In our earlier post, Contingent Workers Pros and Cons – Part 1, we looked at the advantages a growing and increasingly qualified contingent workforce offers to employers. As a continuation of that discussion, today we consider some of the challenges associated with hiring more temporary, part-time and contract employees.
Disadvantages of Contingent Workers
Reduced control: Employers have less control over contingent workers, especially independent contractors who are self-managed. They can accept or refuse work and typically set their own hours, so the employer has only the power of the paycheck in these relationships. The control of temporary workers hired through an agency is also somewhat restricted since the agency is typically considered the employer. In addition, many part-time workers hold more than one job and juggle the competing demands of more than one employer, which may lead to situations where one employer becomes a lower priority than another.
Commitment and loyalty concerns: Contingent workers often work for more than one employer at the same time or consecutively in a given year. As such, some employers worry that these workers will be less loyal than permanent employees, who depend on one employer for their livelihood and enjoy greater advancement opportunities.
Confidentiality and conflict of interest. Again, the fact that contingent workers move around more and can contract with multiple employers may generate concerns about breach of confidentiality or conflict of interest. This is especially true of highly-skilled workers who may have specialized industry expertise that would be valued by a direct competitor.
Lack of inclusion: Temporary, part-time and contract workers can feel a sense of separateness from the permanent staff, almost like being “second-class citizens” within the organization. This feeling of isolation can be heightened if the contingent worker also works remotely. When temporary employees are kept on for longer stretches and find themselves working the same hours and taking on the same responsibilities as permanent staff, yet not receiving the same benefits, employee relations and morale can suffer.
Harder to build teams: Because contingent workers are often perceived as separate or different from the permanent workforce, it can be difficult to meld them into teams. In some cases, permanent positions have been eliminated and later replaced with temporary hires or contractors, creating resentment among permanent staff. In other cases, the temporary nature of an assignment can make the effort of establishing strong working relationships seem fruitless to the contingent worker.
Potentially higher wages: While the overall cost of hiring a contingent worker to meet short term demand is typically lower, the actual wages paid to a temporary employee or independent contractor will likely be higher as a result of fees and/or overhead assumed by the agency or contractor.
Increased Training Needs: All new employees need a certain amount of training. Tapping into the contingent workforce to meet short term demands may mean increased training requirements. Aside from the specific skills imparted by training, permanent employees also accumulate a body of organizational knowledge over time that can help them absorb new information more quickly resulting in faster ramp-ups when they take on new responsibilities.
Safety concerns: When working on jobs with inherent danger that require specialized safety training, temporary workers are at greater risk of accident. Studies show that frequency and severity rates of on-the-job injuries are significantly higher with temporary workers.
Legal considerations: Businesses must be careful when contracting temporary staff, particularly those who are being classified as independent contractors. If an employee relationship exists, treating that employee as an independent contractor can result in significant liability. While the US Department of Labor acknowledges the advantages a stronger contingent workforce offers to both employers and employees, it has expressed concern that “current tax, labor and employment law gives employers and employees incentives to create contingent relationships not for the sake of flexibility or efficiency but in order to evade their legal obligations.” As such, increasing oversight and enforcement is being brought to bear on the classification of workers.
In addition to being very careful about how they classify contingent workers, it’s also important that employers treat part-time and temporary workers with the same respect and care afforded to permanent employees.
The Contingent Workforce is Here to Stay
As these types of employment become more common, conversations about best practices and how to better integrate temporary, part-time and contract workers into the broader workforce will also become more common. Whether employers are focused on the advantages or the disadvantages of temporary workers; they likely recognize the contingent workforce is here to stay. More importantly, employers must decide how to effectively incorporate contingent workers into their workforce to best meet the needs of their organizations.
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 Risk Quick Tips. Risk Management Newsletter. http://www.nd.gov/risk/files/newsletters/2013-03.pdf