquid workforce is on a path of rapid growth as people seek more flexibility and agility in the work they do. In fact, by one estimate a majority of workers will be freelancing by 2027. At some companies — Google for instance — contractors already outnumber full-time employees. As the liquid workforce continues to grow, enterprises need to be prepared for this changing labor economy.

Our work with staffing firms and the contingent workforce led us down a path to better understand how to effectively manage this flourishing subset of workers. For the purposes of our study, the liquid workforce references those who work in a variety of arrangements, most of which are contingent on short-term organizational needs.

Communication disconnect

Our findings indicate that organizations seek out contingent workers primarily to increase workforce flexibility and reduce costs. Although 30% of the surveyed organizations employ temporary workers, a disproportionate amount (45%) report poor communication with consultants, temporary workers from staffing firms, freelancers and independent contractors, and volunteers. Only a mere 39% of organizations report managing their contingent workers well and keeping them in the loop with key updates.

In fact, only 47% of executives are highly informed about non-payroll workers’ contract terms, and just 31% are knowledgeable about the quality of their work

Because contingent workers are employees of the staffing agency that placed them, instead of the companies employing them, they’re left in a gray area. If contingent workers are faced with personnel issues, the HR department of their workplace will be of little help as they’re not full-time employees, and looking to the staffing agency would be impractical, as recruiters are too far removed from the work to take any effective measures. Further, managers fail to efficiently check-in with the “deskless workers” who are not on the premises, leaving them deprioritized. Because contingent workers are often added to assist with overflow or seasonal needs, managers don’t have the time to communicate properly.

To combat poor communication, organizations should consider instituting a formalized communication program for their contingent workers. When a program is put in place, the communication drop-off between managers and liquid workers dissipates which, in turn, enables the liquid workers to remain productive and engaged.

Worker satisfaction

Only 23% of surveyed organizations measure engagement metrics or satisfaction levels of the contingent workers they employ. Of those that don’t administer satisfaction or engagement surveys among their contingent workers, the most commonly cited reason is apathy. These organizations don’t have any intention to act on these would-be metrics and as such, see no reason to seek them out.

This may not work in favor of the organizations though, as workers that are happier and more engaged tend to outperform their disengaged counterparts, and happy workers remain in their jobs longer than unhappy workers. Analysis of engagement levels also provides organizations with a deeper understanding of cultural fit, best fit for future recruitment or placements, and making contingent workers feel they’re included rather than disconnected from their place of employment.

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Staffing analytics

More than half (53%) of responding organizations turn to staffing agencies to fill available temporary work positions. The greatest benefit staffing agencies offer businesses is improving time-to-fill (73%), as agencies can fill vacancies much faster than can businesses. However, only 36% believe staffing agencies are a cost-effective solution to hiring full-time staff, and even fewer (18%) report staffing agencies provide excellent analytics.

As the war for talent continues, staffing agencies are turning to data and analytics to showcase their success. Over half of the organizations believe that tracking (56%) and assessment (53%) technologies will become more important in being able to effectively manage the liquid workforce as the demand for quality personnel rises.

To ensure top performance, organizations should be investing in staffing agencies that prioritize the quality of their candidates. Those that provide excellent performance management and analytics likely have a better pulse on the preferences of their candidates, putting them in a better position to deliver candidates who can offer quality work. Additionally, staffing agencies that utilize technologies can help organizations better track time, attendance, performance management, and other key metrics for both their liquid and full-time employees.

Although organizations may still be getting accustomed to the growing number of liquid workers, they realize the value this subset of workers add and are seeking to better understand how to effectively manage them. With the proper management and guidance, the liquid workforce will be able to deliver the quality work organizations desire while maintaining the flexibility and autonomy that they value.

Anil Dharni is the co-founder and CEO of Sense. He founded Sense to help fix temporary employment for the 42 percent of the U.S. workforce that are contingent workers. Sense has raised over $23.5M led by Accel, Google Ventures and Khosla Ventures. Before founding Sense, Anil was co-founder and COO at Funzio, which was acquired by GREE in 2012 for $210M, where Anil continued his work as COO. Prior to Funzio, Anil led Product and Design at the third largest Social Networking company, hi5. Anil has an MBA from MIT Sloan School of Engineering and a Bachelor’s degree in Aeronautical Engineering.

anil@sensehq.com 

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