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For most companies, success rests largely on human capital. Temporary and contingent workers have become a permanent part of a “gig economy,” especially in IT, where project work and remote employees are commonplace. Staffing companies provide several approaches that support an employer’s need for agility, momentum, and to stay compliant with the law.
Temporary and Contract Staffing
Staffing agencies established themselves as a vital and widespread solution for the US workforce in the 1940s, when men and women vacated positions to serve in the military during World War II. Businesses needed to fill this war-driven gap in resources and hired people through staffing agencies, largely for clerical work and to fill positions at banks and factories.
Today, employers use temporary and contract employees for a broad spectrum of jobs, from janitors to virtual customer service reps to doctors, nurses, and interim executives. This workforce may be called consultants, contract workers, interns, seasonal workers, or temps, and today’s labor laws have a host of requirements around the classification of employees.
Temporary employees are hired to meet business demands, including rapid growth, seasonal fluctuation in demand for services, employee leaves or absences, and to bring on expertise and specialized skills for projects. This work can be part or full time, with the staffing company employing the talent who is assigned to the client. Wages, withholding, remitting taxes (including Social Security and unemployment), workers’ compensation, and any employee benefits are duties that fall on the managed service providers (MSPs) to leverage vendor management systems (VMS) in sourcing candidates. MSPs use technology to streamline their process and communicate with selected vendors (staffing agencies) who then submit candidates who meet the criteria of a position. The MSP is a gatekeeper while the selection of candidates is done by the client’s hiring manager.
Companies use MSPs to help stay current with regulations that vary across markets and to streamline and consolidate the view of their non-employee workforce.
SOW Employees
When a company has a specific challenge to address in the short-term, they may benefit from a separate workforce to tackle the initiative. SOW (Statement of Work) employees are usually professionals who bring years of experience across multiple industries. They typically ramp up quickly, provide insights and fresh perspectives that can improve results, and enjoy working with a wide degree of independence.
SOW arrangements rely on formal, legal statement-of-work documentation that drives project objectives, schedule, tasks, deliverables, payment, and expected outcomes. Unlike traditional temporary or contract employees, a company is only paying for the result, so they don’t have control over the SOW employee’s daily activities and progress.
In this model of sourcing talent, payment can be a fixed fee, milestone-based, or an hourly rate for professional services. With work that’s performance-based, it’s important to have a system for change management that documents details of changes in scope and allows for adjustments in compensation for items outside a worker’s control.
SOW initiatives can be complex; employers often rely on MSPs and their automation technologies to reduce risk and avoid project failure. A successful implementation will result in the client’s ability to close skill gaps with professionals needed for single projects, manage salary budgets by paying a fixed price for results, and scale the workforce up or down in the face of change.
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