Why Companies Need to Consider Contingent Workforce Trends in an (Almost) Post-Pandemic World
April 7th, 2021
If “disruption” was one of the most used words in 2020, then “resilience” is poised to play that role in 2021. For many companies, contingent workers will enable the agility needed to navigate the uncertainties ahead. Also known as freelance, contract, or gig workers, a contingent workforce can provide much needed flexibility if companies establish policies and practices that address potential risks—from background screening temporary workers to virtual onboarding that drives engagement. What trends merit a closer look?
Contingent workforce expected to grow
Fueled by innovators of the gig economy, in 2018 the estimated number of contingent workers already working in large corporations was 20% to 35%. As noted by Forbes, due to the use of freelancers, Deloitte named one of the top human capital trends of 2018 as “managing beyond the enterprise.” As expected, this trend did not lose momentum. In its latest report on the US Gig Economy, SIA notes that the contingent workforce expanded by one million people in 2019 alone.
Fast forward to 2020, and business-as-usual took a sudden detour due to the Covid-19 pandemic. A combination of travel restrictions, supply chain disruption, and business slow-downs and shut-downs led to employee furloughs and layoffs. By September 2020, Pew Research found that 25% of U.S. adults reported that they or someone in their household had lost a job, and 32% reported a reduction in hours or pay due to the pandemic.
Almost simultaneously, grocery stores, online retailers, and quick service restaurants went on hiring sprees to fulfill increased demand for touchless delivery of everything from essentials to meals. Domino’s, Pizza Hut, and Papa John’s, for example, added more than 50,000 employees collectively to their workforces. The sudden expansion contributed to 33% growth of the gig economy, according to one recent survey.
Meanwhile, after years of mixed results from remote work experiments, many companies had to quickly shift to fully virtual offices to accommodate social distancing mandates and ensure the health and safety of their employees and clients. CNBC recently reported that within the next four years, the number of remote workers in the U.S. will reach 36.2 million, a whopping 87% increase over pre-pandemic numbers.
These factors are certain to accelerate the expansion of the contingent workforce. Why? While a third of those who reported being laid off have since returned to work in the same job, Pew Research says half who lost a job earlier in the year remain unemployed or under-employed. Contingent work expands work options of this population, offering flexibility for individuals with in-demand skills.
Hiring to meet demand is a cost-effective option for businesses. A contingent workforce enables resilience when an organization needs to augment existing resources to meet a sudden spike in demand or to fill talent gaps for specific projects. Until the Covid-19 vaccine rollout reaches a critical mass, however, companies will also need to have effective end-to-end testing programs in place to protect on-premises workers and the customers and members of the public that they interact with.
Companies found unexpected success from the work-from-home model, in spite of some technical hiccups along the way. Now that they’ve invested in more digital communication and collaboration tools to facilitate remote work, they have greater confidence in the process and are ready to bring in the right talent, wherever they are. Many of these new hires may be on a freelance or contract basis.
Focus on flexibility, while managing hiring risks
Organizations that want to take advantage of the contingent workforce trend need to prepare for the challenges they will likely face. According to SHRM, recruiting is one of the top concerns for HR professionals in 2021. The article also cites that an American Staffing Association survey found that 80% of respondents planned to look for new jobs in 2021. When coupled with high unemployment levels, Emily Scace, legal editor at XpertHR, tells SHRM that a high volume of applicants could pose a challenge, noting, “Less time per applicant could make hiring managers more likely to rely on shortcuts to determine which candidates to advance—an approach that can exclude a significant portion of the talent pool, perpetuate biases and fail to identify the best candidates for the job.” The takeaway here is that now is not the time to cut corners on background screenings or onboarding.
Many recruiting tactics need to be reimagined or created to support a resilient, contingent workforce. Now, we see recruiters and hiring managers leveraging aggregate data points so that they can focus their hiring and retention efforts on quality candidates. Employers and staffing firms want tools that offer convenience and automation allowing employers to modernize and simplify their hiring processes.
According to research by Gartner, 90% of company HR leaders plan to allow employees to continue to work remotely at least some of the time. Staffing and managing a hybrid workforce present unique challenges for HR professionals striving to create a smooth hiring process for those onboarding remotely, as well as those onboarding in person.
As a result, where possible, digitizing the process and integrating identity verification into the background check process becomes foundational. Identity verification will become a critical aspect of background screening in 2021. More and more, we see staffing companies implementing their own minimum screening packages rather than matching client requirements as was historically the case. For example, many staffing companies are including a sex offender search for all contractors, even if their client does not specifically request this search. The risk now is higher; therefore, the approach is different.
The Intuit 2020 Report on workforce trends notes that “The long-term trend of hiring contingent workers will continue to accelerate with more than 80% of large corporations planning to substantially increase their use of a flexible workforce.“
The Sterling Staffing team works closely with clients to provide regular guidance, best practices, and support. We are continually improving and adapting our processes, as well as adding new products to support our clients. Just as organizations need to be agile to accommodate a growing contingent workforce, we are doing the same to support our clients.
Do you have the right resources and tools in place to integrate contingent workers into your organization quickly, while addressing the potential pitfalls? Contact us for more information.
Jami Carrico is the Leader of Client Success for the Staffing, BPO and MSP vertical at Sterling, a leading provider of background and Identity Services. Connect with her on LinkedIn. For more information, visit Sterling or call 833 342 4571 with any questions you may have.
Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.