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*Employer of Record:
*Employer of Record:
*Portable Employer of Record:
*Portable Employer of Record:
*[[PEO]]: provides outsourcing of human resources tasks such as payroll, mainly for small to mid-sized businesses that do not have the need or resources for a dedicated human resources department.
*[[PEO]]: provides [[outsourcing]] of [[payroll]], [[workers' compensation]], [[human resources]] and [[employee benefits]] administration. It does this by hiring a client company’s employees, then leasing them back under [[contract]] to the original [[employer]].


==See Also==
==See Also==

Revision as of 17:23, 28 June 2007

Contingent Workforce Management (CWM) is the strategic approach to managing an organization's Contingent Workforce in a way that it reduces the company's cost in the management of contingent employees and mitigates the company's risk in employing them [1]

See also: Contingent Workforce

Contingent workers currently represent a substantial portion of the U.S. workforce, and "nearly four out of five employers, in establishments of all sizes and industries, use some form of nontraditional staffing." The Contingent Workforce, also referred to as "people in alternative work arrangements", includes independent contractors, employees of contract companies, workers who are on call, and temporary workers.[2]

Drivers of Growth

Among several other contributing factors, globalization has had a large impact on the growth in using contingent labor. Globalization contributes to rapid growth in industries, increased outsourcing, and a need for flexibility and agility to remain competitive.[3] By engaging contract workers, organizations are able to be agile and save costs. The contingent workforce acts as a variable workforce for companies to select from to perform specific projects or complete specialized projects.[4] Also as organizations make efforts to be more agile and to quickly respond to change in order to be more competitive, they turn to the contingent workforce to have on-demand access to professionals and experts.[5] Organizations also see the opportunity to reduce benefits and retirement costs by engaging the contingent workforce.[6] However, there is risk involved in avoiding these costs if an employee is improperly classified as a contingent worker. Using the contingent workforce is also cost-effective in that using contingent labor allows for adjustments to employment levels and employment costs depending on what kind of expertise and labor is need and at what time it is needed.
Trends in the contingent workforce are also impacted by the economy. A study conducted by the MPS Group shows the relationship between the contingent labor cycle and the state of the economy.[7] In a bullish economy, the demand for contingent labor is strong. This is most likely due to the fact that organizations are trying to grow with the economy, and using contingent workers allows them to work with experts when needed, without the long-term costs of hiring them.
A knowledge-driven economy also contributes to the growth in the use of the contingent workforce because organizations rely more on their specific and expert knowledge and expertise.[8] As demand increases for highly-skilled and knowledgeable people, the expertise of contract workers becomes more attractive.
Another factor for the growth in the contingent workforce comes from not benefits to organizations, but to the individual. The ease of changing jobs has increased and has made working as a contingent worker more attractive.[9] Increased popularity of applying for jobs on-line as well as an increased need for specialists make becoming a contingent worker a possibility for several individuals.


Advantages and Disadvantages of using Contingent Workers[10]

Advantages Disadvantages
Flexibility Loyalty
Save costs in benefits and tax Disturbs organizations core morale and culture
Immediate access to expertise not present internally Training costs
Savings in long-term compensation costs

The Future of CMW

Several reports and statistics report to an increased prominence of contractors and contingent labor to be used by organizations.[11] The US Bureau of Labor Statistics expects an increase of 68% in use of white collar contingent labor.[12] The BOL also estimates that the US staffing industry will grow faster than any other industry over the next 10 years.[13]

History of the concept of Contingent Workforce Management

The concept of CWM appears to be fairly recent, dating back perhaps a few decades.[14] Yet, despite the fact that there is a trend in the workforce growing more strongly towards contingent labor, effective CWM is still not yet widely spread.[15]

Risk Assessment and Mitigation

Not an Uncommon Problem

Some employers misclassify unintentionally due to the complexity of classifying employees versus contingent labor. While others do it on purpose in order to escape the costs of providing benefits to employees.[16] According to a study done by the Cornell University ILR School, 10.3% of NY's private sector are misclassified each year.[17] And according to the US GAO 15% of employers misclassified employees as Independent contractors.[18] Yet another report shows that 66% of organizations are highly concerned about employee misclassification and co-employment risk, and 69% are highly concerned about their organization’s compliance with industry regulations such as Sarbanes-Oxley, SEC, FDIC, etc.[19]

Costly Problem

The risk associated with misclassifying employees is costly to the individual, the organization, the government and tax payers. As far as individuals, if not classified properly these contingent workers do not get the benefits they deserve as an employee.[20] For businesses it creates an unlevel playing field, unfair advantages, and risks of penalties from IRS.[21] The government and the tax payers who comply with policies and laws are greatly affected too. In New York state alone, $4,283,663,772 in taxable wages were underreported.[22]

Suggested Solutions

Traditional business models are slow to react to the change in the labor force and are not readily prepared to engage the contingent workfroce efficiently and risk-free.[23] Companies in a Taleo Research survey reported that they had implemented a contingent workforce management solution because of reasons including cost/bill rate reduction (32%), visibility and process control (31%) and risk reduction (21%).[24]

Among other solutions, the following are types of CWM.

See Also

References

  1. ^ from<http://cips.org/documents/workforce_management_pp4_oct05_pg_40-43-1.pdf>"Contingent Workforce Management: Developing a Successful Strategy" Procurement Professional, October/November 2005
  2. ^ from"Futurework", Occupational Outlook Quarterly, US Bureau of Labor Statistics, Summer 2000, p.36
  3. ^ from<http://www.innovativeemployeesolutions.com/knowledge/articles_04/04-article-01.html>, " Ten important issues and trends shaping human resources in 2004", Innovative Employee Solutions, 2004
  4. ^ from<http://www.mpsgroup.com/vNews/mpsgroup/presentations/BankofAmerica/BOA_20040601.pdf>, "Banc of America Securities Conference", MPS Group, July 2004, page 21
  5. ^ from<http://www.businessweek.com/careers/content/may2007/ca20070523_580432.htm?campaign_id=rss_null>,"The Contingent Workforce", Business Week, May 2007
  6. ^ from<http://www.mpsgroup.com/vNews/mpsgroup/presentations/BankofAmerica/BOA_20040601.pdf>, "Banc of America Securities Conference", MPS Group, July 2004, page 21
  7. ^ from<http://www.mpsgroup.com/vNews/mpsgroup/presentations/BankofAmerica/BOA_20040601.pdf>, "Banc of America Securities Conference", MPS Group, July 2004, page 10
  8. ^ from<http://www.humancapitalinstitute.org/hci/tracks_contingent_workforce_management.guid>, "Contingent Workforce Management", The Human Capital Institute, 2006
  9. ^ from<http://www.taleo.com/research/articles/talent-article1.php?id=102>, "Resume Volume: Can You Handle It?", Taleo, 2007
  10. ^ from<http://www.quepublishing.com/articles/article.asp?p=437082&seqNum=8&rl=1>, "Workforce Planning and Employment", Que Publishing, December 2005
  11. ^ from<http://www.businessweek.com/careers/content/may2007/ca20070523_580432.htm?campaign_id=rss_null>,"The Contingent Workforce", Business Week, May 2007
  12. ^ from<http://www.mpsgroup.com/vNews/mpsgroup/presentations/BankofAmerica/BOA_20040601.pdf>, "Banc of America Securities Conference", MPS Group, July 2004, page 21
  13. ^ from<http://www.americanstaffing.net/statistics/economic.cfm>, "Staffing Industry Economic Analysis", American Staffing Association, May 2007
  14. ^ from<http://www.allbusiness.com/human-resources/workforce-management/593407-1.html>, "Will employee meltdown mean a "contingent" work force?", AllBusiness.com, 1996
  15. ^ from<http://www.s-ox.com/news/detail.cfm?articleID=1284>, "Contingent Workforce Management Trends", Sarbanes-Oxley Compliance Journal, 2005
  16. ^ from<http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1009&context=reports>,"The Cost of Worker Misclassification in New York State", Cornell University, 2007, page 5
  17. ^ from<http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1009&context=reports>,"The Cost of Worker Misclassification in New York State", Cornell University, 2007, page 5
  18. ^ from<http://www.unclefed.com/GAOReports/ggd96-130t.pdf>,"Issues in Classifying Workers as Employees or Independent Contractors", US General Accounting Office, 1996, page 3
  19. ^ from<http://www.s-ox.com/news/detail.cfm?articleID=1284>, "Contingent Workforce Management Trends", Sarbanes-Oxley Compliance Journal, 2005
  20. ^ from<http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1009&context=reports>,"The Cost of Worker Misclassification in New York State", Cornell University, 2007, page 5
  21. ^ from<http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1009&context=reports>,"The Cost of Worker Misclassification in New York State", Cornell University, 2007, page 5
  22. ^ from<http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1009&context=reports>,"The Cost of Worker Misclassification in New York State", Cornell University, 2007, page 5
  23. ^ from<http://www.401khelpcenter.com/401k/cfdd_new_business_model.html>, "New Retirement Plans Business Models: Adapt & Grow Or Die", 401K Help Center, 2004
  24. ^ from<http://www.s-ox.com/news/detail.cfm?articleID=1284>, "Contingent Workforce Management Trends", Sarbanes-Oxley Compliance Journal, 2005
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