Contingent Workforces Suit the Small Business Sector | DCR Workforce Blog

Contingent Workforces Suit the Small Business Sector

According to the May numbers released by the BLS Job Openings and Labor Turnover Survey   (JOLTS), there were 5.43 million job openings in the United States as of May 2015. The report tracks of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and geographic region.  The graph below, based on the latest JOLTS report, is illustrative of the open job positions which are dogging the job market as a whole and particularly troubling some of the industry sectors like:

  • Professional & Business Services (1,099,000)
  • Healthcare (865,000)
  • Accommodation & Food Services (687,000)
  • Retail & Wholesale Trade (739,000)
  • State and local government (464,000)

industries

A bleak job market inevitably encourages self-employment and results in the development of the small business sector. According to the Bureau of Labor Statistics, 15 million (or 1 in every 8) Americans are currently self-employed, whether incorporated (BLS Series Id: LNU02048984) or unincorporated (BLS Series Id: LNU02027714).

small businesses in USA

As the unemployment rate continues to decrease and more join the ranks of people not looking for work, the open positions in the job market are faced with progressively less hope of being filled with high quality workers. There is no doubt that a wide range of businesses are having trouble attracting high-quality workers, but the problem is particularly difficult for small businesses. Small businesses face unique difficulties when faced with the need to recruit high caliber workers, as they:

  • Lack big budgets and teams to manage their efforts to locate, hire, train, and retain suitable, high-quality staff.
  • Lack the ability to offer better than standard wages and benefits.
  • Are unable to draw large numbers of applicants as they are not well known.
  • Appear less attractive on a resume compared to a big employer. Many candidates fear that the company may be unstable financially or will offer fewer opportunities for skill development and advancement.
  • Cannot allot the resources for their training programs to develop the skills needed using unqualified/underqualified candidates.
  • Cannot afford to hire a wrong fit and fire/replace them without suffering negative effects in operational efficiency and financial health.

The July 2015 survey of small businesses by the NFIB Research Foundation shows that job creation was flat, with 48% of the respondents reporting that they found few or no qualified applicants for the positions they were trying to fill while 16% used contingent workforces. There is no doubt that contingent workforces are well suited to the needs of small businesses. The reasons could be found in the way the whole industry is structured and operates:

  • Contingent workers are a great way to complement the existing skills of any team, big or small.
  • Staffing firms offer workers with a wide range of niche skills who fit the unique needs of specific industries.
  • If the business is looking for the right talent in different geographies, staffing agencies which operate in multiple locations provide the answer.
  • The staffing agency screens the candidates and conducts background checks, if required.
  • A staffing agency is willing to match candidates with the organization’s culture, develop clear job descriptions and identify the right talent for the assignment.
  • Contingent workers offer flexibility. They are on assignment only for the period of time in which a specific need exists. There is no cost or effort associated with severance.

Any company, regardless of size, can benefit from a blended workforce of permanent and temporary employees. Small and mid-tier businesses would benefit from adopting contingent workforce programs, not only because they bring in the needed talent but also they provide a source of highly competent workers who can also be converted to permanent employees without establishing expensive recruitment programs.


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.