Just how temporary should your field service workers be?
There are many benefits to working with a flexible team of contingent (contracted, freelance) workers, especially for small or growing businesses that don’t have the capital to hire dozens of full-time employees.
But their temporary status also comes with its own set of risks, and many companies may be happier with a smaller team of reliable laborers who have committed themselves over the long haul.
So which is right for your business? There are a few pros and cons to think about if you’re looking to hire (or continue hiring) contingent workers.
Pros of Hiring Contingent Workers
The very benefits that drive people to become contingent workers are often the same benefits that companies receive when hiring them: namely flexibility, cost savings, and skill specialty.
In addition to the natural growing pains of running a business, many in the field service industry also experience seasonal ups and downs or periods of time when the market demand is simply higher. Being able to hire workers or let them go as needed without the hassle of laying off employees or negotiating severance packages has significant appeal.
Populating your workforce with contingent workers can also be cheaper in some cases. Contractors are typically only paid for actual time spent on a job, and they’re not entitled to other benefits such as sick leave, vacation time, holiday pay, or health insurance, which can all significantly increase a company’s overhead. Workers are paid for what they do, and once the job is complete, they move on or wait for their next assignment.
Contingent workers also provide companies the ability to hire top talent without doling out significant resources to do so. Many companies that are faced with skill gaps can hire for the skillsets they need, when they need it the most. According to CareerBuilder, 25% percent of companies experience losses in revenue as a direct result of an inability to hire top talent. Hiring temporary contractors opens the door for more recruiting opportunities while also saving time and money.
Cons of Hiring Contingent Workers
Of course, temporary work may cause headaches for some companies and may not actually be the best solution in some circumstances. Small businesses that don’t want to manage the risks associated with temporary workers may want to reconsider. Some of those risks include things like management style, legal and compliance risks, and even the impact on other employees.
Having a rotating team of workers requires a different style of management that many smaller businesses simply aren’t prepared to handle. Because contingent workers are paid differently, don’t receive the normal set of benefits, and can leave whenever they like without much consequence, serious conflict can occur if things go wrong (say, your whole team decides to quit in one day). These risks make it necessary for management to understand exactly how to deal with temporary workers to keep them happy.
Legal and Compliance Risks
Contingent workers also fall within different tax and legal categories than regular employees, and have to be classified as such in all legal paperwork. There’s also the risk that a company would treat a contingent worker as a regular employee without giving them the same benefits that employees enjoy. There are significant legal risks associated with misclassifying workers, so it’s important to get the legalities right.
Impact on Employees
Temporary workers that come and go as they please may also negatively impact other full-time employees or staff at the company, or vice versa. Contingent workers may feel that they’re not treated with the same respect as regular employees, and employees may feel as though contingent workers aren’t truly a part of the team, making it hard to form relationships.
Over time, the two sets may come to resent each other, which can lead to unnecessary conflict. This can be especially important for companies that value loyalty, as contingent workers and employees may have differing views on the matter.
When (and When Not) to Hire
So should your company hire contingent workers or should you stick to a traditional team of employees? Or should you do both? When it comes down to deciding which solution is best, you shouldn’t make the decision lightly.
You should consider both the pros and cons and how they apply to your business strategy as a whole. Here are a few questions to ask when making a decision one way or the other.
What’s our financial situation? If your business is in a transition, or struggling to stay afloat financially, contingent workers can cut down on major costs such as having to pay Social Security taxes, unemployment compensation taxes, and worker’s comp. However, the turnaround may also be higher, meaning that more time and energy may be spent hiring new workers, which can also eat into your budget. Take some time to consider the costs of hiring a contractor versus the costs of retaining an employee.
How busy are we? Contingent workers can help if your business is growing and you’re in a time crunch to scale your workforce. They’re also great for companies that are busy but also experience regular downtime. Paying a salaried employee for hours they’re not working can eat into the bottom line, whereas contingent workers only get paid for the work they do. If you’re in a position where you’re growing but you haven’t reach max capacity, contingent workers can help accommodate your scheduling needs.
Do we know what skills we need? If you’re looking to fill a specific skill gap for a certain job or project, contingent workers can be a great choice. However, they’re also temporary, so you may not have access to the same talent year after year. If you need that specialized skill regularly, or if you’re looking to hire people with varied skill sets who can be around for the long haul, you’re better off hiring an employee.
Do we know how to hire contingent workers? Another thing to consider is where you’re going to look for workers. You can partner with a Managed Service Provider or a staffing agency, ask for word of mouth referrals, or post in online job forums. But each will require a different level of energy, time, and commitment. Do you or your team have the ability to consistently look for new employees should the need arise? If not, you may find that hiring for a long-term position is a better bargain.
When it comes to deciding which solution is best for your business, you will have to weigh the pros and cons. While contingent workers can save you money, you will also need the mental fortitude to handle their temporary status on an ongoing basis.
Keep in mind that your options are flexible. You could build a massive, scalable team out of contingent workers. You could hire only employees and keep the company small. Or, you could keep around some regular employees for safety and hire contingent workers during your busy season.
There are no strict guidelines that say one method is better than another. It comes down to where your business is at financially, how busy you are, how much you’re growing, and how adjustable you want your team to be.
Ultimately, it’s all about ROI. Whichever solution keeps your company healthy, wealthy, and thriving will be the best choice.