Workforce scalability and the contingent workforce

In an ideal environment, every business would grow at a steady, predictable pace. HR managers would be able to plan their staffing needs accordingly, building the team little-by-little as demand increases.

Unfortunately, this is wishful thinking.

The reality is that market volatility never stops. Trading is impacted by global disruptions such as shipping delays, black-swan events like Covid, and economic factors including inflation and recession. Individual businesses with long-term growth trajectories can see demand plummet in the short-term due to emerging competition, changing consumer trends or new technology. In this situation, organisations can be left with a team of idle employees, causing the business to haemorrhage money in the form of salaries that will not be recouped.

And then there’s the flipside. Trading conditions can suddenly improve and demand can skyrocket due to similar factors: overseas disruptions causing people to turn to local suppliers, a sudden shift in consumer trends, or an influencer endorsement on social media going viral. If a business fails to rapidly scale up its workforce in response, they will fail to ride the wave of customer demand, miss out on a growth opportunity, and see the profits flow to competitors.

Having a scalable workforce means taking market volatility as a given. This approach recognises the unlikelihood of steady, predictable growth and makes a rule of expecting the unexpected.

Scaling up and down

Time-to-hire permanent staff is currently hovering around 33 to 40 days in Australia and 36 to 50 days in New Zealand, meaning an organisation could see a short-term demand spike come and go before they even bring a candidate to the interview stage. Scaling down a permanent workforce can take too long as well, with lengthy minimum notice periods meaning payroll costs will linger for weeks at a time when the business can’t afford it.

The risk-based solution to workforce scalability lies in the contingent workforce. Instead of being viewed as a quick fix to plug talent gaps on an ad-hoc basis, temporary workers can be seen as a permanent part of an organisation’s talent mix. This approach will become increasingly common as the project economy – which prioritises skill-based hiring over role-based recruitment – gathers steam.

Finding an effective permanent-to-contingent ratio will vary depending on your organisation’s sector and context. Hospitality businesses, long-used to seasonal ebbs and flows, may choose to keep a small core of permanent staff and rely on contingent labour pools to scale up when needed. Retailers have always taken a hybrid team approach to cope with demand spikes in the festive season.

But there are costs involved. Building a talent pool of contingent workers takes just as long as building a traditional talent pool, with the added challenge of keeping track of temporary workers’ rapidly changing availability as they move in and out of roles. Businesses may choose to outsource this task to staffing agencies who have large and reliable talent pools, so long as they are willing to pay a steep agency margin which may be almost a quarter of the total candidate cost. Temp workers attract the usual “on costs” such as superannuation, workers compensation, payroll tax and insurance, although temporary workers do not receive leave benefits (annual, sick or carer’s leave).

Think of contingent workers’ higher hourly rates as the cost of flexibility. Keep in mind that the cost of higher rates can pale in comparison to the opportunity costs of failing to take advantage of a game-changing demand spike or maintaining a large unwieldy permanent team during a downturn.

Background checks for the contingent workforce

Engaging temporary workers can increase risk to your business in terms of background checking and workforce compliance. Staffing agencies usually include background vetting as part of the service, but it may be worth asking for more detail before you commit: what sort of checks have they carried out? How rigorous are their processes?

If you are hiring temp workers directly without the help of a staffing agency, it is crucial that your organisation uses the same level of rigour and due diligence in background checking as you do with permanent staff, whether it’s employment verification, a national police check or psychometric assessments. The fact that temporary workers have not been a part of your safety culture means safety inductions/training are even more crucial for understanding the hazards of the job.

Employ a simple and scalable screening solution that balances rigour with speed to help organisation scale up fast with minimal workforce risk. Look for:

  • Fast and smooth onboarding of staff to ensure no temporary worker misses the safety induction.
  • Integration with HRIS and ATS systems to track and manage complex temporary workforces.
  • Scalability to take advantage of demand peaks or protect profits during downturns.
  • Reliability and security, preferably meeting ISO 27001 certification.
  • A delightful candidate experience that extends to temporary workers as well.

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CVCheck’s flexible solutions and fast turnaround are particularly suited for events-driven businesses that rely on having temporary staff checked and cleared to work within a matter of days. Learn more.

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