What is a Contingent Workforce?

Businesses that need extra workers on either a short-term or long-term basis can hire independent contractors as part of a contingent workforce. These contractors, consultants, or other freelancers generally work with businesses for different amounts of time based on their availability and the company's needs. 

Contingent workers are not on a company's payroll and, thus, do not receive the same benefits as full-time employees. Building a contingent workforce can be an excellent strategy for getting specialized help at a reduced cost.

‍

Businesses can hire independent contractors as part of a contingent workforce to meet short- or long-term needs, offering specialized help without the cost of full-time hires.

‍

A contingent worker is anyone hired as a temporary worker to provide specific services or complete a project for a company. Unlike full-time employees, contingent workers do not receive benefits such as paid time off or employer-provided health insurance. They are responsible for paying their own taxes since employers do not withhold Social Security or other taxes from their pay. 

While some contingent workers may work through a contracting agency, they can also contract directly with an organization using a Statement of Work or other legal agreement that outlines the terms of their services without official employment. This flexibility allows employers to hire and terminate contingent workers as needed, providing a sense of adaptability in their workforce management.

A contingent worker is a temporary hire who provides specific services or completes projects for a company without receiving full-time benefits, giving employers flexibility in managing their workforce.

Employing contingent workers can be a cost-effective business strategy for companies seeking to fill staffing shortages or skill gaps within teams. It can also be a smart way for businesses to access specialized consultation without the significant financial and administrative costs of a full-time hire.

Contingent workers can also be valuable for one-off projects requiring expert assistance or during a transitory or migratory period. A freelance team can offer employers flexibility, as they can quickly terminate employment at the end of a project or contract.

Employing contingent workers helps companies fill staffing shortages or skill gaps or receive specialized consultation without full-time hiring costs. This approach offers flexibility by allowing businesses to terminate contingent employment at the end of contracts.

‍

Of course, while a contingent workforce can offer cost savings, many businesses prefer to stick with the tried-and-true model of a full-time staff. Regular employees are generally more loyal to a business, in part due to the generous benefits offered to full-time staff. This can show up in freelancers struggling to adapt to a company's culture or making businesses wary of sharing inside information. 

Hiring contingent workers also poses the risk of businesses facing compliance issues, particularly those related to worker misclassification. It's crucial for organizations to stay updated on the employment laws that regulate their industry before developing a contingent workforce strategy.

While a contingent workforce offers cost savings, businesses may prefer full-time staff for greater loyalty, easier cultural integration, and to avoid possible compliance risks from worker misclassification.

Small businesses should absolutely consider hiring contingent workers for fractional work. They can do so to receive consultation, temporary assistance to fill skill gaps, help on specific projects or migrations, or allow full-time staff more time to do work they love. Contingent staff gives small businesses access to expertise they may only have been able to afford with the existence of such a flexible work model. 

To effectively implement these policies, consider your business's highest priority projects and most expensive potential full-time hires in the next year to find the place(s) that will add the highest possible value to your organization.

Small businesses should consider building a contingent workforce to assist regular full-time staff, assessing the areas where they could offer the highest impact alongside savings.