With nearly 19.2 million independent workers active in the EU in 2020 and 83% of contract staffing agencies expecting a rise in temporary workers, it's safe to say that the gig economy is thriving!
On the other hand, the popularity of traditional full-time, permanent staffing (AKA original staffing) seems uncertain.
While EU employment rates increased to 75% in the last quarter, labor market slack remains an issue in several member states where demand for work outweighs worker availability. This juxtaposition might partially be because rather than opting for the standard nine to five, nearly half of all young workers under 30 are turning to temporary and gig-based roles. As such, staffing agencies are increasingly gaining momentum. In fact, an average of 3 million contractors join such agencies each week!
But what does this mean for the state of staffing? Clearly, the industry is changing. But why? Interestingly, McKinsey reports that more and more employees are turning to freelance and contract work for 3 reasons: flexibility, enjoyment, and better income opportunities.
However, the question is whether these recruitment changes benefit businesses.
Let's explore this in more detail...
What's Original Staffing?
Original staffing (AKA traditional staffing) is the practice of hiring full-time employees to fill a position(often through a staffing agency) based on their skills and experience. In other words, these employees have an employment contract with their employer and are part of the regular payroll.
This is the opposite of proactive contingent staffing. In contrast, this is where an employer hires someone to temporarily fill a position or carry out a project for a set duration.
As we mentioned in the intro, original staffing is beginning to die. The reasons for this are many, but the main one is that people are becoming increasingly dependent on the internet and other forms of technology, which are creeping into their professional lives. It's never been easier for workers to set up their own freelance businesses. On top of that, since we got a taste of working from home during the pandemic, more of us are jumping on the gig economy bandwagon.
Conversely, companies are equally better positioned to find contractors online. Gone are the days when we had to rely solely on word of mouth! Likewise, the advent of remote technology has made it easier to create global teams, empowering businesses to expand their talent pools far beyond location-specific boundaries.
What Is Proactive Contingent Staffing?
Proactive contingent staffing isn't a new concept; it's actually a return to an old idea utilized in the early 1900s when the first recruitment agencies were established in the US. These organizations would help firms find temporary contract workers to hire on a per-project basis. Needless to say, this helped companies stay within their HR budget.
With that in mind, proactive contingent staffing can be understood in two ways:
Firstly, "proactive" refers to identifying prospective workers before they’re needed. So instead of waiting until you’re desperate to plug your organization’s skills gaps, you proactively create a talent pool that you can dip into as and when you need to.
The second aspect, "contingent," speaks to how contracts are negotiated between an organization and a staffing agency (or directly with the freelancers/contractors themselves). Here, the worker is typically paid on a per-project ad-hoc basis. This allows companies to utilize workers for specific projects or jobs without the long-term costs of permanent employment.
More and more companies are turning to proactive contingent staffing to help them meet their staffing needs. It makes economic sense to temporarily employ a worker with highly specialized skills to perform a role that would otherwise go unfilled. This is especially true if you only need help with a one-off project. For instance, if you need a coder to develop your website, you might need their skills for this specific job, but not permanently.
So, rather than disrupting the day-to-day workflows of existing employees by giving them a task that they’re not qualified to do, an organization can efficiently plug their skills gap using third-party agents instead.
Best of all, your in-house team can still manage the project so that your organization retains control, but you can use contingent workers to delegate tasks more effectively.
How Is Proactive Contingent Staffing (PCS) Changing HR?
Staffing trends have shifted dramatically over the past few years. Traditionally, organizations would hire people based on job titles alone. They would look to hire job seekers pursuing employment via the typical labor market.
Although many companies still use this hiring model, more and more businesses are waking up to the fact they often leave it too late to hire the talent they need. As a result, they end up hiring out of desperation and, consequently, don’t make the best hire.
Fortunately, the proactive contingent staffing model presents a viable solution. This model lends itself to recruiting the best people for the job, regardless of their traditional job title or physical location, because you already have a talent pool ready and waiting for you to dip into.
The Advantages of Proactive Contingent Staffing
Many companies are looking to reduce labor costs in every way. One such solution is to outsource work to a contingent staffing agency. These agencies can source qualified workers for short-term projects on your behalf. Typically, this is much cheaper than hiring a permanent staff member. In fact, Indeed estimates that it costs close to 15-25% of an employee's wage to recruit new, permanent hires. In contrast, research suggests hiring freelancers can be as much as 60% more cost-effective than hiring a permanent employee.
Of course, the most obvious benefit of a proactive hiring strategy is that when you need to make a hire, you can do so much more quickly. It stands to reason that you cut out a considerable portion of the hiring process with a talent network already at your disposal. There’s no need to post job ads online and scour through hundreds of resumes. Instead, you already have access to high-quality talent. All in all, this works wonders for streamlining the hiring process. Sometimes you can hit the ground running within hours because you have easy access to talent with the expertise necessary to do the job justice. So you save further time not having to train staff.
You may also find that proactive recruitment positively affects the retention rate of your permanent staff. As we all know, burnout is one of the most commonly cited reasons team members quit. However, you lessen the strain on your permanent workforce by having access to the talent you need to plug skills gaps at a moment's notice.
The Disadvantages of Proactive Contingent Staffing
When hiring freelancers, some employers raise concerns about the speed and adaptability of contractors. This is especially true if you’re looking to establish a global network of freelancers. In this instance, employers also have to consider regulatory and legal boundaries.
Other concerns often include the following:
Scheduling conflicts, when you don’t track availability.
A lack of coordination between freelance and in-house teams.
Complications of local labor law, compliance & paying freelancers worldwide.
No centralized system, building a talent pool from excel sheets, is the least proactive way.
Thankfully such issues are quickly addressed with the right freelance management technology:
What Is a Freelance Management System?
As you may have already guessed, a freelance management system, or FMS, is software that helps you manage your freelancers. A decent platform should enable you to add freelancers to a virtual talent network so that you can connect with them whenever the need arises. More specifically, the right platform will allow you to track their availability and see at a glance their core skillset. Ideally, your FMS will come with in-built payment processing to ensure your contractors are paid on time every time.
Bubty is one such freelance management system. So if you’re interested in how we could help you utilize proactive contingent staffing, why not book a demo today?