Bringing Contract Labor Back to the Talent Table

Are you leveraging contract labor as part of your talent strategy?

Within the past year, we've faced fluctuating markets, ongoing debates about the economy’s trajectory, and widespread skill gaps—especially in manufacturing. These challenges are pushing companies to reevaluate labor costs, flexibility, and the need for dynamic skill sets. 

In fact, research published by Wiley in January 2023 found that 69% of companies faced a substantial skills gap. To address this, 41% of HR professionals surveyed reported using contractors (Rework). 

So, is now the time to bring contract labor back to the talent table? 

During the pandemic, many companies shifted away from contract labor, focusing instead on direct hires due to intense competition. But with some of those pressures easing, the flexibility and cost-effectiveness of contract labor is once again a key part of a resilient talent strategy. This surge, with an estimated 59 million Americans now engaging in independent contracting (Playroll), not only benefits these contracted professionals but also offers companies a valuable opportunity to tap into a highly skilled, adaptable workforce. 

Contract labor can drive growth and offers these key advantages: 

Cost flexibility  

Contract workers can be hired for specific projects or time periods, allowing businesses to adjust their labor costs according to current needs. This flexibility helps manage expenses without the long-term commitments associated with full-time employees. 

Specialized skills 

73% of recruiting pros say hiring based on skills is a priority (Future of Recruiting, LinkedIn). However, some businesses may need specialized skills or expertise for specific projects but not on a permanent basis. Contract workers can provide these skills on a temporary basis, allowing companies to complete projects efficiently without investing in permanent hires.  

Scalability  

Contract labor allows companies to scale their workforce up or down quickly in response to changing market conditions. This agility can be crucial especially when demand for products or services may fluctuate. Still, it’s important to remember that contract doesn’t mean disposable. Companies should prioritize their retention and talent strategy for contract employees no differently than permanent, full-time employees. 

After all, you want a happy, engaged and therefore highly productive employee, no matter the length of their employment, right? 

When you think about how to best retain your contract labor, think about it no differently than you do your full-time workforce. Below are some retention fundamentals. 

• Foster a supportive & flexible work environment: A supportive culture with flexible work hours enhances your company’s attractiveness. In fact, 82% of professionals whose companies offer flexible work options say they take advantage of them (Deloitte). This is especially key for contract labor. Be supportive by helping establish a schedule that works for both parties. In turn, this can strengthen your retention efforts, especially when it comes to maintaining access to specialized skill sets that complement your full-time workforce. 

• Offer competitive wages: Wages won’t solve everything, but they are still important! Contractors often do the same job, so why pay them a lot less? If “cost” is your answer, make sure you know your fully loaded internal burden rates. They are often just as high or higher than the agency rates. 

• Offer professional & technical development: Sure, maybe you hired a contract worker for their specialized skills. But training and development still matters. It helps, not hinders, a company to retain a highly developed individual to count on when projects come up. Additionally, it can create a path to hire them on for future full-time openings if desired by both parties. 

• Most importantly, integrate contract workers into the team: Consider the perspective of a contract worker—they experience more first days and first impressions than most. So, let them know the company goals, connect them with key players relevant to their work, and include them in company-wide events.  Equal treatment and a warm welcome will go a long way. 

So, is now the time to bring contract labor back to the talent table? If the answer is yes, HTI works with companies to leverage diverse staffing models that help bring benefits to both your organization and your people. Reach out today to talk about your talent strategy.