Contingent workforce management requires a different set of leadership skills than a traditional HR strategy for W2 employees. Many employers see the value contingent workers bring to their organization, but shy away from the opportunity to employ them. This is often a result of confusion around rules and regulations.
Working with a partner like NexusCW is a great way to facilitate the process correctly. However, it’s also helpful to understand where most companies go wrong to set yourself up for success before launching your candidate search.
Even if you have an experienced contingent workforce management team, you may still be making some of these common errors. Here’s an in-depth look at what not to do when making your next contingent hire. Read on for our top five mistakes companies make when hiring contingent workers.
1. Paying Below Market Value
Most contingent workforce management teams understand the perks of cost savings when it comes to contingent workers. Not having to worry about paying for health insurance, 401k matches, or sick day benefits is a major advantage. However, that doesn’t mean you should pay contingent workers below market value.
Many employers fall into this trap in an attempt to cut costs. If cutting costs on payroll is your goal, don’t forget about the savings you’ll see from eliminating benefits packages.
2. Misclassifying Workers
Misclassification is one of the most common mistakes contingent workforce management teams make. Hiring independent contractors when they don’t qualify as true contractors can result in hefty fines. To avoid misclassification issues, work with a professional organization. They’ll help you hire the right workers, classify them correctly, and complete the proper paperwork.
There are quite a few myths around classifying contractors that many believe to be true. In our experience, the majority of misclassification cases we’ve encountered have been in the information technology field. These types of organizations should pay special attention to opportunities for misclassification.
3. Not Tracking Contingent Workforce Management Metrics
Many contingent workforce management teams don’t track the operational metrics of their contractors. HR departments should have an organized dashboard with insights into how their workforce is performing. Without hard data for labor costs and revenue, decision-makers are unable to make strategic changes within their departments to move the company forward.
Also, due to major differences in how independent contractors are paid, costs need to be managed closely to avoid any employment discrepancies with The Department of Labor.
4. Poor Planning and Forecasting
HR teams are often tasked with filling a position on short notice which leaves them scrambling to find candidates, set up interviews, and send out offers.
It’s a common story for many hiring managers. Filling key contingent labor positions on-demand leaves lots of room for error. It’s critical that organizations plan and forecast for new talent requirements well in advance.
Not only is this important for a smooth onboarding experience for the team member, but it also helps the company hire correctly. For example, rushing the process could lead to an independent contractor misclassification and then ultimately large fines as a result. Don’t skip on your due diligence.
5. Not Treating Contingent Workers as Part of the Team
Just because a contingent worker isn’t a W2 employee, doesn’t mean they should be treated differently. It’s important to build relationships with your contractors the same as you would the rest of your staff. Include them in team-building activities, company gatherings, and all other events. This will ensure they feel valued and in turn, work hard as loyal members of the organization.
The ability to retain contingent workers also keeps your talent acquisition costs lower than a high turnover situation. Building relationships with these individuals is good business from a budgetary perspective and company culture.
Have you fallen victim to any of these five mistakes? Now that you understand some of the most prevalent pitfalls, arm your organization for success moving forward. Next time you plan to make a contingent hire, keep these concepts in mind. And if you need some help facilitating the process, reach out to NexusCW Today.