Between continued talent shortage struggles, an evolution of what we’re requiring of field technicians, and continued pressure from customers to do more with less (and faster), more and more companies are turning to contingent workers to alleviate some of the burden of their service requirements. However, while we’ve come a long way in the acceptance of a contingent workforce as an option, there’s still some hesitation around relinquishing control, trusting “outsiders” to deliver your ideal customer experience, and properly managing the resources.
In 2019, I interviewed Charles Hughes, VP of technical services for Acuative, for the Future of Field Service podcast. Knowing not everyone of our listeners catch every episode, along with the substantial growth of our following since then, I wanted to revisit some of Charles’ valuable points about when and how it makes sense to turn to a contingent workforce. Charles has had a long career in field services and has experienced a variety of labor models including in-house only, outsourced-only, and hybrid labor models.
The Value of Contingent Labor
“If you take it down to the most basic components, leveraging a contingent workforce gives you flexibility, it gives you scalability and it gives you the ability to control the cost and still deliver high-quality levels of service,” says Hughes. For service organizations balancing the pressures of increased customer demands, more stringent SLA requirements, as well as an increasing shortage of talent, turning to a contingent workforce in some cases may be the only viable path to success.
That said, what Hughes recommends is thinking of the contingent workforce as a sliding scale – it doesn’t have to be an all-or-nothing option. “People approach this as a binary option. Ether all in or I’m all out. But if you take a closer look, you’ll find that often a hybrid approach is best,” says Hughes. “You can start with lower-complexity tasks and using a hybrid labor model to support those. It is very low risk. If I need three techs on a job, I can send one of my tenured W2 techs, then a couple of texts from the hybrid labor model to support and that helps lower the cost and it also helps me build confidence in the 1099s that I’m using as well.”
The combinations are nearly limitless, and what’s needed will not only vary from company to company but even from function to function within a company. “Even within the same organization, there can be different flavors. You may have some markets where your technician utilization is low, so you would rarely use a 1099 because you have the bandwidth. Then we have those markets that are very high utilization that will use a lot more of it, so even within the same group you might have different usage levels,” explains Hughes. “It’s really understanding how to make it work in your organization. But to start, you have to quit thinking of all the ways it won’t work, find one or two ways it might work, try it, and see how it grows from there.”
Whatever your individual mix, you need to keep all employees engaged to promote optimal productivity. “You have to make sure that you’re keeping all the employees productive. They like to be challenged. Field technicians thrive under pressure and they like the challenging tasks and they like you to push them, so you have to keep them engaged,” says Hughes. “I take my W2s then and layer them over the contractors and partner vendors that we use to provide oversight, do quality audits, but they’re doing roles that if I need to pull them for maintenance, I can still meet my SLA and still keep the project going forward, and that’s one of our primary focuses. The second area that we look at is where we have some untapped markets. The sales teams out there, they find a customer that’s not in a spot that were heavily populated with technicians. The scale is not there to go out and hire the team to support that market. I can still do the work to bring the customer onboard, using my hybrid model until we grow that critical mass. Then start putting my W2s in place. Being able to get into those markets at a lower cost point and lowest entry level is a big opportunity for us.”
Overcoming the Challenges of Managing a Contingent Workforce
Despite the value proposition a contingent workforce offers most service organizations, many still hold on to some hesitation and concerns. One of the biggest is the lack of control, or perceived lack of control, over contingent workers. To this end, Hughes’ advice is to set clear expectations, stay engaged, and leverage technology to maintain visibility of performance. “From a technology standpoint, make sure you have real-time visibility into the work that’s going on on-site. You must be very good at delivering quality runbooks and instructions, what has to go on with the site. You must be very good at checking deliverables and you have to have the ability for the technician on-site to reach out to a lifeline or support,” he says.
Again, thinking of a more hybrid approach alleviates some of this concern because you can rely on your W2 employees to provide a level of oversight. “Anytime it’s possible their first few jobs, I have a 1099 go alongside with one of my W2s to see firsthand our expectations. This sets them up for success, which keeps them engaged and makes them want to do more work for you. One of the key differences between the 1099 and the W2, the 1099’s next job depends on how well he does this job. If you’re making it hard for him to succeed, he’s going to go to the person who’s making it easy to be successful,” explains Hughes.
Another common concern is the potential negative impact contingent workers could have on the customer experience. The fear is that having someone that is less knowledgeable than your own employee base or less committed to the company mission than your own employee base will sacrifice the customer experience you’re committed to delivering. “This is a common concern and it is a valid one,” says Hughes. “When you start down this path, you need to have a solid vetting process in place. While you don’t always have the luxury of fully vetting and developing a robust labor cloud that you know the techs extremely well, you need to do your best. I use a third-party tool that gives me access to different 1099s and gives me tools to manage and understand what they can do, track their performance, provides ratings that other companies have given them. The first step is no different than screening somebody’s resume. You go through here and you see their work history and you see that they have the right skill sets and experiences that you need.”
Then Hughes loops in his tenured team for their viewpoints. “The second thing we do is we have them vetted by our field service management team. Our regional managers interview these technicians the same as they would interview someone they were going to hire, and they make the decision. Then we make sure to set clear expectations and rely on our technology to maintain visibility into performance,” says Hughes.
A final major concern is the impact looping in contingent workers can have on the satisfaction and retention of your W2 employees as it can instill fear in them of losing their jobs. “Companies fear the negative impact this can have for the W2 employees. They can get the idea that we’re bringing on these 1099 employees to replace all our W2 employees, even if that’s not the intention,” says Hughes. He shares an example:
“My first endeavor with this was at Walgreens in a previous role and that’s exactly how the technicians were taking it. I had one gentleman in Florida, I remember clearly meeting with them and he said, ‘When I started here 34 years ago, they were trying to outsource us, and I know you’re still trying to do that. I just can’t stand living under that umbrella.’ For 34 years he’d lived in fear of his job being eliminated.”
The key here is communication. “Your team needs to understand the value of their contribution to the organization. I don’t advocate a 100% 1099 model. Your employees need to understand what it is you’re trying to do. Engage your field technicians, your frontline managers, and your direct managers and work as a team on what this means and how it works. That way there is transparency upfront. Help your employees understand that you are trying to find a way to deliver better service to your customer, help control costs, which benefits everybody, and which provides job security,” Hughes advises.
When you approach it from a team perspective, you can empower your W2 employees to take a leadership role. “As we started bringing the 1099s into the mix for a project, we had them work side-by-side with our most senior technicians. They provided the evaluations on who we should and shouldn’t use and this helped us make sure they understood that the more the 1099s we brought in for this work, the more we needed their leadership,” says Hughes.
In summary, it’s important to understand that while there are some historical concerns with leveraging contingent workers, there are wide variety of ways to make it work and make it work well. “The first thing I would recommend you do is sit down and find out what is the problem you’re trying to solve. Every organization has something they’re struggling with, whether it’s a continuous pressure to lower your cost or the ability to stand up fast and ramp up for projects more quickly without bringing in a lot of overhead. Figure out the problem you’re trying to solve, talk to your team, find out what problems they have, and let them help you provide insight to what you can fix,” suggests Hughes.