The modern business landscape has witnessed a significant shift in how organizations source and utilize talent. With engineering projects requiring specific skills at specific times and the challenge of finding the right skills in a given project's region, businesses increasingly turn to contingent workers to fill critical skill gaps, meet project demands, and enhance workforce flexibility. Hiring full-time engineers for short projects is costly and inefficient, and contracting elements of a project to third-party companies can also blow project budgets. The answer is finding, engaging, and implementing the right skills at the right time, and a growing response to this challenge is contingent workers.
What Are Contingent Workers?
Contingent workers, freelancers, independent contractors, or 1099 workers are hired to perform specific tasks or projects. Unlike traditional employees, contingent workers are not part of the business's regular workforce. They operate independently, providing expertise and skills to companies project-by-project or contractually.
Contingent workers have the autonomy to determine their work schedules, choose where they perform their tasks, and even decide on the number of hours they dedicate to each project. They are not added to the organization's payroll and are typically compensated based on the agreed-upon project fee or hourly rate. Because they are non-employees, they are not entitled to benefits such as health insurance, paid time off, or retirement plans.
Types of Contingent Workers
Contingent workers encompass a wide range of individuals with diverse skill sets and expertise. There are also legal and contractual differences between contractors, temporary workers, and part-time or full-time employees. An organization must first thoroughly understand the problem or task they're looking to solve, the budget, and the deadlines for completing a task or project to select the best contingency.
Independent contractors are highly skilled individuals who offer specialized services to organizations on a project basis. They often work with multiple clients and have the freedom to set their rates and work arrangements. Independent contractors may use their tools and equipment and are responsible for managing their own taxes and business expenses. They will typically work on-site with clients, adhering to the client's working hours but working around the project's timeline rather than a set number of hours.
Freelancers are self-employed individuals who provide services to organizations on a project or contractual basis. They offer expertise in various fields, such as graphic design, writing, programming, marketing, and more. Freelancers can choose the projects they want to work on and often collaborate with multiple clients simultaneously. Freelancers often differ from contractors in that freelancers rarely work on-site with clients, instead working remotely to complete tasks on the client's behalf.
Temporary workers, or temps, are individuals hired for a specific period to fulfil short-term staffing needs. They are often employed through staffing agencies and are assigned to businesses based on their skills and availability. Temporary workers may be engaged for significant project stages, peak business periods, or to cover employee absences.
Consultants are highly experienced professionals who advise and guide organizations seeking specialized knowledge. They may be engaged in short-term projects or long-term strategic initiatives. Consultants bring industry expertise and help businesses solve complex problems, develop strategies, and optimize performance. These will often be engineers or managers with many years of experience in their field.
Benefits of Hiring Contingent Workers
There are many advantages to using contingent workers for skills or labor gaps in projects.
1. Flexibility and Scalability
One of the key advantages of hiring contingent workers is the flexibility and scalability they provide. Businesses can quickly adapt to changing business needs and project demands by tapping into a contingent talent pool. Contingent workers enable businesses to scale up or down their workforce based on project requirements, ensuring optimal resource allocation and cost efficiency.
2. Cost Savings
Engaging contingent workers can result in significant cost savings for businesses. Unlike traditional employees, contingent workers are not entitled to benefits such as health insurance, paid time off, or retirement plans. This reduction in benefit expenses, combined with the ability to hire talent on a project basis, allows organizations to allocate their budget more effectively and optimize their overall labor costs.
3. Access to Specialized Skills and Expertise
Contingent workers often possess specialized skills and expertise that may not be readily available within the organization. By tapping into the contingent workforce, businesses can access a diverse talent pool and bring in individuals with specific knowledge and experience to address critical business needs. This infusion of specialized skills enhances business capabilities and promotes innovation and growth.
4. Attract top talent
Well-planned projects with learning and career development opportunities will often attract the best talent. Contingent workers will be highly attracted to working with clients known for good organization, timely payment and good working conditions. Well-managed projects will also attract returning workers, allowing a company to develop a portfolio of preferred suppliers who know the business and can re-engage efficiently.
5. Knowledge Transfer and Learning Opportunities
Contingent workers often bring a wealth of industry knowledge and experience to the organizations they engage with. Consultants can support director and management-level positions with new skills, while contractors can train full-time workers to use new equipment or processes. Traditional employees can benefit from working alongside contingent workers, gaining new skills and expanding their professional networks.
Considerations when Hiring Contingent Workers
While there are numerous benefits to hiring contingent workers, it is essential to be aware of the potential drawbacks associated with this workforce strategy.
1. Management Challenges
Managing a contingent workforce requires a different approach compared to traditional employee management. Contingent workers operate independently and may need additional guidance and support to align their work with organizational objectives. It can be challenging when using different contractors each time they are needed, requiring re-training each time. Effective communication, clear expectations, and ongoing performance feedback are essential to ensure seamless collaboration between contingent workers and the business.
2. Control and Supervision
Contingent workers have the freedom to carry out their work according to their preferred methods and schedules. This level of independence can be challenging for some managers who prefer more direct control and supervision over their team members. Building trust and establishing effective communication channels are crucial to meeting project requirements and fostering successful collaboration.
3. Compliance and Legal Considerations
Proper classification of workers is essential to avoid legal and compliance issues. Misclassifying workers as contingent when they should be classified as employees can lead to severe penalties and legal consequences. Organizations must stay updated on relevant labor laws and regulations to ensure compliance when engaging contingent workers.
4. Stability and Commitment
Contingent workers, by nature, do not have a long-term commitment to the organization they are engaged with. They may have multiple clients and projects simultaneously and can choose to leave once their current assignment is completed. This lack of stability and commitment may pose challenges regarding workforce continuity and long-term strategic planning.
5. Integration and Team Dynamics
Contingent workers may face challenges in fully integrating into the organization and establishing strong working relationships with traditional employees. The temporary nature of their engagement and focus on specific projects can hinder the development of strong team dynamics. Businesses should foster a culture of inclusivity and collaboration to bridge any gaps between contingent workers and their traditional counterparts.
How to Effectively Manage Contingent Workers: Best Practices for Success
There are some key strategies to maximize the benefits of hiring contingent workers and ensure a smooth integration into the business.
1. Clear Communication and Expectations
Establish open and transparent communication channels from the outset of the engagement. Clearly define project goals, deliverables, timelines, and performance expectations. Regularly communicate progress updates, provide feedback, and address any concerns or issues that may arise. This transparent communication fosters a sense of alignment and ensures everyone is working towards the same objectives.
2. Onboarding and Orientation
Provide comprehensive onboarding and orientation for contingent workers to familiarize them with the company culture, values, and policies. This process should include an overview of the project scope, access to necessary resources and tools, and introductions to key team members or stakeholders. A well-executed onboarding process sets the stage for a successful working relationship.
3. Collaboration and Integration
Promote collaboration and integration between contingent workers and traditional employees. Encourage cross-functional teamwork, knowledge sharing, and opportunities for collaboration on projects. This integration fosters a sense of inclusivity and harnesses the collective expertise of both contingent and traditional workers.
4. Performance Management and Feedback
Implement a performance management system that provides regular feedback and evaluations for contingent workers. Set clear performance metrics and review progress against established goals. Recognize and reward exceptional performance to foster motivation and engagement. Regular check-ins and performance discussions enable continuous improvement and ensure alignment with organizational objectives.
5. Compliance and Legal Considerations
Stay updated on labor laws, regulations, and guidelines for engaging contingent workers. Ensure proper classification of workers to avoid legal penalties and compliance issues. Consult legal or HR professionals to ensure adherence to relevant regulations and best practices.
Embracing the Power of Contingent Workers
The rise of contingent workers has revolutionized how organizations source and utilize talent. With their flexibility, specialized skills, and cost-effectiveness, contingent workers have become integral to the modern workforce strategy. By understanding the nuances of contingent work arrangements, effectively managing these workers, and complying with relevant regulations, businesses can unlock the full potential of their contingent workforce. Embrace the power of contingent workers and harness their unique contributions to drive innovation, agility, and success in your organization's journey towards the future of work.
How Bedrock can support diverse staffing needs
Workforce management is a challenge every business in the oil and gas industry understands. The industry has evolved to be more technical and specialized than ever before, and companies need reliable sources of workers to meet tight project deadlines with quick onboarding.
Bedrock can support your candidate search for contingent workers and full-time, part-time and contracted staff in the Upstream Oil and Gas industry. Our centralized team of technical recruiters specialize in the onshore market, with many years of experience understanding the industry's requirements and delivering the right talent. Our extensive roster of contractors is built on the specific needs of the changing oil and gas market.
Contact us today to find out how we can support your contractor requirements.