Contingent staffing has taken off for corporate roles. But there are a few persistent myths about hiring people on contract that cause companies to leave value on the table.
As we wrote about recently, the rise of contract (also known as contingent) staffing for corporate roles is one of the biggest business stories of the twenty-first century. More companies than ever are using temporary workers for high-skilled positions, typically three, six or twelve months. It’s not just about leave coverages anymore. Companies are leveraging contractors for project-based work, backlogs, software implementations, business transformations, and many other strategic uses.
In our core verticals at Argentus —supply chain management and procurement—we’ve seen a tremendous uptick in contingent staffing, as companies navigate an environment of tremendous disruption. With the pandemic, companies have pivoted their supply chain focus. They’ve realized that they need to invest in new systems and capabilities to navigate the uncertainty in their supply chains.
And contingent staffing has become an invaluable tool. Companies bring on contingent workers for these projects. When the project finishes—when all suppliers are onboarded onto a new Procure-to-Pay system, for example—the contractors move on to another contract, or to a different permanent opportunity, while the company avoids raising their long-term permanent headcount when they don’t have a permanent need.
It’s a model that works.
But in a recent Association for Supply Management (ASCM) survey, only 16% of people surveyed said their companies have concrete strategies for managing their contingent workforce. As a result, many hiring managers are flying blind. The needs are there, but the strategies sometimes aren’t. And given that the contingent model has evolved in the past few years, it’s no surprise that there are some misconceptions around contingent staffing and what it offers.
We’re writing this post to clear up some of those misconceptions, with the goal of arming hiring managers with as much knowledge as we can. So without further adieu, here are some of the biggest misconceptions we encounter:
Myth #1: Contingent staff will leave for the first permanent opportunity that they see.
Gone are the days when contract work was only a stopgap on the way to permanent employment. Yet this myth is persistent. People think contingent workers will fly the coop for the first permanent opportunity that comes along. However, if you’ve done your work correctly—either by working with an agency with an established roster of contractors, or by doing your due diligence in the hiring process—you’ll identify candidates who are highly professional and committed to completing their contract term.
In our experience, an overwhelming majority of contractors we place finish out their contract terms. In fact, a majority have their terms extended by their clients, and continue beyond the length of their contract. The number of candidates who don’t work out in a contract is no higher than the ones who don’t work out in a permanent role—and both numbers are vanishingly small when you do the proper leg work up front.
Myth #2: Contingent workers are people who can’t find permanent roles.
This is a related myth to the one above, and just as incorrect. The myth is that contingent workers are “fly by night,” less professional, or less skilled than their permanent counterparts. “After all,” the conventional wisdom goes, “why aren’t they in a permanent role?”
It’s true that some people on contract would love to land in a permanent role. Quite a few newcomers to Canada use contract roles with top companies to gain exposure to the Canadian market, for example. But in 2022, many high-skilled contingent workers choose to work on 3, 6 or 12 month assignments. Some prefer the often higher hourly pay rate over the stability of a permanent role. Some prefer the flexibility of being able to gain exposure to a wide variety of industries. Some are very senior consultants who would rather work as hired guns on diverse projects than fill a seat at the same company—and these are some of the most skilled procurement and supply chain professionals in the game.
Whatever the reason they choose, contingent staff are just as skilled as permanent employees. In fact, many are specialized in executing projects quickly—as opposed to the day-to-day, transactional firefighting that permanent employees have to do. For the right role, a contingent candidate pool can be even more effective.
Myth #3: A contingent worker is just a permanent employee you hire temporarily.
Hiring managers sometimes treat the process, candidate pool, and workforce management for contractors the same way they treat them for permanent employees. It shows up in subtle ways, but it’s one we see all the time. For example, they’ll come to us with a contract search. After two weeks of interviewing candidates, they’ll change it to permanent—or even worse, the other way around—which sets them back to square one in a way they might not realize. Or they’ll take a perm salary and divide it up into an hourly amount, without accounting for the lack of benefits and vacation that often gives contractors higher hourly pay rates. Or, once the contractor is onboarded, they will treat them like an employee.
Contingent and permanent are two sides of the same coin, but they’re very different beasts. As we alluded to above, permanent and contract hiring pulls from two different talent pools. Treating them as the same kind of search short changes your efforts. They also differ in terms of process: part of the advantage of contingent staffing is that it’s faster than permanent search. High-skilled contingent staff are pre-vetted resources that can hit the ground running immediately. Sometimes our candidates go from interviewing to start within a week. If you neglect this aspect, and instead send a contract candidate through multiple interview rounds and approval cycles, you’re missing out on why contingent is a good strategy in the first place.
Here’s another, related issue: contingent staff are not employees. They’re legally required to be independent contractors, meaning that they’re reasonably self directed in their work. Their term has a defined end date. Often, they’ll use their own equipment. It’s a consultant/client relationship, rather than an employee/employer relationship. If you treat a contractor as a perm employee—especially if these candidates are on your own payroll—you open yourself up to employee misclassification risk, which can cost huge penalties. Just saying the individual is a contractor isn’t enough. You need to prove that they’re independent.
Contingent staffing has been popular in supply chain and procurement for almost a decade at this point, but as we mentioned, most companies still don’t have a dedicated strategy. Thankfully, taking the first step isn’t difficult.
We hope this guide helps point you in the right direction for some of the biggest myths and issues to help get the most out of your own contingent staffing. And if you have further questions—or want to explore how to set up your own contingent workforce program—reach out to Argentus! We’re reachable any time at 416 364 9919 or firstname.lastname@example.org.