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Working on Contract: Part of the Economy’s “New Normal”

by User Not Found | May 23, 2017
By Stacy Pursell
The VET Recruiter

The Great Recession may be a distant memory, but the effects of the recession are still being felt. You might be thinking, “What effects? Everything is fine.”

While things might be fine, the recession definitely left its mark. And one of the areas in which it did so was in the area of contract assignments.

Once upon a time, there was a certain ebb and flow to how organizations hired on a contract basis. Specifically, they were less likely to hire on contract when times were good. On the flip side of that, they were more likely to hire on contract when times were not good. Then, when times were good again, they’d go back to primarily hiring on a direct basis.

This was a cycle that persisted through quite a few recessions and recoveries. However, something different happened following the Great Recession.

Organizations didn’t stop hiring on a contract basis. Because of what they experienced during the recession, company officials decided to make contract workers a permanent part of their workforce. In short, it became part of the economy’s “new normal.”

This “new normal” has come to be called the blended workforce model. There are two distinct parts of this model:

#1—Core of direct hire employees

These are your most important employees, your top performers. They are critical components in the organization’s goals for productivity and ultimately, profitability. As a result, you hope that they will be with your company for a long time. You’re not looking for them to go anywhere anytime soon.

#2—Supplementary group of contractors

This is a group of workers that “fills the gaps,” so to speak. They’re brought on board to help meet important deadlines or finish crucial projects. They only work for the organization for a specified amount of time (as per their contract) and then they’re gone. Some companies have a rotating number of contractors working at any one time, depending upon the current workload.

As you can see, this is a rather lean model. There’s not a lot of “fat” in it. Organizations were forced to run lean following the Great Recession and they learned that lesson so well that they continue to run that way whenever possible. This new blended workforce model allows them to do just that.

In fact, below are three advantages for companies hiring on a contract basis:

1. Flexibility to do more with their staff and their workforce, now and in the future
2. The ability to “try out” a candidate on a contract basis before bringing them aboard on a direct basis (temp-to-direct)
3. Better able to control budgets and match the workforce to the budget allotted

What you might be thinking right now is, “Sure, companies like to hire workers on a contract basis. But what about the candidates? They don’t want to work on contract . . . do they?”

The fact of the matter is that yes, quite a few candidates not only are open to working on a contract basis, but some of them actually prefer to work that way. This includes some top candidates, as well. That’s because there are a number of advantages for them, too, including the following five:

1. More flexibility in where and when they work
2. The opportunity to travel more
3. The chance for a better work-life balance
4. The opportunity to pick up new skills at each new employer at which they work
5. Variety in terms of their assignments and their employers

So we have the lingering effects of the Great Recession. We have employers who are motivated to hire contract workers as part of their new blended workforce model. And we have candidates who are willing to work on contract, perhaps more willing than at any time in U.S. history.

During the past few years, there have been plenty of statistics thrown around claiming that 40% to 50% of the United States workforce will be contractors by the year 2020. That’s a pretty impressive figure. Keep in mind, though, that the percentage includes freelancers and workers who are employed by companies such as Uber.

Regardless, more companies are continuing to hire on a contract basis, and that trend shows no signs of slowing down. This is, without a doubt, part of the economy’s “new normal,” presenting new opportunities in the employment marketplace for organizations and job seekers alike.




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