Non-employee workers are outsourced, non-permanent workers that are the perfect solution for any organization that is looking to augment its employees with hot skills and flexible talent on an on-demand basis.
To successfully manage non-employees and the staffing agencies you use to engage them, it’s crucial that you have a structured program in place and that you use vendor management software to consolidate that data.
So, when building your contingent workforce management program, what are some of the benefits and cons of non-employee workers that you can expect to see? Let’s take a look!
Contingent workers Vs. employees: What’s the difference?
The contingent workforce is a pool of non-employee workers who are hired by an organization on an on-demand and project-by-project basis. This pool of workers is made up of a variety of classifications, including independent contractors, freelancers, consultants and temporary workers (temps).
There are a few important distinctions between non-employee workers and employees, including;
- contingent workers are not on your payroll,
- contingent workers are only hired for a defined period of time or for a specific project,
- contingent workers are not eligible for the same benefits that employees are entitled to, such as vacation time, sick pay and bonuses.
What are the advantages of hiring contingent workers?
Increased flexibility to change with the market
Temps and independent contractors are there to suit your company’s unique workforce needs. Whether you need an employee to work in your warehouse for a couple of months or an IT specialist to work on a specific project, engaging a staffing agency to source non-employee workers gives you the flexibility to change your workforce depending on your current workforce requirements or business demand.
A decrease in time to hire
The typical hiring process for employees in the US is a staggering 23 days to fill an open position. That’s because employees need to be sourced, screened and onboarded. Staffing agencies are able to place contingent workers into your organization in short notice, helping you to access talent at the time you need it.
Access to hot skills that are typically difficult to find
Accessing hot skills can be difficult. Organizations have more competition than ever before when it comes to hiring in-demand skills and workers. The contingent workforce offers your business access to a huge talent pool, making it a great way for you to navigate the skills gap and hire hot skills quickly.
What are the disadvantages of engaging contingent workers?
Compliance risk
As we mentioned above, company employees and contingent workers fall under different categories of workers. It’s important that 1099 contractors, W2 workers, and T4 workers are all categorized correctly, and that’s why compliance is a crucial aspect of your organization’s contingent workforce program.
You can read more about the difference between employees and contingent workers on our blogs, ‘What’s the Difference Between W2 Employees and 1099 Contractors’ or ‘Contingent Worker Definition: Your Complete Guide.’
It’s important that you have procedures and protocols in place to ensure your temporary workers and independent contractors aren’t being misclassified or considered as “co-employed”. Misclassifying contingent workers can result in audits of your workforce, and potentially expensive tax hits, penalties and law suits against your organization.
Research the compliance regulations in your region to ensure you don’t fall foul of any laws when hiring non-employee workers.
Ineffective management methods that lead to rogue spend and poor worker quality
Managing staffing agencies to source contingent talent and managing a non-employee workforce is complex. Despite many organizations using spreadsheets, in-house databases or Sharepoint-like websites to manage their vendors and contingent workers, this is simply an ineffective method that results in a complete lack of visibility into your non-employee workforce program.
The result? No insight into how staffing agencies are performing, no visibility into how much you are paying those vendors and rogue spend across your organization that’s driving up workforce costs and impacting your bottom line.
Thankfully, these issues can be easily resolved with a vendor management system (VMS). A VMS is a cloud-based software platform that automates and centralizes your entire staffing agency process - helping you to monitor and track vendor performance, improve workforce visibility, reduce costs, consolidate vendors and much more!
Want to find out how a vendor management system can significantly improve how you manage your staffing agencies and non-employee workers? Get in touch with Conexis VMS today. We’d love to answer your questions!
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