Every business needs a strategy for managing contractors and gig workers. Whether they’re your bread and butter or you’re considering them for the first time, you need a clear idea of how they fit into your business and – more importantly – the value they can offer.
But realising that value requires a considered approach. Contractors and gig workers bring with them unique opportunities and unique risks that set them apart from your permanent employees. Documenting these risks in a contractor management strategy helps you steer your business towards success.
The need-to-knows
To help you start strong, here are the three key elements you need to consider when building a contractor management strategy:
- Shifting ways of working driving a need for organisational change
- A unique, fast-changing and brutal regulatory system
- The range of options available for contractor management
Three burning reasons why your business needs contractors
Contractors aren’t just the future of work – they’re the present. Already we’re seeing a shift in the way that professionals at all levels are approaching contract and gig work, driven primarily by three factors:
- The ascent of Millennials and Generation Z in the workforce – many of whom are looking for more flexible working arrangements outside of traditional employment structures.
- The growth of sophisticated technology, enabling a transient workforce to provide their services wherever, whenever and to whomever.
- A deliberate move by top-talent away from permanent employment, knowing they can command a higher price and better conditions as a contractor.
Taken together, these factors have the potential to change employment forever – diminishing the importance of permanent work in favour of contracting and gig employment. Businesses who are able to recognise these forces for what they are and to understand how they’ll impact the market will be well-positioned to take the lead in the years to come.
It’s a jungle out there – The contingent labour regulatory landscape
Your business may understand the risks associated with underpaying, overworking or failing to document your permanent staff, but does it understand the same risks for contractors? In many cases, what constitutes a breach of regulations – and the penalties for a breach – can differ significantly between permanent and contingent workforces.
Regulations and penalties around contingent work are generally far stricter than for permanent employment. There are complexities around who holds insurances, who needs to provide work cover and who pays payroll tax among other things?
Newly initiated labour-hire licensing schemes in several states stipulate fines in the hundreds of thousands of dollars for not only operating as an unlicensed labour-hire provider but also for clients of unlicensed providers (recruitment agencies without a license).
As a result of this complex legal landscape, nearly all corporations in Australia with contingent workforces outsource contractor management to a specialist company. It’s simply too risky for businesses in Australia to go into contingent labour blind – they universally need a guide and a strategy.
Two ways to manage your contractors
So what is a business to do? Broadly, there are two options for businesses looking for support in managing their contingent workforce:
- Full-service recruitment firms with candidate supply capabilities, and/or
- In-house talent acquisition with outsourced contractor payroll management.
Both options have their strengths and weaknesses, and these broadly track with other industries offering fully outsourced or hybrid solutions such as IT with cloud computing vs SaaS. A full-service recruitment firm takes the issue away for you completely, minimising your administrative load to nearly nothing but also abstracting you away from the candidate selection process. For certain businesses, this is ideal, and the arm’s length approach to recruitment does not make a significant difference for their operations. It does, however, mean, that you need to ensure your recruitment partner has the necessary skills and technology to ensure the process is smooth for you as the Client. Recruiters can also work with CMOs like Oncore to ensure their back-office function is 100%.
For others seeking greater control over who they bring on board, keeping talent acquisition in-house allows more stringent vetting. During the search for the appropriate candidate, an outsourced payroll management company is waiting in the wings to meet them during the onboarding stage, registering them into a database and making it easy to refer to current agreements and contracts at a moment’s notice. Some organisations also provide WH&S inductions, helping to further minimise your exposure to risk.