15 Contingent Workforce Best Practices 2025

The Contingent Workforce is undergoing rapid transformation. As companies aim to improve efficiency, cut costs, manage risks, and prioritize vendor relationships, understanding industry best practices is essential for effectively managing your contingent workforce program. In this article, we present the top 15 best practices for you to consider.

According to industry research, it's estimated that 30-40% of the U.S. workforce is made up of contingent workers, and this number is expected to grow to 50% by 2050 (CW Statistics 2024). Research also indicates that about 54% of all companies will include the contingent workforce as part of their strategic planning.  Accordingly, business leaders are adapting to workforce changes and it's reported that 93% of business leaders believe that using technology to improve work outcomes and team performance is very important or important to their organization's success (Deloitte 2024 Global Workforce Trends).

What is a Contingent Workforce?

The contingent workforce is a pool of non-employee workers who are hired by an organization on an on-demand or project-by-project basis. These workers are not considered employees of a company. Instead, they work under a contract or a temporary basis. 

Unlike permanent employees, contingent workers are only with an organization for the continued existence of the job at hand - whether that be completing a specific project or working for a pre-determined period of time. Once this short-term engagement is completed, a contingent then moves on to a new job with a different organization.  

The contingent workforce category is made up of a variety of workers, including independent contractors, freelancers, consultants and temporary workers.  

You can read more about "What is a Contingent Workforce" and "Types of Contingent Workers" here: Contingent Workforce Management Guide

Best Practices

The contingent workforce brings many benefits, it can also introduce challenges and risk into the organization if the program is not managed correctly and best practices aren’t followed.

Here are the top best practices to help your organization manage its vendors and get your contingent workforce spend back under control

#1 - Invest in a Vendor Management System

A VMS is a software platform that centralizes the management of your contingent workforce staffing. It provides clear visibility over your workforce and helps manage every stage from sourcing and onboarding to payment. Best of all, it can help streamline and even automate processes so that your staff can spend less time managing workers and more time working with clients. 

If your company is still using manual spreadsheets to manage staffing vendors, it's likely that you are dealing with disjointed processes and a lack of centralization, which affects the effectiveness of your contingent workforce. With minimal visibility and control over your contingent workforce, your business may experience uncontrolled spending, poor vendor decisions, and reduced workforce quality, ultimately diminishing the ROI of your non-employee workforce program. The solution? Implementing a vendor management system (VMS) can resolve these challenges.

A VMS will centralize, automate, and consolidate all processes and data related to managing your staffing agencies into a single web-based platform. Consequently, your organization will achieve full visibility into contingent workforce spending and vendor performance, providing the data necessary to optimize your non-employee workforce.

Read more at: What is a VMS? and What are the Benefits of a VMS?

Watch our Webinar hosted by Bryan Pena of Defiant Solutions; with Wayne Burgess and John Clark from Conexis VMS: How To Get Started with a 1st Gen VMS 

#2 - Build a strong and open relationship with your vendors

Communication with vendors extends beyond just signing a contract and agreeing on terms. As your business grows, so should your relationship with your staffing agency.

Keep communication channels open to build a strong, mutually beneficial partnership with your vendors. The better a staffing agency understands your current and future needs, the more effectively they can source the right workers.

To enhance this relationship, ensure robust vendor onboarding and provide agencies with insights into your culture, work methods, and unique attributes. Companies should operate with openness and transparency, alongside clear goals or metrics that define success. This approach will help vendors deliver high-quality resources promptly.

Regular reviews, such as Quarterly Business Reviews (QBRs), that highlight performance against program metrics and benchmark against peers, allow for consistent check-ins and feedback opportunities. Be open to receiving feedback on how you can improve as a client to facilitate success.

#3 - Track the performance of your staffing vendors

If you don't monitor vendor performance, you won't know how effectively your staffing agencies are supporting your workforce goals.

To make the most of your staffing agencies, ensure you have the tools to assess their performance. This involves verifying that they deliver on schedule, maintain the promised quality, and adhere to the agreed-upon pricing.

Read more at: Measuring Staffing Agency Performance 

#4 - Regularly evaluate vendor risk and conduct audits 

When you begin working with a staffing agency, it's common to establish standards and agreements they must adhere to. These may include specific KPIs like time-to-fill, time-to-submit, and turnover, along with the standardized rates for hiring non-employee workers.

It's essential to regularly assess vendor risk to ensure that staffing agencies are meeting your company's expectations and that hiring managers throughout your organization are engaging with these agencies using the established processes, rather than deviating and paying arbitrary amounts.

Read more at: Mitigate Contingent Workforce Risk

#5 - Ensure your VMS is used across your entire organization and provide in depth training

For your business to effectively manage and oversee contingent workers and staffing agencies, a company-wide, centralized contingent workforce management program is essential.

This is a key reason for implementing a VMS.

To fully leverage the benefits of your VMS, it's vital that all hiring managers within your organization utilize it correctly. If hiring managers bypass the vendor management system and independently hire contingent workers or engage staffing agencies, it will hinder your organization's ability to maintain comprehensive oversight and control, ultimately affecting the ROI of your entire program. Establish a process that enables all hiring managers to seamlessly integrate the VMS into their roles, ensuring that all contingent workforce data is consistently captured across your business.

Training Employees: It's also important to train your employees to use your vendor management system.  As with any new system within your organization, employees need to understand why new technology is an improvement from what they had before. In most cases, staff members typically care more about how technology will improve their own professional life, more than it will help the results of the business. If technology is difficult to use, most employees won’t bother to use it.  

To ensure uptake of a vendor management system within your organization, staff training is essential. Ensure that all employees understand how to use your VMS. This will help them to understand both how it will help their own professional efficiencies, and the company as a whole. In addition, it’s a great idea to either suggest improvements, or have an improvement portal, with your VMS provider so that they can build a product roadmap that further benefits your organization when introduced to the product.

Read more at: Ways to Make VMS Implementation Faster & More Efficient

#6 - Choose a VMS that works for your specific requirements

Vendor management systems come in all shapes and sizes. While some are designed for the large contingent spend volume of large enterprise organizations, others have been specifically designed for companies with smaller contingent workforces and are considerably easier to use for smaller teams. 

The vendor management system that you implement into your business should be specific to the unique needs of your business. If not, you may find you're spending more money than you need to, and that the system is too complex for your employees to use. 

Determine if your vendor management is meeting the needs of your business. Some businesses may need a vendor management system that supports the management of permanent employees (sourced through staffing agencies), or contingent workers sourced directly.

Not all systems have these features.  Research the current technological advancements available for more modern, affordable Vendor Management Systems, compare providers to ensure that you have the best fit for your company. 

A good place to start is to read our VMS Buyer's Guide. It's full of information on what to look for in a VMS and how to choose the right one for your organization. 

#7 - Ensure HR and Procurement work together collaboratively

Contingent workers are not traditional employees, but they aren’t your typical ‘procurement category either. They are a temporary part of your workforce, which can be seen as either a human resource or a 'temporary service.  This creates ambiguity in deciding whether they should be managed by procurement or HR.

Who should oversee them? The answer is both. Procurement can leverage their cost management expertise, while HR can ensure that contingent workers deliver quality work and enhance retention by engaging them appropriately (while being careful not to misclassify temporary workers as employees).

Your organization must ensure collaboration between HR and procurement teams. Failing to do so could lead to financial waste and resource mismanagement.

Read more at: Who should Manage Contingent Workforce: HR or Procurement?

Watch our webinar on the Role of Procurement in Contingent Workforce Programs.  "Ask The Expert - The Role of Procurement in Contingent Workforce Programs". Hosted by Contingent Workforce Solutions (CWS) Jeff Nugent, with guest Wayne Burgess of Conexis VMS.

#8 - Have clear and consistent business-wide policies & procedures

A significant challenge businesses encounter with their contingent workforce management is inconsistent procedures. This often arises because individual hiring managers handle the recruitment of contingent workers. This can result in fragmented processes, increased spending, poor workforce visibility, and compliance issues.

To mitigate these risks, it's essential to establish clear procedures for managing contingent workers. This involves training the staff responsible for hiring and management, as well as conducting internal reviews to ensure adherence to these procedures.

Ensuring that all processes are centralized is also crucial. Many companies, particularly those with a smaller contingent workforce budget, lack a formal contingent workforce management program. This absence often results in disjointed and inconsistent procedures throughout the organization when it comes to hiring contingent workers and compensating staffing agencies. To alleviate these challenges, consider adopting a vendor management system (VMS), which centralizes information and standardizes processes.

By implementing, and mandating, business-wide policies and procedures, you’ll ensure that all hiring managers are paying standardized rates, using the right staffing agencies and working towards the common goal of achieving your company’s workforce objectives.

#9 -  Get outside support (if needed) - Partner with an MSP or Consultant

If you are finding it challenging to manage your contingent workforce management program and you have limited resources to manage it, you’ll need external support. By working with a managed service provider (MSP), or a Consultant, you gain access to experts who will evaluate your situation and help you streamline your contingent workforce processes. Expert advice will ensure you are meeting government regulations, obtaining the best talent, and receiving the best rates.

Read more at: MSP vs VMS: What's the Difference in Contingent Workforce Management?

#10 - Ensure you assess classification of your Contingent Workers

For contingent workers, it is crucial for your business to manage them according to their "contingent" status rather than treating them like traditional employees.

It’s crucial that contingent workers are classified according to their status, as a non-employee worker and not in the same manner as traditional employees. Businesses that misclassify their workers are subject to hefty fines and lawsuits.

Typically, a worker is presumed to be an employee unless the employer can prove that:

• The worker is free from control and direction in the performance of services
• The worker is performing work outside the usual course of the business of the hiring company
• The worker is customarily engaged in an independently established trade, occupation or business. 

Misclassifying them as employees can lead to significant fines and legal issues for your company. Your organization must clearly demonstrate that each worker is a contingent worker, not an employee. This means they are not on the company payroll, are hired only for a specific period or project, and do not receive the same benefits as regular employees, such as vacation time, sick pay, or bonuses. These are some of the criteria used by the IRS or CRA to determine if a worker is classified as an employee. Consult with local tax experts or CWF consultants to accurately define the status of your contingent workers.

Read more at: How to Track Contingent Workforce Compliance  

#11 - Get cross-departmental buy-in

To prevent uncontrolled spending and inconsistent hiring practices that lead to a lack of program visibility, it's crucial for contingent workforce management to be a collaborative strategy involving all hiring-related departments, such as HR, procurement, and department managers.

By dismantling team silos and adopting a company-wide approach, your organization will achieve full transparency regarding your contingent workforce, allowing you to track spending accurately and understand its allocation.

#12 - Keep up to date with the latest trends and approaches

The contingent workforce is constantly evolving. To effectively onboard and manage contingent workers within your organization, it's crucial to keep abreast of the latest HR and management practices.  In the past, contingent workers were often viewed merely as temporary staff who completed a task and then departed. However, the perception has shifted, and many successful companies are now striving to become preferred employers for the contingent workforce.

Read more at: Industry Trends and Insights

#13 - Have a documented program guide & framework

Before embarking on the selection of staffing agencies or the implementation of systems, it is prudent to establish a comprehensive vendor management policy. This policy serves as a foundational document, ensuring clarity and understanding of vendor management practices across your entire team. It becomes a valuable resource for team members seeking guidance on pertinent matters.

Tailored to the unique needs of your company, your vendor management policy should encompass key elements, including:

• Purpose: Clearly articulate the objectives and goals of the vendor management policy.

• Applicability: Define the scope and identify the stakeholders to whom the policy applies.

• Data and Information Security: Detail protocols for safeguarding data, specifying access privileges and restrictions.

• Roles and Responsibilities: Clearly outline the roles and responsibilities of individuals involved in vendor management.

• Staffing Agency Assessment and Selection: Establish criteria and processes for evaluating and selecting staffing agencies.

• Contractual Documents: Specify the required contractual agreements and documentation for vendor engagements.

• Compliance Standards: Outline the compliance standards that vendors must adhere to in their operations.

• Oversight and Monitoring: Define mechanisms for ongoing oversight, including provisions for agency audits.

• Incident Management: Establish procedures for handling and resolving incidents related to vendor activities.

• Enforcement: Clearly communicate the consequences of non-compliance and the enforcement mechanisms in place.

#14 - Utilize robust and clear contracts

When managing your contingent workforce, contracts are essential. These legally binding documents should clearly outline all the responsibilities your vendor must fulfill. As you draft these contracts, it's wise to consult your policy to ensure comprehensive coverage - from data management to incident response and enforcement. Establish clear guidelines for information and data sharing.

Additionally, the contracts should detail specific expectations for staffing agencies, including timelines, quality standards, necessary requirements or certifications, and detailed aspects like payment terms and proof of insurance coverage.

#15 - Choose staffing agencies carefully. Focus on a healthy supply mix

There are multiple components to selecting a staffing vendor. Spending time up front is an exceptional use of time.

• Good fit – Ensuring there is a good match between your company and the agency is a critical step. Are they the right size? (Maybe you need a large vendor with national coverage, or a medium sized vendor with some specialization or maybe they have niche expertise). Do they have the geographical presence? Do they have experience in your industry and within the job categories? Can they handle your volume? Are they a good match of your values? It’s important to note, you don’t want to have too many vendors with similar footprint and capability.

• Value – Can the vendor add to the existing footprint that ultimately improves quality? Can they get up to speed and provide the right resources, quickly at the right price? Dollar value should be important, but it isn’t the only consideration.

• Risk – Evaluate your minimum standards. Ensuring your supplier is financially stable, has physical presence in the jurisdiction, has proper documentation (corporation documents, insurance as examples) and is established is important. Conduct references before onboarding and consistently auditing of payment etc. is a hugely underutilized tool.

Take the Next Step with Conexis VMS

Whether you are in the market for a new VMS solution or just getting started, Conexis VMS is here to guide you every step of the way. Our award-winning VMS and innovative approach sets us apart and we’re committed to helping you find the perfect VMS for your organization.

To get started, download a free copy of our Ultimate VMS Buyers Guide. This comprehensive resource includes:

• Key VMS features to consider for your organization’s unique needs

• Insights to ensure a high return on your investment

• A checklist of essential questions to ask VMS providers

About Conexis VMS

Conexis VMS is a robust, cloud-based, mobile-friendly software application that empowers your company to streamline and oversee your entire contingent workforce, regardless of the diverse skill sets you require. Our award-winning Vendor Management System is the the most modern and advanced VMS tech stack available today that has been built with the user in mind. It starts with the latest codebase and extends to our lightning-fast AWS microservice infrastructure. Add to that our Open API and Software Development Kit (SDK), making Conexis the lights-out leader in VMS technology. We provide the easiest, fastest, most modern, sophisticated, and flexible VMS on the market today.

Learn more about our company and why organizations are choosing Conexis VMS.

Contact Us

Whether you are in the market for a new VMS Solution, or just getting started, we are here to help.  See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour.  Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights) or Book a Personal Demo Today! 

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