Growing reliance on flexible workers requires new strategies
By: Leslie Stevens-Huffman
Were the first contractors the American builders and engineers who traveled to Russia to help rebuild the country after the Russian Revolution? By accepting 6 to 12 month assignments and offering their talents on a freelance basis, those early trendsetters may have unknowingly launched the professional contracting movement.
The roots of the modern staffing industry can be traced back to the years following World War II. However, the concept of free agency came of age during the 1970s as the U.S. transitioned from manufacturing to a service economy. It was during that time when employers ended the practice of lifetime employment by instituting mass lay-offs in response to the decade’s severe recession.
Managers needed flexible workers with a variety of skills to counter rising global competition. They also wanted relief from the burgeoning costs of employment-related regulations, benefits and litigation. By 1990, average daily employment in the staffing industry had grown to 1.6 million workers. It peaked during 2000 and 2005 at 3.21 million, according to the American Staffing Association (see chart below). In 2010, there were roughly 2.6 million contingent workers.
Some 90 percent of businesses used contingent workers during 2010. Roughly 40 percent of staffing industry clients engaged technical, information technology and scientific professionals, according to a joint study by Career Builder and Inavero Institute.
Today, the average American worker is 42 years old and has held 10.2 jobs over the course of his or her career. Experts predict this trend will continue, creating a workforce that is 50 percent contingent by 2012. In fact, Microsoft’s model may provide a glimpse into the future of corporate staffing. The company utilizes some 96,000 regular employees and 88,000 contractors to achieve its mission.
While some engineering professionals view contracting as a quick fix after a lay-off or a bridge to full-time employment, veterans often see free agency as an opportunity to enjoy greater flexibility and extend their careers into retirement. Contracting also helps them enhance their marketability and value by working on a variety of global projects.
In light of the increasing reliance on professional contractors in the U.S., engineering managers and staffing buyers identified these top four strategic priorities for 2011.
1. Risk Mitigation
Whether it’s protecting intellectual property, avoiding co-employment exposure or keeping the IRS at bay, managers planned to mitigate risk by instituting robust onboarding procedures and incorporating independent contractors into existing contingent workforce programs.
2. Performance Management
Managers need to optimize their investment in professional contractors. Therefore, they are launching formal performance management programs and offering bonuses and other incentives to bolster engagement and inspire outstanding achievement.
3. Workforce Planning
Managers are seeking additional opportunities to lower fixed costs. To this end, they are utilizing contractors in lieu of full-time employees, while being assured of receiving top notch talent amid critical shortages in some engineering disciplines. The answer is holistic workforce planning, which allows staffing firms and managers to explore future needs and calculate the ROI for both future full-time hires and contractors.
4. Retiree Programs
Managers plan to avoid debilitating brain drain and the loss of critical institutional knowledge by utilizing retired engineers on a contract basis.
Leslie Stevens-Huffman is a freelance writer in Southern California who has 20 years of experience in the staffing industry.