As your business grows, so does the need for contingent labor. Whether it’s to staff a new project or cover increased demand and have a competitive advantage over your competitors, adding contract and temporary workers can be a quick solution. But contingent workforce management involves managing costs too. If not managed properly, your contingent workforce can become one of your biggest expenses.
Here are a few ways to keep your contingent workforce costs under control:
1. Define the scope of work upfront
When engaging a contingent worker, it’s important to have a clear understanding of the work that needs to be done. This will help you avoid scope creep, where the scope of work expands beyond the original agreement. Scope creep results in higher costs and can often be avoided by defining the work upfront.
To avoid scope creep, define the work in as much detail as possible upfront. This includes specifying deliverables, deadlines, and any other expectations. By doing this, you can ensure that the work stays within the original scope and doesn’t end up costing more than expected.
2. Set a realistic budget
Before engaging a contingent worker, set a realistic budget for the project. This will help you avoid underestimating what you need to spend, and giving the impression that you’re being cheap.
To set a realistic budget, research the going rates for the type of work you need to be done. This will give you a good starting point for negotiating with contingent workers. Once you have an idea of what you can afford to pay, make sure to build a buffer for unexpected costs. Be sure to include the cost of the workers’ time, as well as any other associated costs such as materials or travel.
If you’re not sure what a realistic budget is, get quotes from multiple vendors. This will give you an idea of the going rate for the type of work you need to be done. Once you have an idea of the going rate, you can set a realistic budget that won’t break the bank.
3. Use an agency
When looking for contingent workers, consider using an agency. Agencies can help you find qualified workers at a lower cost than if you were to hire them directly. This is because agencies often have pre-existing relationships with workers and can often get discounts.
In addition, agencies can handle the administrative work associated with hiring workers. This includes conducting interviews, running background checks, and onboarding new hires. By using an agency, you can incur cost savings in the hiring process.
4. Negotiate rates
When engaging a contingent worker, be sure to negotiate the rate. This is especially important if you’re working with an agency, as they may have pre-existing relationships with workers and can often get discounts.
To get the best rate possible, be sure to compare rates from multiple vendors. This will give you negotiating power when it comes to setting the rate. In addition, be sure to understand what’s included in the rate. For example, some workers may charge a higher rate if they’re expected to provide their own materials.
By understanding what’s included in the rate, you can ensure that you’re not overpaying for the work. Keep in mind the level of skills and experience required for the work, as this will impact the rate.
5. Manage expectations
When working with a contingent worker, it’s important to manage expectations. This includes setting clear deadlines and deliverables. It’s also important to communicate your expectations for the work. By doing this, you can avoid misunderstandings that could lead to scope creep and higher costs.
In addition, be sure to manage the expectations of your team. Let them know that you’re working with a contingent worker and that the work may not be done immediately, or that it will incur additional costs. This will help avoid frustration and unrealistic expectations.
6. Get it in writing
When working with a contingent worker, be sure to get everything in writing. This includes the scope of work, the rate, and any other expectations. By doing this, you can avoid hidden costs and misunderstandings that could lead to scope creep and higher costs.
In addition to getting the scope of work in writing, be sure to get a signed contract. This will protect you in the event that the work is not completed as expected. The contract should outline the expectations for the work, as well as the consequences if those expectations are not met.
7. Review the work
When the work is completed, be sure to review it. This will help you ensure that the work meets your expectations. If the work is not up to par, be sure to communicate this to the contingent worker. By doing this, you can avoid paying for work that you’re not happy with.
In addition to reviewing the work, be sure to get feedback from your team. This will help you ensure that the work is meeting their expectations. If the work is not up to par, be sure to communicate this to the contingent worker. By doing this, you can avoid paying for work that your team is not happy with.
8. Make payments on time
When working with a contingent worker, be sure to make payments on time. This will help build a good relationship with the worker and will ensure that they’re more likely to work with you in the future. In addition, timely payments will help you avoid late fees and interest charges.
To make sure that you always make payments on time, consider setting up automatic payments. This way, you can ensure that payments are always made on time, without having to remember to do it yourself.
9. Offer benefits
Benefits may sound like something reserved for permanent employees, but they can help attract and retain good workers. In addition, offering benefits can help you build a good relationship with temporary workers. By doing this, you can ensure that they’re more likely to work with you in the future.
Benefits for contingent employees that you may want to consider offering include health insurance, retirement savings plans, and paid time off. Keep in mind that the cost of benefits will vary depending on the type of benefit and the number of workers you have.
10. Be prepared for turnover
Contingent workers are more likely to change jobs than traditional employees. Because of this, it’s important to be prepared for turnover. This includes having a plan in place for your hiring managers to find and train new workers.
In addition, be sure to build relationships with multiple contingent workers. This way, you’ll always have someone to turn to when you need work done. By doing this, you can avoid the hassle and expense of having to search for a new worker every time one leaves.
Final thoughts
By following these tips, you can effectively manage your contingent labor force and keep costs under control. By doing this, you can ensure that your business has the workers it needs to be successful.
