Building Blocks – Best Practices for Managing Contingent Workers in Manufacturing | DCR Workforce Blog

Building Blocks – Best Practices for Managing Contingent Workers in Manufacturing

Manufacturing is one of those evolving sectors facing skills gaps which is dependent on contingent workers to fulfill some of its resource needs. The pace at which technology changes causes a lag between education and labor market requirements in some sectors including the manufacturing sector. Gone are the days of repetitive assembly jobs with their dehumanizing impact. The manufacturing industry is still outsourcing the unskilled jobs overseas or bringing in robots to handle such work.

manufacturing employmentIn today’s fast-paced climate, the manufacturing sector needs skilled workers for well-paid technical or factory floor jobs across the board, in a high technology environment, where people control the computers which, in turn, control the work of mills, machines and robots.

The lag between technical education and job market requirements is exacerbating the scarcity of skilled personnel needed to fill technical or factory floor jobs. Without the use of contingent workers, manufacturing – which is being resurrected and regaining its attraction through the additional projects brought in by re-shored manufacturing jobs – may fail to grow to its potential.

As more manufacturing jobs return to the US, the manufacturing industry is sourcing both skilled and unskilled labor, with a clear preference toward retaining contingent workers over permanent employees. Using contingent workers allows a company to enjoy great flexibility in managing its headcount and helps it to stay ahead of supply and demand hassles in hiring new employees.

The question is, how many of these are contingent workers? As manufacturing companies save time on recruiting, interviewing and screening candidates by engaging contingent workforces through staffing agencies, while enjoying direct access to established talent pipelines, manufacturing employs nearly half of all contingent workforces in both skilled and unskilled roles. The workers can be brought on board to meet production spikes, whether seasonal or due to a full order book. The workers can always be made permanent when required, saving on investing in training new workers and waiting for them to grasp the learning curve and then become productive. Even when a contingent worker doesn’t possess the right skill set, the manufacturing industry is happy to provide ongoing learning opportunities that impart the needed skills. Savvy manufacturing companies today strive to build an organizational culture and employer brand that attract both permanent and temporary workers.

Stats for contingent workers in manufacturing

It’s difficult to estimate the actual number of contingent workers in the manufacturing sector, but there some macro-trends and statistics that indicate that the manufacturing sector ranks high in using contingent workers and is also growing steadily. Here are the facts:

  • According to data from the Bureau of Labor Services, the industrial segment of temporary labor, which includes manufacturing, grew by 22% from 2007 to 2014.
  • Corresponding this trend, industry pundits talk about how staffing agencies are working hard to fill positions for the manufacturing industry by filling positions they used to fill in more than two years they’re now filling in one month! Nothing says “hiring boom in the manufacturing sector” more than that!
  • Paralleling this: Individuals who moved out of the manufacturing industry and became non-active as job seekers are being lured back to active roles as the pressure to find talent is building up.

In all this excitement, manufacturing companies need to keep track of the compliance requirements that accompany the use of contingent workers. Ensuring contingent worker safety on the company’s premises through providing proper training and appropriate protective equipment is of paramount importance.  Companies also need to protect their intellectual property rights through appropriate systems and processes that ensure  contingent workers don’t pose a risk to them.

These processes will need to ensure that a temporary worker is not treated or supervised in a way that makes it look like they are a full-time employee (FTE) and thus can be considered as the staffing client’s employee – leaving a doorway open to joint employment issues. It will also be necessary to limit the tenure of a contingent worker who is doing the same work as a permanent employee. What’s more, with project-based roles, the relation with a non-employee will have to end at the completion of the project and cannot be continued indefinitely as the worker keeps on working on other projects. If planning to train and retain the non-employee as an FTE, it would be best to set the expectations of the non-employee right at the outset, to derive the maximum benefits from your contingent workforce program.

Last but not least, here’s a helpful link to some best practices for managing contingent workforces that a company can adopt to ensure safety from negative repercussions later on. A Vendor Management System (VMS) can save you from a world of trouble. The manufacturing sector can realize many benefits from a traditional VMS or one that can handle Statement of Work projects as well if they outsource project-based work. We have many resources that can point you in the right direction or you can get more information by emailing sales@dcrworkforce.com.


Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.