Define your Ideal Workforce Mix | DCR Workforce Blog

Define your Ideal Workforce Mix

contingent workforce programLife is all about wading through the different challenges it places before us – and trying to emerge unscathed, if not victorious. One such challenge facing employers today is getting their workforce mix right – and creating an employer brand which keeps their employees loyal and ‘sticky’!

When it comes to the contingent workforce, few employers are as focused and strategic in their approach to their use as with their regular hires. This makes it fundamentally difficult for them to decide upon the workforce mix they want to have in their workplaces – as in how many must be regularly employed and how many can be hired temporarily. It takes a lot of ingenuity and planning to get this mix right, in such a way that the quality of the company’s services and its productivity are improved by the workforce mix adopted.

In the past, if your business needed someone to fill in for the receptionist while on vacation or had a ‘one time’ need for a day laborer; you would be fine with any person who was willing and able to undertake the task at the promised pay. Today, companies increasingly recognize the value that temporary workers can bring.  Of course, for all of the talk about the “strategic value” of a blended workforce, little information is available about how to plan for that perfect workforce composition.  These choices are complex:  first you need to determine whether a position should be filled with a permanent or temporary resource.  Then, you have to decide what type of temporary resource is best for each position!  For any organization, it pays to start with clear written descriptions of the type of jobs at hand that define the complexity of the role, the duration for which it needs to be performed and the skills and experiences needed to successfully perform the work.  Comparing these descriptions to the availability of matching talent in the market helps to determine your workforce strategy. It does become a tight-rope walk when companies find themselves having to include cost efficiency and flexibility to the heady mix of variables which influence the right mix.

Government policy is now playing a greater role in workforce composition decisions.  All companies are feeling the effects of a weak economy and rising taxes.  Many smaller entities, concerned by the financial impact of the Affordable Care Act, are attempting to maintain an exempt status by limiting the size of their workforce to remain below 50 permanent employees.  New positions are filled by to temporary workers.  Larger organizations are looking to temporary workers as a way to cut payroll taxes.

What role will temp workers play in your organization? To answer that question, consider the following:

  1. Do you envision a significant shift in your business model over the next couple of years?  Will that shift require a re-skilling of your workforce?  If so, temp employees may help to ease that transition and serve as a source of potential future employees.
  2. Are you about to embark on some projects that require specialized skills that are not needed once the project is complete?  Many companies address this need with temp workers.
  3. Is your business seasonal or cyclical?  Temp workers can meet these swings in demand.
  4. Are you planning to expand your operation to a new region, or enter a new market?  If so, do you need to ramp up quickly, but fear that hiring can get out in front of the supporting revenue flow?  Another area where temp workers may be of assistance.
  5. Are there “non-core” roles in your company that you would like to outsource in order to reduce costs?

Once you have determined where you will use temp workers, you need to evaluate what types of temp workers will be used:

  • Agency contractors are W-2 employees of staffing agencies, placed on assignment with your company.  This approach provides the lowest risk in terms of employee classification and co-employment.  However, you will pay a sourcing fee to the supplier.  In addition, you must consider who in your organization will be responsible for qualifying, negotiating with and managing this supply base.
  • Independent contractors, also known as “1099s” or “freelancers” work under a contract that specifies deliverables and delivery dates.  You will have no control over where, when or how the work is conducted. While this option is sometimes available at lower rates than agency contractors, the risk is high that the IRS will deem these individuals to be employees, subjecting you to heavy fines and fees.
  • Small project teams may be hired to work under a Statement of Work (SOW) to complete a project for you.  Limitations applied to independent contractors apply here.  In addition, you must determine how you will internally manage the team’s performance against the SOW.

There are resources available to assist you in making these decisions.  Many companies outsource responsibility for their temporary workforce to a Managed Services Provider who delivers operational efficiency and lower costs while reducing your risk profile.  In addition, innovative talent management systems include modules that lead you through an assessment of the best type of temp worker for each assignment, and the most effective ways to source those resources.  DCR’s Smart Track Engagement Toolkit is a good example of this type of capability.

Balancing all these factors to arrive at a clear understanding of the right workforce mix may not be possible without a trial-and-error approach and a willingness to tweak the mix by tracking the outcomes. This would bring us to the question of mining human resource data to track one’s performance – which is the stuff of another post which we shall endeavor to bring to you soon.

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.