For many small businesses, the time comes to switch gears and plan a scale-up strategy to drive the next phase of growth. Talent acquisition could be a make or break step in this process - a business that moves too soon with full-time employees could find itself overstaffed and struggling with new employees that lack the experience they need.
If current staff resources are strained and extra help is needed, then leveraging the contingent workforce could be the right move for your company. So, what is the contingent workforce?
The contingent workforce is a labor pool which is made up of people who work on an on-demand basis. These workers consist of independent contractors, freelancers, consultants and temporary workers. Self-employed workers are often highly experienced and can provide you with specialist services for a set period of time or for specific projects.
Contractors work in virtually every industry, from IT, project management, sales and marketing, HR and training, finance, the creative industries and professional services. It’s estimated that the contingent workforce makes up 40 per cent of the entire US workforce.
What is the difference between a contractor and an employee?
There are various differences between a contract worker and a full-time employee, and it’s these differences that could help your small business scale up to the next level with the help of expert advice.
A full-time employee is paid a salary and their schedule is set by their employer, while a contractor:
- pays their own taxes;
- is either paid for a specific project or per hour;
- is self-employed, meaning they can work on their own schedule and in their own time, although they are still required to meet your deadlines;
- is free to choose which work they take on and has no obligation to accept a contract;
- assumes liability for any errors;
- is not entitled to the employment rights and benefits that your full-time employees are;
- can work on multiple projects for different clients.
It’s important you properly classify and have a distinction between your employees and contract workers. Failing to do so is against the law. Your business could end up paying unnecessary additional taxes or even face significant fines and penalties.
Is the contingent workforce the right choice for your company?
If your business is turning down big projects or clients because you lack the resources to take them on, then a contingent workforce could definitely be the solution for you. Tapping into this workforce will allow you to take on more clients and projects as they come in, and you can hire and pay for workers as and when they are needed.
The aims of each small business will be unique, but HCMWorks has created three indications that hiring an independent contract worker is a good match for your business:
- The business does not have the talent needed to complete the work. If, for example, the business is lacking a specific skill set, or a new project requires a specialized talent - the answer is to acquire a freelancer or independent contractor to complete the work for you.
- Workload is uncertain. If your client list is wavering, or project work is up and down, you can smooth out the ride with a contingent workforce that is flexible to demand.
- The business doesn’t have the bandwidth. If your organization is showing signs of strain, getting extra help by going with contractors can give you time to re-evaluate staffing.
What are the benefits?
As you gain experience working with a contingent workforce in your SME to cover a growth phase or to acquire specific skills, you will then be able to decide whether your business is ready to employ further full-time employees, or if continuing with contract workers is the right direction for you.
Using a pool of contract workers will give your company: access to specialized talent that can be used to train your full-time staff, cost savings over full-time employees, less need for office space or the requirement to purchase additional equipment such as computers and desks, and the ability to hire the resources needed to complete a project on a non-permanent basis.
Consulting with a contingent workforce advisor can help you to unlock financial and organizational benefits for your small business - and help you grow.
These benefits of the contingent workforce apply to organizations of all sizes, not just SMEs. Enterprise clients are our specialty. For more information about the contingent workforce, contact us today.