Top Challenges in Contingent Workforce Management
1 December 2021

The Top Challenges of Managing a Contingent Workforce

2 min read

Is your business failing to implement an effective contingent workforce management program? If so, you may be suffering from rogue costs, poor vendor decision making and inefficiencies that run invisibly throughout your business.

Organizations leverage the contingent workforce for a number of reasons. Typically they are looking to save money, improve talent acquisition, and make use of staffing agencies to better achieve their workforce goals.

While all these benefits can be realized through the use of the contingent workforce, it’s vital that a contingent workforce management program is in place to mitigate these risks. If they are left unaddressed, they will run through your business, seriously affecting your bottom line.

In this blog we take a look at some of the most common risks associated with poor contingent workforce management.

What are the top risks that come with contingent workforce management?

Despite the benefits that come with the growing use of contingent workers, a poorly managed contingent workforce program will bring risks to a business. These risks can seriously impact your bottom line if left unaccounted. 

Unfortunately, most companies aren’t prepared to successfully manage their contingent workforce - even when they plan on using more contingent workers than before.. 

When asked to forecast the makeup of their workforce in 2020, a study from Deloitte found that 37 percent of businesses expected growth in the use of contractors, 33 percent in the use of freelancers and 28 percent in the use of gig workers. Yet, despite this growth, only 16 percent said they had an established set of policies and practices to manage a variety of worker types, pointing to an enormous gap in capabilities.

When businesses have no real contingent workforce program in place, hiring managers take on the sourcing of contingent workers and engagement of staffing agencies on their own terms, leading to a severe lack of standard processes and rates.

That leads to a range of risks, including: 

  • Operational inefficiencies and fragmented contingent workforce management processes across the business.
  • The potential to misclassify contingent workers if they aren’t documented properly.
  • Rogue spend that goes unseen within the organization. 
  • A complete lack of visibility and control over the contingent workforce
  • No insights into the performance of staffing agencies.

Why contingent workforce risks are invisible 

Managing a contingent workforce is highly complex. It can involve a huge number of temporary and contract workers, various staffing agencies and a range of data points that cross every department within your organization. 

The problem is, most organizations have no contingent workforce management program in place to successfully manage this area of their business. To make it worse, these companies have no idea that they are even wasting huge amounts of time and money due to inefficient contingent workforce management strategies. 

Contingent workers and staffing agencies are typically managed on a departmental basis, with hiring managers using their own vendors, processes and price points. This results in a fragmented system that has no consistency when it comes to hiring processes, vendor engagements, workforce compliance, candidate quality or worker rates.

This complete lack of oversight over contingent workers and staffing vendors leads to a complete lack of visibility and control over the entire contingent workforce strategy. 

In fact, visibility remains a real issue for the average contingent workforce program. The average rate of visibility into non-employee workforces has dropped nearly 20 percent since late 2018, according to Ardent Partners.

To be successful, contingent workforce management must be a centralized, company-wide initiative, in which hiring managers use the same staffing agencies, at the same rates and following standardized rules for hiring contingent workers.

If these rules aren’t followed, hidden risks such as operational efficiency, overspending, compliance issues and a lack of visibility into the contingent workforce will have significant impacts on the company. 

Stay tuned for our next blog, Contingent Workforce Management Methods to Gain Visibility and Control, to learn how you can better mitigate the risks that come with these challenges and

Alternatively, contact us today to discuss your unique staffing agency and contingent workforce management needs. Our team of experts would love to help!

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