Project contractors and your workforce strategy

Matthew Franceschini
May 16, 2013

In the past decade or so it has become common practice for organisations to supplement existing staff resources or to seek additional specialised skills and expertise by engaging project contractors (referred to as Independent Professionals or IPros by Entity Solutions).

It’s well-documented that IPros are a valuable resource to employers because they allow an organisation to remain flexible and adaptable to new opportunities or shifts in market demand. However, IPros’ worth goes beyond the ebbs and flows of business conditions. Here I explore and explain the supplementary value that IPros bring to organisations wanting to build a powerful workforce strategy.

Cost effectiveness

There is a common misconception that IPros are more expensive than permanent employees. Though the hourly or daily rate of an IPro is typically higher than that of their permanent counterparts, cost cannot be measured solely on time-based rates.

Permanent staff expenses run deeper than salary; they also include recruiting fees, personal leave, annual leave, redundancy payments, bonuses, company share schemes and other fringe benefits such as car parking, anniversary gifts and alike. An IPro’s hourly rate appears to be higher as it takes into consideration that they are not offered the many benefits inherent with a permanent role.

No business can afford to carry the costs of over-staffing, yet there has to be a capacity to respond quickly to periods of peak demand or to develop and implement new initiatives. Engaging IPros reduces the overhead associated with onboarding and integrating a permanent employee into the organisation, providing flexibility to adjust resources or skills at short notice and is a convenient way for employers to maintain efficiency while ensuring responsiveness to changing market conditions.

Increased productivity

Labour productivity is all about the quantity and cost of the people needed to produce goods or services. If an organisation can cut its labour requirements while maintaining or improving its productivity, then it is the best outcome for the organisation. IPros facilitate this by providing an on-demand workforce that lessens the financial overheads which are typically associated with the permanent workforce.

Furthermore, it’s well-documented in academic literature that workers’ engagement is the key to productivity. From the IPro Index 2012*, we know that IPros are in fact very engaged in their work, as the past four years of reporting have consistently shown that the highest attitudinal IPro Index score is for measures surrounding engagement in work. These results reveal that far from being disinterested workplace participants, the vast majority of IPros perceive that they are productive contributors to their client organisations and consider themselves trustworthy, professional, efficient and effective in their client dealings.

Specialist skills and innovation

A major drawcard in engaging IPros is that they bring a breadth of new skills and expertise into an organisation, supplementing in-house capabilities and extending resident knowledge.

Generally speaking, IPros have a wider portfolio of skills and experience due to exposure to different organisations, challenges, roles and industry sectors. This experience has the potential to bring about a fresh perspective to your organisation that is particularly critical in diffusing innovation and knowledge throughout the entire workforce.

What’s more, because an IPro’s entire livelihood centres on the unique expertise that they offer to your organisation, it’s rare that they will let their skills stagnate. This is particularly evident in the use of IPros working in IT roles that have to step in with little notice and deal with new technologies and different applications every day.

Knowledge management and transfer

The IPro Index also reveals that another benefit of many IPro-client relationships is knowledge sharing. The process of knowledge sharing is not a replacement for scholarly or formal learning, but it is a way of providing very efficient, specific, context-based and on-the-job training. It gives permanent members of staff the knowledge and confidence they need to continue their development or to manage the project into the future. Often, it may be the first step in encouraging a staff member to seek additional training and formal skills certification. Most importantly, it adds to an organisation’s store of resident knowledge.

Rather than leaving the process of knowledge sharing to chance, organisations should consider formally incorporating knowledge sharing into the relationship through the use of verbal or written knowledge sharing obligations in work contracts or by creating informal organisational knowledge networks which involve IPros.

Neutrality

Perhaps one of the greatest reasons for using an IPro is that they are a neutral resource. As the name suggests, they are ‘independent’ and in the unique position to observe systems and processes within an organisation and deliver outcomes that have their client’s best interests at heart. Because IPros are often brought in short term and stand outside the fray, they come without an emotional predisposition to certain situations, so they can take on the role as a neutral observer.

As a neutral observer an IPro examines the facts of a situation, rather than from an emotionally driven perspective, allowing them to gain understanding and make rational and open-minded decisions about how to respond.

Having a neutral resource frees businesses of prejudice and offers flexibility to adapt and respond to changing business conditions.

IPros are not just a useful source of additional, temporary labour or skills. They inject new blood into teams without incurring long term fixed costs and can be an extremely effective way of bringing new vigour to a stalled project, adding resourcefulness to a project team or even a way of enabling permanent staff to focus on more exciting and rewarding work.

* The IPro Index is an annual study of the attitudes and experiences of Australia’s white collar contingent workforce, developed by Entity Solutions in conjunction with Monash University.

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Matthew Franceschini
Matthew Franceschini is a co-founder and the CEO of Entity Solutions, a contractor management agency. He has more than 10 years’ experience working in the contract workforce management industry. He holds a Bachelor of Economics and is also the Vice President of Independent Contractors of Australia.
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