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Contingent workers are part-time, temporary and contract workers used by organizations to fill peak staffing needs or to do jobs which management has decided not to be carried out by core workers as a “rightsizing” initiative. Contingent workers are posing new challenges in Human Resource Management. Today every Human Resource Manager has to balance the aspirations of Contingent as well as Core workers in an organization.

The need for contingent workers has arisen due to Globalization.  According to an article in Wikipedia:

Among several other contributing factors, globalization has had a large impact on the growth in using contingent labour. Globalization contributes to rapid growth in industries, increased outsourcing, and a need for flexibility and agility to remain competitive. By engaging contract workers, organizations are able to be agile and save costs. The contingent workforce acts as a variable workforce for companies to select from to perform specific projects or complete specialized projects. Also as organizations make efforts to be more agile and to quickly respond to change in order to be more competitive, they turn to the contingent workforce to have on-demand access to professionals and experts.

Globalization has with its technological prowess has brought certain disadvantages too. Today in the market no company is safe. The rise of the knowledge-based organizations has ensured that today David can defeat Goliaths any time. So to be on safer side large MNC whenever faces recession or economic depression – they promptly resort to downsizing.

The recent trend among Human Resource Management is today is not to resort to massive layoffs but to design the organizational setup with rightsizing strategies. This strategy keeps a small number of core workers to remain responsive to market challenges. And the noncore works are outsourced to contingent workers.

But the strategy to allow contingent workers to work in any organization has brought several Human Resource Management or HRM issues. An article in Deloitte sums up the crisis in a nutshell:

Although the contingent workforce segment is growing in importance and its size, many organizations may not be skilled at managing it effectively. Major challenges include the lack of an integrated workforce management strategy, ad hoc (and at times high-risk) managerial behaviour, poor data management, and inadequate technology. These shortcomings can expose companies to significant business, financial, and public relations risks. Additionally, the lack of an integrated solution across these areas can inhibit an organization’s ability to make decisions about what type of talent to deploy where.

In this video from YouTube titled Risk and reward: Managing your external workforce you can have a brief synopsis of the major dilemmas faced by HR Managers today while employing contingent workers.

 

According to an estimate by Skilledup “By 2017, contingent workers, including independent contractors, statement-of-work-based labor, and freelancers, will account for nearly 45 percent of the world’s total workforce.”

The three main challenges the contingent workers bring in organizations are onboarding issues, pay and benefit issues and employee engagement issues.

When any new contingent worker joins in any organization the first challenge faced by Human Resource manager is the onboarding issue. The HR Manager cannot offer a full-scale orientation program to the temporary worker. But the organization needs total loyalty of any contingent worker as good as any core worker. The challenge in human resource management is how to design an impactful onboarding process with such a low budget.

Consultants or freelancers who are part of the contingent workforce are naturally paid a high fixed compensation than core workers. This can provoke anger and disengagement among core workers. On the other hand, part-time workers cannot enjoy full perks and benefits of regular workforce. The challenge of the human resource managers is how to design a compensation package which will justify the aspirations of part-time workers.

Bringing in employee engagement is another challenge among contingent workers. Many HR Managers face such challenge. As these workers are employed for limited time obtaining full loyalty needs a finer balancing act from the human resource management professionals. Before designing HRM strategies the HR manager must fully examine the compensation philosophy of the company. They must ascertain what attracts these contingent workers individually? Is it pay and benefits, or career goals or flexibility in working hours – which is more important for them?