Contingent Workers

By Kathryn Tyler Mar 1, 2008
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HR Magazine, March 2008 Consider both your company’s and workers’ needs in contingent workforce planning.

Every summer, Gentle Giant Moving Co., a moving and storage company headquartered in Somerville, Mass., doubles its workforce. During the winter, it employs 150 regular employees, but during peak summer months the company adds another 150 contingent workers, many recruited from Eastern European nations.

“We do 60 percent of our annual business from May to September,” says Ryan Falvey, vice president of organizational development for Gentle Giant. “We target students looking for summer work. We try to develop an interest in them coming back year after year. They can get up to speed faster” that way.

These movers number among the 5.7 million contingent workers in the United States, who make up about 4 percent of all employed individuals, according to a 2005 Bureau of Labor Statistics study, the latest statistics available. Contingent workers—a majority of whom are under 25 years old—are defined as workers with jobs structured to be short term or temporary, including workers from temporary employment agencies, on-call workers, independent contractors and seasonal workers.

“Contingent labor helps ease the anxiety of economic uncertainty because it’s flexible and easily scalable,” says Traci Fiatte Izzo, executive vice president of Vedior North America, a staffing company headquartered in Wakefield, Mass. “[Workers in] almost every job category are now available as contingent labor. Gone are the days when only administrative and factory workers were temporary.”

As a result, HR professionals may be called to do more contingent workforce planning. Regardless of whether the company pairs with an outside temporary agency or hires contingent workers directly, HR professionals need to determine what data to examine to make accurate workforce needs predictions, foresee emergency workforce needs, locate contingent workers and create an onboarding strategy that ensures that contingent workers will return when necessary.

Failing To Plan

Planning for a contingent workforce— not just reacting to current workplace conditions—becomes crucial if companies are to avoid having too much work and not enough workers or too many contingent employees and insufficient work. Either scenario is expensive.

“Failing to adequately plan for contingent staff often forces companies into a position where they cannot afford to hire contingent workers even though they need to” because they don’t have the funds budgeted, says Izzo. Planning for the use of contingent labor minimizes companies’ risks and costs of employing unnecessary regular workers and at the same time allows them to fulfill business obligations.

At Gentle Giant, Falvey spends a lot of time forecasting how many contingent workers to hire for the coming season. He wants to avoid situations where there isn’t “enough work to give them the hours [they want].”

Managers must plan for predictable work spikes and shortages, as well as natural disasters such as snowstorms that prevent regular employees from coming to work. Managers who don’t plan may be lucky for a while, but “once they have experienced a significant unforeseen event, they never let it happen again,” says Christopher Carrington, chief executive officer of Alpine Access, a temporary call center agency headquartered in Denver.

For instance, shortly before Christmas 2006, Oklahoma had massive ice storms and one retailer lost potential orders during the busy holiday shopping season when callers had to wait 20 minutes, says Carrington. “In contrast, one of our East Coast clients woke up one morning to ice storms, and we had contingent workers online taking calls for that retailer by 8 a.m.”

Predictable Cycles

“The best indicator of the future is what has happened in the past,” says Izzo. To plan for appropriate staff levels, “understand the historic trends per business unit, industry and economic environment.”

To accurately assess future contingent staffing needs, experts recommend that HR professionals:

  • Use the calendar.Many companies have predictable work cycles, such as an increase in temporary retail employees for the Christmas holidays. HR professionals need to analyze projected customer volume long before the season begins. Retailers should not begin looking for holiday workers at Halloween. Instead, in January they should analyze what went right and what went wrong with the plan for the previous months’ seasonal workers, and map out a strategy for the following year.

    Gentle Giant begins planning during the fall and winter for the following summer. “We hire a good number of foreign students on visas. We have found that the European employees work hard and are dedicated to working as many hours as they can. Culturally, it adds to the workplace. The domestic students enjoy interacting with the foreign students,” says Falvey. But hiring foreign workers requires extra time and planning for visa approval and transportation.

    Gentle Giant also hires temporary office staff to handle the additional paperwork. “In January, each department manager estimates staffing levels and how many different positions” need to be filled for summer, says Falvey.

  • Examine past sales records and current sales leads.Falvey looks at several different statistics to determine how many employees to hire. Call volume is a leading indicator. “Any given day, we’ll get 150 calls from people who are potentially interested [in using our moving service]. We’ll compare the call volume from the year before” to determine how many moving jobs the company did and how many workers it will need.

  • Scrutinize influences on the industry. For example, the unstable housing market has affected moving companies such as Gentle Giant. “The average cost per move is going down,” says Falvey. “In a better economy, we do more pack and prep work that requires more staff.” In leaner times, more customers pack belongings themselves.

  • Study plans for future projects.Izzo recommends looking at how growth or stagnation has affected the company’s staffing levels historically: “Do we have any new product or service launches that will affect staffing levels? Do we have any products or services we are discontinuing?”

Dow Chemical Co. in Midland, Mich., uses contingent workers for massive plant-building projects. “Our business is cyclical, with multiyear cycles of peaks and troughs,” explains Mark Bachman, global director of Dow’s HR Center of Expertise. Up to 25 percent of Dow’s 43,000 employees are contingent workers. “We use contingent workers across all staff functions, but primarily in manufacturing, engineering and office staff,” he says.

Emergency Staffing

Many companies experience sudden needs for contingent staff as a result of emergencies such as floods, snowstorms, hurricanes, disease outbreaks or terrorism. Managers must foresee potential emergencies and prepare long before they arrive. In these cases, it may be wise to partner with an outside agency to manage this contingent workforce because HR professionals may be affected by the emergency as well.

“The day 10 inches of snow falls is not the day to plan for contingent workers,” Carrington says with a laugh. But that is how many managers address it.

Step one: Plan for emergencies. If your business resides in part of the country prone to hurricanes, earthquakes or ice storms, have a plan in place or you will lose customers. “Understand what potential events could occur. If you have 10 inches of snow, only 50 percent of your workforce may make it to work. How will you solve [the problem of acquiring] the other 50 percent?” asks Carrington. All 7,500 employees for Alpine Access work from their homes, so they aren’t affected by driving conditions.

Being able to obtain contingent workers during an emergency situation requires advance preparation to line up vendors and other sources. This type of planning is most important for companies with national or global customers who won’t be affected by the disaster and will still expect service. Carrington says, “It’s no longer acceptable to say, ‘We can’t help you for eight hours.’ You need to continue to provide customer service.”

Alpine Access serves airline-reservation call centers. “If you see a weather front coming with the potential to shut an airport, you know your call volume will go up. We can add additional workers for the day while that airport is closed,” says Carrington.

For example, ExpressJet Airlines, headquartered in Houston, uses contingent workers to meet unforeseen spikes in call volume. “Minor schedule changes, weather disruptions or airport-initiated closures will drive call increases, but these cannot be planned for in advance,” says Trish Winebrenner, vice president of marketing for ExpressJet Airlines.

With help from Alpine Access, “it takes far less time to send out an e-mail requesting agents to jump on, if available, for quick coverage. We’ve been successful in acquiring as many as 17 agents concurrently on the phones within 15 minutes of the request sent out via e-mail. This would never be possible in a brick-and-mortar call center where agents would have to drive in,” Winebrenner says.

Tough Finds

HR professionals should determine how many contingent workers the company will need, what type and where to find them. Many managers increase their potential labor pools through partnerships with temporary employment agencies.

“Our contract workforce represents a unique skill set, a talent pool that is difficult to find,” says Dow’s Bachman. “For instance, on the Gulf Coast we are in competition with the oil companies for engineering talent. Our vendor offers us a way to channel the talent, especially for chemical engineers.”

But such partnerships are not always sufficient, especially when it comes to finding skilled contingent workers. Dow recently discovered another source for hard-to-find contingent talent: retirees. “A lot of retirees like being retired but wouldn’t mind working on a project for six months in China,” says Bachman.

A recently created program at Dow helps the company tap into this talent pool. Dow Network is an online social networking site where all employees and retirees can post their profiles. Within two weeks of the site’s creation, 1,800 people had subscribed to it. Retirees interested in short-term work are funneled to the company’s temporary employment vendor, which handles their paperwork. (For more on how Dow and other companies use social networking sites, see “Social Networking at the Office” on page 81.)

“These people know a lot about the company. They’ve already got the skill sets necessary to do the jobs, and these skills are difficult” to find, says Bachman. Retirees “come back under their own terms, and when the project is done, they go back to their retirement.”

Treat Them Well

You’ve determined when, how many, what type and where to find the workers you will need. Now, plan to onboard them efficiently, thoroughly and personally. Contingent workers need to be trained, not just thrown into the deep end of the pool. Treat them as you would any other new hire, with genuine warmth and respect.

Gentle Giant arranges housing, bicycles, furniture, summer outings and an Internet cafe for foreign workers. “If you make it fun for them, it’s more likely they will return,” says Falvey.

“Some companies in other industries treat seasonal employees like, well, seasonal help,” he adds. “We value their contributions to the workplace. From an HR strategy standpoint, it’s sensible. It reduces our costs [for recruiting and training].” When you don’t have to retrain someone about how to hoist a piano up three stories into an old brick row house, it saves a lot of time, too.

“Sixty percent of our full-time workforce came out of the contingent workforce,” Falvey concludes. “These seasonal folks could be long-term fulltime employees if we make them feel special. Then, any investment we have made pays off.”

Kathryn Tyler, M.A., is a freelance writer and former HR generalist and trainer in Wixom, Mich., who has written business-related articles for the last 13 years. She can be contacted at www.kathryntyler.com.

Web Extras

SHRM articles:
Contingency Systems
(HR Magazine)

Making the Transition
(HR Magazine)

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