HRDV 3305 Contingency Staffing

1ContingencyStaffing:A MainstayinPermanentWorkPlacementStrategy
Contingency Staffing: A Mainstay in Permanent WorkPlacement Strategy
By: Tammy Corn
HRDV 3305-Staffing Strategies in HRDV
April 27, 2014

Contingency Staffing has become more common and more popular over the last few
years. Contingent workers are defined as freelancers, contractors, and temporary employees. The
beginning of this tread of keeping contingent workers in place at organizations happened during
the recession in 2008 and 2009. Though companies have used contingent workers during peak
seasons when extra help was needed, a big production needed extra hands or to cover “life
events” such as vacations, illnesses, or maternity/paternity leave, it is a more permanent strategy
in placed for corporations due to several factors. One of the biggest reasons is cost. Corporations
who place contingent or temporary workers in positions do not pay out for benefits or bonuses.
They do not need to pay for holiday or vacations for these workers. Administration cost goes
down as well since not as much documentation is needed for contingent workers. Secondly,
working contingent worker gives employers more flexibility in their workforce and corporations
are using contingent workers during their growth or expansion of their company. Lastly,
corporations expanding into the global market benefit more from temporary experts, just in time
hiring, and virtually remote workers.
Jim Link(2012) writes in his article, Companies Making Contingency Staffing a
Permanent Strategy, that in 2012, according to the annual Workforce 360 study, 67 percent of
companies utilize contingent workers, which make up 8.3 percent of their workforce-up from 8.1
in 2005 and 6.6 in 2009. This is a number increase of approximately 25,000 jobs a month with
84 percent of employers’ state their temporary staffing have either increased or stayed the same.
(Link, 2012). Rossheim(2011) in his article, Contingency Staffing Trends for 2011 and Beyond,
states that the temporary workforce between 2007 through mid-2009 dropped by 33.7 percent

with the total private workforce dropped by just 5.8 percent according to an analysis by the
Bureau of Labor Statistics. Then in 2010 the temporary workforce rose by about 300,000 to 2.21
million. The Bureau believed by 2012 that contingent employment would return to 2008 levels.
(Rossheim, 2011). As part of the recession, “88percent of employers either maintained their
contingent workers or increased them according to a December 2010 survey by staffing firm
Yoh.” (Rossheim, 2011). According to Accenture’s 2013 “Rise of The Extended Workforce”
report, “to compete in the future, organizations will need to push talent management beyond the
confines of the enterprise wall to include the new extended workforce: a global network of
outside contractors, outsourcing partners, vendors, strategic partners, and other nontraditional
workers.” (Woody, 2013). Also according to Woody’s article, Freelancing in America: Rise of
the Contingent Workforce, the Labor Department recent reports show companies are focusing
more on filling short-term needs and hiring part-time workers. Woody refers to it as the “just-in-
time” model for staffing. It is believed that by 2014 that 60 percent of corporations plan to
increase freelance hiring according to research conducted by Tower Lane Consulting. Some
factors driving the change are the needs for “just in time hiring, temporary experts, and the
virtual reality of remote workers.” (Woody, 2013). The areas of workforce that will see the
increase is the financial industry, defense contractors for the US government, construction firms,
and natural resource companies. “Professional contingent hiring and staffing opportunities are
increasing fastest in the Northeast and in the Southeast, where growth is returning, says Rebecca
Callahan, president of staffing firm SourceRight Solutions.” (Woody, 2013). A decade ago,
author Daniel Pink stated that the United States was rapidly becoming a “free agent nation”.
Researchers from the Aberdeen Group estimated in 2012 that nearly 26 percent of the average
organization’s workforce is contingent or contract-based. They also stated they were growing

rapidly and jumped by 12 percent that year.(Frauenheim, Contingent Workers, 2012).
Christopher Dwyer(2014) wrote 2014: The Year Ahead in Contingent Workforce Management,
where the research study: The State of Contingent Workforce Management believes that over the
next three years there will be a growth by nearly 30 percent in the contingent workforce in many
different categories such as services, consultants, SOW, traditional temporary labor, independent
contractors, etc…Organizations will need to realign their approach to their workforce to
implement strategies that include the contingent worker. Human Resource departments will need
to be prepared to adjust their recruiting, staffing, and training to include these workers. With the
understanding the purpose of these workers is to put them to work faster and efficiently for their
organization.
Human Resource Departments will need to implement strategies to include contingency
workers according to the needs of their organization. “In order to restructure an existing
workforce and include a permanent contingent worker segment, employers need to start with
three critical components to achieve integrated staffing success: collaboration, strategy, and
technology.” (Link, 2012). Collaboration should include decision makers, stakeholders, and
human resource departments. It will be up to the human resource department to address the
issues and create a staffing strategy that shares a unified set of needs and solutions.(Link, 2012).
Conor Smith(2011), president of The BOSS Group, in his blog for Cella Consulting he
recommends some practices and gives tips in his article titled, The “New Normal” in Staffing
Strategies: Contingent Workers. Smith states to first define the strategy and lay out the reasons
the company will use contingent labor. This may require a more refined definition for each
department who will utilize contingent workers. Some of the reasons may include: need to
increase capacity on a project basis or seasonal work, people with specialized skills that may be

needed for a time but not a necessity for permanent full time employment, coverage for full time
employees during vacations, maternity leave, illnesses, and employee resignation, and budget
wise part of the labor force will always remain contingent so more flexibility as the business
changes.
Human resource departments, after developing a strategy plan, must develop relationship
with vendors and freelancers so they are reliable and will provide labor as needed. Dealing with
these workers requires creativity in viewing their talents and abilities. As HR manager, you must
be able to determine if they are the ones that fit your need at this time. Also do they align with
your company’s goals and missions? They cannot simply be a quick fix because this can be
disastrous if they are not committed to either the project or company during their employment.
Building relationships with them will be the key to determine their drive or motivation. Smith
also recommended developing an onboarding plan for contingent workers. “As contingent
workers play a greater role in your workforce, it is critical that you have a plan to properly
onboard them so they are productive as quickly as possible.” (Smith, 2011). Lastly, Smith
recommends that Human Resource and department managers hold their contingent workers
accountable. They are to help meet the company goals in whatever project they are working on
or position they are filling. Link also recommends that HR create a model for future hiring
decisions along with a talent acquisition strategy formalized and documented. Advanced
technology can automate manage the strategic acquisition process which includes new and
innovative solutions and analytics software that will help hiring and help managers more
efficiently with staffing needs.(Link, 2012). Barry Asin, president of Staffing Industry Analysts,
that organizations need to stop setting their contingent workforce to the side and add them to
their strategic workforce planning. In Frauenheim’s article, Contingent Workers: Why

Companies Must Make Them Feel Valued, Steve Youll, human resources strategic planning
analyst for Greif, not only sees companies engaging with highly skilled individual but states that
it is the HR’s responsibility to “attract them, vet the effectiveness of their work, and woo the
good ones back time and again will be crucial.” Companies have purchased software tools called
vendor management system to address their contingent workforce strategy. Other companies
have turned to third-party managed-service providers, MSPs which are staffing services agency.
John Healy, vice president and talent supply chain strategist for Kelly Services Inc, says MSPs
have a responsibility to help their client determine whether their need is for efficient contingent
workers such as for an assembly line or for more professional talent. Creative and talent
professionals will need a more responsive, high-touch relationship. HR needs to look at their
contingent workers as they do their regular employees. They still need to assess performance of
these workers because mediocre and low quality work threatens a company’s efficiency and
productivity. Feedback is crucial especially if the majority of these workers are coming from the
millennial generation that requires it to perform their best. As some companies are relying on
contingent workers for their customer service representatives they must require excellence in
their performance. This is crucial because the customer sees these people as the company’s
people.
In all aspects how a company handles and deals with their contingent workforce is very
important to company success. Human Resources are a key factor in collaboration between the
leaders and this part of the workforce along with it is their responsibility to develop a strategic
plan. However, company executives and managers play a crucial role in their contingent
workforce be beneficial for their company. The reasons behind companies using contingency
workers vary from company to company. Companies must deal with the pros and cons of having

contingent workers in their organization. The biggest pro for companies in today’s economy is
cost. Borowki’s(2008) states in Risk, Benefits of Using Contingent Workers that cost are the most
significant motivation for companies using temporary workers and independent contractors.
Companies do not provide vacation time, holiday pay, sick leave, or health insurance for
contingent workers. The other cost benefit is they are not required to withhold payroll taxes, pay
social security and Medicare takes, or make unemployment contributions. Alongside this is
administration cost. A company participating in a leased employment arrangement saves time
reviewing employment applications, interviewing candidates, and preparing tax withholding
forms and other documentation needed for permanent employees. And also contingent workers
can be fired or let go without the hassle of documentation of infractions or other forms needed
for reasonable cause for firing a permanent employee. As stated earlier, contingent workers can
increase efficient during peak hours, days, or periods of demand and for one-time projects. A
company experiences periods of low demand than can stop using them. For permanent
employees, a feeling of job security: “because workers such as independent contractors and
temps allow you to use labor fluidly and adapt strategies for expanding and reducing hours with
minimal effect on the employment core workforce, regular employees may feel an increased
sense of job security. (Borowski, 2008). Another benefit is recruiting opportunities; contingent
workers are a good resource for recruiting for permanent positions. With these workers already
working for the company, it is easy to evaluate their work performance along with their work
ethics. Do they give this job their all? Are they motivated to give their best for the company?
They also offer a broader talent pool. A company may need an individual with a particular talent
for a special project with a limited duration that do not required hiring a full time regular

employee. Flexibility is a big incentive for companies in hiring contingent workers because they
can increase and decrease staff with economic consequences and minimal legal risks.
The risks for hiring contingent workers are listed by Borowski as decreased in loyalty and
productivity, impact on employees, confidentiality, increased training cost, and status.
Employers are concern that contingent workers are not dependent on employer for their
livelihood or motivated by advancement opportunities. They feel this makes contingent workers
less likely to be loyal, be less productive, and their quality of work will be substandard. In some
organizations, regular employees resent contingent workers. They feel these workers rob them of
overtime or take a regular full time job from someone else. They may also know someone who
was laid off during bad economic times and now that position is being refilled by a temp worker.
Companies do not have a contract with contingent workers so they are free to move to
competitor. Those with specialized skills and the number of expertise is limited can negotiate
with more than one company and can also go to the one who will pay more. Contingent workers
can result in higher turnover which also results in higher training cost. Some contingent workers
feel they are not treated the same as regular employees and feel left out or isolated from the
company and the other employees. They also feel their work will not be recognized or rewarded.
Ed Freunheim addresses the issues between employers need to change their outlook on
contingent workers and how they need to make them feel valued. “Increasing amounts of work
are going to higher-skilled contingent workers-to professionals such as engineers, graphic artists,
and nurses-whose talents can be pivotal for organizations.”(Freuheim, 2012). These same people
are more likely millennials who need more attention than previous generations. Companies that
are going to make contingent workers a mainstay in their organization they must develop a new
relationship with them. “That relationship might be called the ‘arm’s length embrace’.” Even

though they are independent and need that respect, they also need to feel as part of the
organization as long as they are. Ways to make them feel a part of the company are invitations to
social gatherings, improved communication, recognition and rewards when applicable. This also
means a fair wage for them not lower wages because they are only “temporarily”. Brian Kropp,
analyst for research firm the Corporate Executive Board, says, “Organizations need to rethink
their approach. If you treat them as ‘hired help,’ then they will behave as ‘hired help.’”
(Frauenheim, 2012). As more and more contingent workers become independent contractors
with areas of expertise, companies need to value their skills and abilities by paying them what
their services are worth and by giving recognitions when it is deserved. Companies who really
want to benefit from their contingent workforce than they must develop open and complete
communication. If for example, they are working on a portion of a big project, give them the
whole picture so they know how to implement their part to coincide with the rest of the project.
Companies also need to understand this give and take relationship. The company giving the
independent much needed information but also the independent is array of good information and
knowledge.
Organizations have the potential of misclassifying workers. The Labor Board concluded
in their findings that there is no set definition for an employee compared to an independent
contractor. Employers need to evaluate their workforce to make sure they are following
government guidelines for their labor force including contingent workers. Companies can face
significant legal risk if they misclassify an employee as a contingent worker when actually the
courts will classify them as a regular worker. The legal risks they can face are tax liability
because companies do not withhold taxes nor do they pay social security or Medicare taxes for
contingent workers. A company can also face wage and hour violations by not paying minimum

wage or paying for overtime work. Contingent workers risk not be covered by the employment
discrimination statutes. Companies are not liable for work related or workers’ compensation for
contingent workers or do they receive employee benefits. Occupational safety and health issues
along with family medical leave issues are not required for temporary or independent
contractors. Organizations, when it comes to contingent workers, they concentrate on labor costs
and legal compliance. “Microsoft Corp’s landmark $97 million settlement with its ‘permatemp’
in 2000 put the ‘co-employment’ issues on employers’ agenda, and recently the Obama
administration has made worker misclassification enforcement a priority.” (Frauenheim, 2012).
The state of Texas defines an employee as someone an employer exercises direction or control
over and for whom they are responsible for wages and taxes. An independent contractor,
however, is responsible for their payroll, social security, and Medicare taxes and is not subject to
the employer’s direction or control. There is not a clear definition for an employee and the
National Labor Board feels that due to this fact that employers take advantage of the ambiguous
definition to have lower labor cost and not pay taxes or benefits for contingent workers.
The questions that are arising in companies today are whether it is more beneficial for
hiring contingent workers in key situations. “With 56 percent of companies indicating their
increasing concern about an impending skills gap, it is even more important to identify talent
needs and structure the best workforce based on the supply of qualified talent, including full-time
and contingent candidates.” (Link, 2012). Rossheim(2011) also states that industries going
through fundamental changes are using professional contingent labor. Also according to Dr.
Woody(2013), the contingent workforce is going global as companies use independent
contractors in other countries or they outsource their labor such as customer service. According
to the collected data, contingency staffing is here to stay and HR departments will be the

forerunners in developing staffing strategies along with recruiting techniques for this unique job
force. They will need to also have a good training plan in place so these “just-in-time” workers
can began producing for the company as soon as possible. They need to build rapport with this
much needed talent of professionals who have the talent needed for their company at the time
along with developing relationships. Long term relationships does not mean long term
employment but it keeps the communication open so whenever this individual’s talent is needed;
they are willing to come help out the company. In this sense, the time a contingent employee
spends at a company should not only be productive for both but it needs to be a good experience
for the worker for their willingness to continue to work there as needed or to come back when
needed.
In conclusion, motivation is a crucial key in getting quality work from contingent
workers. Their personalities may play a part but more so their feeling of belonging and valued.
They need to feel as an important member of the organization and not as a “second class” citizen.
They need to be implemented into all aspects of the company’s organization as far as the goals
and missions of the company. They need to be included in any gatherings the company has while
they are employed. Any changes in company guidelines or policies that may affect them should
be communicated to them as well. Contingent workers are becoming a mainstay in today’s
workforce due to the economy and immediate needs of the company. Companies are finding it
makes more sense to hire contingent workers when the job or project does not require a
permanent full time employee. Full time employees should look at contingent workers as
fulfilling a need of the moment and not as a threat to their job. Contingent or independent work
benefits those who want a more flexible schedule. Those who do not want to be a part of any
office politics, and treasure the diversity of assignments that comes from working independently.

Those who work as contingent workers involuntarily will also give the company good
performance because their hope is to be a permanent employee. Finally, as companies are
dealing with not only today’s economic issues they are expanding globally. A company who
wants to be competitive in the global market will do so have a large array of people working for
them from permanent, temporary, contractors, and even outsourcing.

13
Works Citied
Link, J.(2012). Companies Making Contingency Staffing a Permanent Strategy. Retrieved from
http://www.thestaffingstream.com/2012/10/18/companies-making-contingency-staffing-a-
permanent-strategy/
Rossheim, J.(2011). Contingency Staffing Trends for 2011 and Beyond. Retrieved from
http://hiring.monster.com/hr/hr-best-practices/recruiting-hiring-advice/strategic-workforce-
planning/temporary-staffing.aspx
Woody, Dr.(2013). Freelancing in America: Rise of the Contingent Workforce. Retrieved from
http://www.foxbusiness.com/personal-finance/2013/09/30/freelancing-in-america-rise-
contingent-workforce
Borowski, C. (2008). Risks, Benefits of Using Contingent Workers. Retrieved from
http://www.hrhero.com/hl/articles/2008/09/26/risks-benefits-of-using-contingent-workers/
Smith, C. (2011). The “New Normal” in Staffing Strategies: Contingent Workers. Retrieved
from http://www.cellaconsulting.com/blog/the-new-normal-in-staffing-strategies-continegent-
workers/
Frauenheim, E. (2012). Contingent Workers: Why Companies Must Make Them Feel Valued.
Retrieved from http://www.workforce.com/articles/contingent-workers-why-companies-must-
make-them-feel-valued
Dwyer, C. (2014). 2014: The Year Ahead in Contingent Workforce Management. Retrieved from
http://cporising.com/2014/01/25/2014-the-year-ahead-in-contingent-workforce-management-
part-i/
Texas Workforce Commission, State of Texas website:
http://www.twc.state.tx.us/news/efte/ics_contract_labor.html

HRDV 3305 Contingency Staffing

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