Pros and Cons of Contingent Workers

A little over ten years ago, I participated on a human resource round table to discuss the future of the workforce. Most of the participants focused on demographic changes in the workforce and only at the end did the conversation turn to how traditional employment will transition to a more temporary workforce in the future. The majority of the participants acknowledged that some information technology positions align with the trend, but they felt that the move to a more temporary workforce overall would not be an issue for employers until well into the future.

Today, the contingent workforce is a reality. Contingent workers include freelancers, independent contractors, consultants, or other outsourced and non-permanent workers. The Bureau of Labor Statistics (BLS) reported in 2017 that approximately ten percent of the workforce functioned in a contingent capacity. Some of the other findings included:

• contingent workers were more than twice as likely as non-contingent workers to be under 25;
• contingent workers were more likely to work in professional, construction, and extraction occupations;
• compared to traditional workers, independent contractors were more likely to be older, temporary help agency workers were more likely to be Black or Hispanic or Latino, and workers provided by contract companies were more likely to be men; and
• almost 80 percent of independent contractors preferred their status over traditional jobs.

Many analysts and researchers feel that the BLS underestimated the total and that the actual, contingent workforce is much larger (https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/experts-puzzled-new-bls-contingent-workforce-data.aspx). In keeping with that idea, according to Deloitte, more than four in ten workers or 40 percent in the current workforce may be functioning in a contingent capacity.

Employers have embraced the contingency approach due some relatively sizable benefits. The major benefits include:

cost savings – while the hourly rate might be higher in some cases, the absence of benefits and paying for unproductive time reduces overall labor costs;
workload management – allows organizations to staff up and down based on business needs;
broader labor pool – by including more talent in the selection process, an organization has more selection options;
workforce stability – contingent workers allow traditional workers to remain with the organizations during periods of economic downturns or other financial adjustments; and
administrative reduction – by employing contingent workers, an organization reduces it administrative burden associated with traditional employees.

While the advantages are compelling, what is not discussed as much are the disadvantages of growing the contingent workforce. Some of the major disadvantages include:

commitment – contingent workers typically lack commitment to the organization when compared to traditional workers;
high turnover – contingent workers have a higher turnover rate;
security issues – access to confidential or propriety information creates more of a risk for an organization than working with traditional workers;
cultural misalignment – when joining an organization as a contingent worker, there can be issues with integration, cultural alignment, and even morale;
knowledge retention – organizations have found that more temporary workers create dilemmas for documenting and retaining job-specific knowledge;
skills issues – while contingent workers can bring hard to find skills, organizational experience can vary on the quality of the skills.

Contingent workers provide a central and key element of the modern workforce. As an organization weighs its options, it is critical to use some form of cost-benefit analysis to ensure that its staffing decisions are the right ones.  Consequently, a successful implemention process should include examining what processes need to change or adjust to best address the differences in needs and behaviors.

Flexible Management

“We are set in our ways, bound by our perspectives and stuck in our thinking.”
 Joel Osteen


As we age, we become more set in our ways.  Most of us have a favorite meal, television shows, places to visit, streets we follow to work, and even comfortable chairs.  With the recent holidays, most of us probably had the joy and adventure of witnessing how “set” our family members are in their daily practices. What time to eat, what to eat, and who does what are all major topics at the typical holiday celebration.  As human beings, we gain comfort in predictability and regularity.

When we are young, we spend considerable time trying to establish our own identity and breaking with our childhood norms.  As we age, we become comfortable in our routines and what we have seen work time and again.  Scientific American in a December 2008 article identified the age of 20 as a key milestone of the time of change and transition (http://www.scientificamerican.com/article.cfm?id=set-in-our-ways).  From 20 until 60 as we deal with more responsibility, we cling to those things that we know work.  At 60, we open ourselves again to new experiences and opportunities for growth as family and work responsibilities tend to diminish some.  After this brief opening, most people return to a renewed comfort zone that continues until their end of their life.

As managers, we follow a growth path as well.   Our thinking and development changes as we enter the workforce, advance in our career, and take on more management responsibility.  As we progress in an organization and life, we form opinions and ideas of how to be an effective manager.  Moreover, it is common to subscribe to the idea that there is one effective way to manage.  Most management ideas make the claim that they hold the key or secret ingredient to success and once known and utilized success will follow.  Once we are quasi-successful and believe we have it, it is very hard to change our mind to use alternative approaches.

Most of us develop our management style over time and based on our own experiences, ideas we come in contact with, and interpretation of events around us.  Issues start to arise once we find that our standard approach does not work with some people or situations.  Why does a single approach typically not work?

  • Different people respond to different methods – Each person is a little different and has to be motivated and engaged in the method most appropriate to the individual.  It is easy to assume that one size fits all, but reality quickly reminds us that the tradeoff for ease is less productivity and effectiveness.
  • Environment dictates the best tool – The environment in which we work including the internal and external factors set the stage for what will be successful.  Just as individuals vary, environments or circumstances do as well.
  • Change is a part of life as well as business – We constantly have to redefine ourselves to keep up with the natural changes that occur around us.

Flexibility is a critical ability of managers as well as leaders.  We can all think of examples where organizations, teams, as well as individuals have mistakenly assumed that something that works in one situation will work in all others.  To be our best, we have to be willing to change to match our circumstances and those around us.

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”

Charles Darwin