The modern business landscape has seen a significant shift towards a more flexible form of employment, with an increasing number of companies leveraging the skills and expertise of contractors and freelancers. McKinsey reports that between 20 and 30 percent of the working-age population (in the United States and the EU-15) engage in the gig economy. This shift has necessitated the need for effective contractor management. But exactly what is contractor management, and how can businesses successfully navigate this new terrain? Let's explore everything one by one.
What is Contractor Management?
Contractor management refers to the process of managing the numerous aspects associated with working with independent contractors and freelancers. This ranges from the selection and hiring process, defining clear terms of engagement, ensuring legal and compliance considerations are met, to managing project timelines and payments.
It's important to note that contractor management differs from traditional employee management. Unlike employees, contractors work independently, and while they need to adhere to the terms of their contracts, they are not subject to the same level of control and direction that employees are.
How to Manage Contractors Effectively
Effective contractor management isn't just about hiring the right people. It's also about ensuring that these contractors are integrated into your existing workforce, their performance is consistently monitored and evaluated, and that their contractual terms are adhered to. World Commerce & Contracting states that companies that don't manage contracts well could lose around 9% of their revenue each year.
So, how can you manage your contractors effectively? These are two of the most important considerations:
- Communication and Clear Expectations: Clear and regular communication is vital in contractor management. This includes setting clear expectations about the scope of work, deadlines, and deliverables.
- Legal and Compliance Considerations: It's important to remain compliant with the various laws and employment policies in different countries when working with a global workforce. This includes managing contractor compliance, which can be aided by a good contractor management system.
Contractor Workforce Management
Understanding your contractor workforce is key to efficient management. This involves knowing their skills and expertise, their working style, and their payment terms. Integration of contractors into your existing workforce is another important aspect of contractor workforce management. This requires a culture that is welcoming of external talent and processes that facilitate smooth collaboration between your in-house team and contractors.
Monitoring and evaluating contractor performance is just as crucial. This can be done through regular feedback sessions, performance reviews, and by leveraging technology to track their work.
Contractor management systems play a pivotal role in simplifying and streamlining the process of managing contractor workforce. These systems automate key processes, reduce manual effort, and minimize the risk of human errors. They also ensure that all contractor-related information is securely stored and easily accessible.
Leveraging Contractor Management Software
An efficient contractor management software offers various features and benefits that can save your company a lot of resources, such as:
- Easy Contractor Onboarding: Automates and simplifies the process of bringing new contractors into the organization, ensuring they understand their roles and responsibilities.
- Compliance: Helps in maintaining compliance with legal and regulatory requirements, reducing the risk of fines and legal issues.
- Centralized Information: Provides a centralized platform for storing and accessing all contractor-related information, including contracts and legal documents, work hours, payments, and performance data.
- Customization and Integration: Ability to customize according to business needs and integrate with existing HR and project management systems.
- Improved Communication: Facilitates better communication between contractors and the organization, ensuring clarity in expectations and deliverables.
- Time and Cost Savings: Automates various administrative tasks, reducing your staff’s time and efforts spent on managing contractors manually.
- Performance Tracking: Enables monitoring and evaluation of contractor performance, ensuring project goals and quality standards are met before the work is submitted.
- Scalability: Even if you go from hiring 1 to 1000 contractors in a few months, a contractor management system supports managing a growing number of contractors without a proportional increase in administrative burden.
- Global Workforce Management: Particularly useful for organizations employing remote contractors from different countries, handling their diverse compliance and payment issues.
- Payment Processing: Facilitates timely and accurate payment processing, including handling different currencies for international contractors.
Must-Know: Did you know that according to a study, 56% of freelancers embraced cryptocurrency payments for their services? Therefore, choosing a contractor management software that facilitates such payments is becoming increasingly important for companies, especially the ones that have a global workforce.
At Transformify, we offer a range of services related to contractor management. Our Freelancer Management System helps you find, hire, and manage freelancers from around the globe. Our Vendor Management System helps you manage your vendor relationships, contracts, and payments effectively. And our Workforce Management solutions allow you to manage your entire workforce, both permanent and temporary, in one place.
The Future of Contractor Management
Technological advancements are shaping the future of contractor management. From AI-powered contractor management that automates routine tasks to advanced analytics that provide deep insights into contractor performance, the future looks promising.
Plus, did you know that more than 80 percent of large corporations plan to substantially increase their use of a flexible workforce in the coming years, according to a report by Intuit? This highlights the need for robust contractor management systems and software.
In conclusion, effective contractor management is crucial in today's business world. By understanding what contractor management involves, leveraging the right systems and software, and adopting best practices, businesses can ensure successful contractor workforce management. For more insights into contractor management, you can visit our other contractor management blogs.