Amid today’s uncertain economic times, the use of contract workers is one direction employers are going to weather the storm. And it’s going to be up to HR to help facilitate that move to a more “flexible” workforce.
In a recent survey of 1,000 U.S. business leaders with at least 50 employees, ResumeBuilder.com found that more than one-third of respondents are hiring for contract positions and, of those, 78% say they are hiring for more contract positions now than in previous years.
For most, it’s coming down to money. The majority of leaders (71%) say the reason they are hiring contractors is, at least in part, to save money. In fact, those that recently experienced layoffs are more likely to be hiring contract workers (46% vs. 21%). For companies that experienced layoffs in the past three months, 80% say contractors will do work that had been done by employees who were laid off.
“It’s not new for HR leaders and hiring managers to use a flexible workforce to navigate unsettling economic times,” says ResumeBuilder.com’s Stacie Haller, the company’s chief career advisor. “The objective has been to give a company a more nimble workforce without the impact of layoffs and to be able to respond and reorganize a company’s priorities while saving additional labor costs.”
With that, she adds, contract work allows employers the flexibility to decide when to invest more in a particular position within the company, making it permanent going forward or taking a new direction. This approach gives the C-suite and HR some wiggle room in talent management planning, and, for some, the ability to potentially avoid layoffs.
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For employers that shift full-time employees to contract work, they may also benefit from maintaining a good reputation, as they work to retain employees rather than letting them go, Haller says.
But, communication and transparency are key.
“Employees are a lot more savvy and have more alternatives in the workplace than ever before,” she says. “We have seen companies making severe HR decisions—such as Twitter did—without bringing the workforce in to understand the whys, and the company then loses employees as well as revenue.”
HR also needs to be clear with employees who may move to a contract role about expectations.
“Although it may be better than being laid off, asking employees to work more, especially without additional compensation, can fuel dissatisfaction and burnout,” Haller says. “Employees will surely view this as ill treatment and take steps to seek better opportunities, where they are truly valued and can maintain work/life balance.”