4 Ways to Improve Contract Staffing ROI

For organizations that want to reduce labor costs, improve business agility, access high-quality talent, as well as hire workers fast as-and-when they are needed, contract staffing is a critical investment.

That’s why utilization of the contingent workforce is increasing rapidly. In 2021, Staffing Industry Analysts, SIA, estimated that there were 52 million contingent workers in the US, representing 35 percent of all workers and accounting for $1.3 trillion of revenue. 

The analyst firm also reports that based on early numbers from 2022, temporary staffing continues to increase. This is a good indication that business spending on contingent workers will continue to increase into 2023 and beyond.

That’s because contingent workers represent a valuable resource that allows organizations to meet their ongoing requirements for labor, skill and know-how. 

But to truly maximize return on investment from contract and temporary labor, businesses must prioritize and improve the strategies and processes around how they manage them. Before we get into four methods your business can use to improve contract staffing ROI, let's first look at the benefits of contract staffing.

The benefits of contract staffing

Contract staffing offers numerous benefits to organizations seeking to optimize their workforce management. By leveraging contract workers, businesses can experience the following advantages:

• Cost savings: Contract staffing allows organizations to reduce labor costs significantly. Instead of hiring full-time employees with long-term commitments, companies can engage contract workers on a project-by-project basis or for specific periods. This flexibility helps minimize overhead expenses such as benefits, insurance, and payroll taxes associated with permanent employees.
• Business agility: Contract staffing provides the agility required to adapt to fluctuating workloads and changing business needs. Organizations can quickly scale their workforce up or down, depending on project demands or market conditions. This agility allows businesses to remain agile and responsive, preventing resource shortages or surplus.
• Access to high-quality talent: Contract staffing enables access to a wide pool of high-quality talent. Many contract workers possess specialized skills and expertise honed through their experience working on various projects. Organizations can tap into this talent pool to fulfill specific project requirements, gain industry insights, and introduce fresh perspectives to their teams.
• Fast hiring: Hiring contract workers is a streamlined process compared to traditional permanent hires. By engaging staffing agencies or leveraging their own networks, businesses can swiftly identify and onboard contract workers with the required skills. This rapid hiring process ensures projects can start promptly, reducing time-to-market and enhancing overall productivity.
• Reduced administrative burden: Contract staffing alleviates administrative burdens associated with employee management. Since contract workers are typically employed by staffing agencies or work as independent contractors, organizations can delegate responsibilities such as payroll, benefits administration, and compliance to the staffing agency or the contractor themselves. This allows companies to focus on core business functions and strategic initiatives.

Methods to improve contract staffing ROI

1 - Implement an effective contingent workforce program

The most critical aspect to improving return on investment for your contract and temporary workers is to implement a contingent workforce program that enables your business to manage non-employee workers effectively. 

If, like the vast majority of businesses, you have no strategic contingent workforce program in place then your business is likely lacking visibility, control and standardization over its contract workers. Hiring managers engage staffing agencies on their own terms, and pay the rates that they think work. 

This simply doesn’t work. It leaves your organization with rogue spend that runs rampant throughout your business, with management teams having absolutely no visibility into where money is being wasted and why your contingent workforce isn’t performing as expected. 

Implementing an effective contingent workforce management strategy however, will ensure that you:

• Gain visibility and control of your non-employee workers
• Reduce rogue spend and, as a result, improve your bottom line
• Improve the quality of the talent you hire
• Speed up your access to talent

2 - Partner with the right staffing agencies 

Trusting your staffing requirements to a third-party can be a difficult and important decision. It’s highly important that your business partners with suppliers who are able to place the right contractors, in the right positions, at the right time and at the right price point. 

To ensure you partner with the right suppliers, your business will need to define its staffing needs and then evaluate which suppliers are able to fill them. Having a range of pre-approved staffing agencies that hiring managers can work with will be a huge factor in how fast you can access workers, as well as the quality of your non-employee workforce. You should ensure you have the right amount of vendors, the right type of vendors and choose suppliers who are the right size with specific skills.having a varied and dynamic range of expertise is critical. 

3 - Measure the performance of your staffing agencies

It’s not enough to just partner with the right staffing agencies. Your business needs metrics and insights to ensure that the staffing agencies you partner with are helping your business to meet its workforce requirements. 

To gain visibility into staffing agency performance, evaluate metrics such as fill rate, time-to-hire, satisfaction surveys, supplier rate cards, time-to-fill and turnover. You can learn more about these metrics by clicking the below blog.

Top 6 Staffing Agency Performance Metrics to Track

4 - Work with an outsourced specialist if you need help improving contingent workforce management

There’s no doubt that managing a contingent workforce requires expertise of the contingent category, time, as well as the completion of complex processes. A large number of businesses simply don’t have the know-how or resources to complete this successfully. 

If your business can’t manage its contract workers successfully, then it’s typically a sign that you can improve your ROI by outsourcing that management to contingent workforce specialists. A managed services provider (MSP) will implement a strategic contingent workforce program for your business that will improve results. 

Best practices for contract staffing 

To maximize the benefits of contract staffing and optimize ROI, organizations should implement the following best practices:

• Workforce planning: Develop a comprehensive contingent workforce plan that aligns contract staffing needs with business objectives. Identify specific skill requirements, project timelines, and anticipated workload fluctuations. This proactive approach enables better preparation and ensures the availability of the right talent when needed.
• Robust recruitment strategies: Partner with reputable staffing agencies or utilize effective recruitment channels to attract top contract talent. Clearly define job requirements, competencies, and project deliverables to facilitate accurate candidate matching. Implement a streamlined selection process to expedite hiring while maintaining quality standards.
• Onboarding and integration: Provide comprehensive onboarding processes for contract workers to quickly integrate them into the organization. Share relevant information about the project, company culture, and expectations. Offer necessary training and resources to ensure contract workers can contribute effectively from day one.
• Performance management: Establish clear performance metrics and expectations for contract workers. Regularly communicate project goals, milestones, and performance feedback. Implement performance evaluation processes that allow for constructive feedback, recognition of achievements, and identification of areas for improvement.
• Effective communication: Maintain open and regular communication channels with contract workers. Ensure they have access to necessary resources, tools, and information to perform their roles efficiently. Foster collaboration and knowledge sharing between contract workers and permanent employees to promote a cohesive team environment.
• Compliance and legal considerations: Adhere to legal and compliance requirements related to contract staffing. Stay informed about labor laws, classification regulations, tax obligations, and benefits entitlements. Seek legal counsel or consult with experts to ensure compliance and mitigate potential risks.

Interested in learning more about how you can improve contingent workforce management? Get in touch with Contrax today. We have a range of solutions that can save your business time, money and better fulfill your workforce requirements.