Employers Adopting More Permanent Uses for Contingent Staffing

For quite some time, contingent staffing was primarily a gap-filler for many employers: Earn a new contract, hire “x” amount of people to do the job and cut the cord when the work was finished.

Now there is growing evidence that the contingent workforce—a category that includes freelancers, contractors, consultants and temporary workers—is becoming a more permanent part of employers’ hiring strategies. There were nearly 2.9 million workers classified under “temporary help services” in June 2014, according to the U.S. Bureau of Labor Statistics June Employment Situation report, an increase of more than 10,000 from May 2014, and up more than 200,000 compared with June 2013.

Although large-scale hiring has still not occurred for an extended period in the post-recession U.S. economy, some companies are struggling to fill vacancies, in part because of applicants’ insufficient skill sets. Contingent staffing can in many cases provide quicker access to prescreened, qualified workers, said Bryan Pena, vice president of contingent workforce strategies and research at Mountain View, Calif.-based advisory firm Staffing Industry Analysts.

The contingent staffing movement also is changing the roles of human resources professionals, he said.

“Recruiting is constantly evolving,” Pena said. “More employers are interested in ‘total talent management.’ They want the best way to get a job done, and it may not require a full-time hire. Managing contingent labor has become a discipline unto itself. People are now dedicated solely to this function. It used to be a small part of an HR generalist’s duties.”

Like full-time hiring, this can still come with risks. In short-term scenarios, contingent staffers may not always be the right match for a job or possess enough familiarity with a company to properly perform a temporary assignment. On the other hand, contingent work can frequently lead to a long-term arrangement; nearly six in 10 (59 percent) of U.S. businesses that use staffing firms say they do so to “help find good permanent employees,” according to research from the Alexandria, Va.-based trade group American Staffing Association.

Online employment avenues that specialize in contingent placement have changed the rules for talent management, Pena said, particularly with the growing availability of websites like Elance.com, where employers can post jobs and find potential matches from an array of professionals such as programmers, mobile developers, marketers, designers and writers.

The workforce’s changing demographics favor the transient nature of contingent staffing, he added.

“Younger people have less desire to stay on one job,” Pena said. “That’s very real, and it’s enabled by new technology. For the employer, [temp hiring is] a risk-shifting mechanism on a fundamental level, but for the worker, depending on their level of expertise, they can also command higher salaries by playing the market.”

Staffing services firm ManpowerGroup is tracking the contingent worker trend on a worldwide level. In its 2014 Contingent Workforce Index, its second such survey, the United States was ranked second globally for “overall contingent workforce engagement.”

The rankings are based on more than 50 data points that rate, among other things, the availability, cost, regulation and productivity of the contingent workforce in 75 countries. Hong Kong was ranked first in 2014, while China was third, New Zealand was fourth and Singapore was fifth.

A factor that could encourage more people to consider the contingent route to working is health care reform. With individual coverage available on a broader scale to tens of millions of Americans, Pena said, many workers have more options.

“For so long, people have kept their jobs because they don’t want to lose the health care benefits,” Pena said. “If we decouple employment from the benefits, it can change people’s approach to work.”

Joseph Coombs is a senior analyst for workforce trends at SHRM.

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