Executive contracting and the market dynamic

Market volatility and uncertainty are creating challenges for businesses globally, but nowhere is this more evident than in HR. For HR leaders in Australia, this volatility is even more magnified by the shortage of talent across many key sectors.

Access to specialist skills and niche expertise is top of the agenda, but also needs to be balanced against the numbers to manage risk. Executive contracting can help an organisation source and leverage specialised talent when and where it's needed. This is why Australian companies are increasingly moving towards a contracting strategy for executive roles.

According to a recent Cornell HR Review article, 67% of senior executives are planning to maintain 'leaner' organisations by outsourcing work or hiring contract workers. Meanwhile, IBM is forecasting that 50% of global CEO's expect to increase the number of contingent workers over the next three years.

Executive contracting defined

Contract or contingent staff provide specialist skill sets based on an organisation's specific needs. Usually based on hourly, monthly, or all-inclusive rates, contract talent can be hired to address specific projects or broader, longer-term business requirements, ensuring that businesses don't lose momentum and revenue streams due to staffing restrictions. Contracting also opens the door to a pool of quality professionals with rich and relevant experience that may otherwise be hard to identify and attract. Analyst firm, Aberdeen Group backs this point stating that, 'Most companies view non-permanent labour as a high-value strategy."

How companies are using executive contracting

Businesses that adopt an executive contracting model, in conjunction with their permanent hiring strategy, cite many benefits to this approach. Ultimately, it comes down to flexibility, costs and risk management.

Getting top talent in the right place, at the right time

Most contractors, by nature, are motivated to constantly upgrade themselves with the latest skills and expertise to stay at the top of their field. For this reason, they tend to be more competent than permanent staff-a point supported by research with shows that contractors generally make greater strides in their career than permanent workers in a 10 year span. Their motivation also impacts their dedication and engagement in getting the job done.

Contractors can also boast a much deeper skill set, having worked across a multitude of companies and projects. They are adaptable as well, given their experience melding into different corporate structures and cultures, and typically have strong social skills which enable them to fit into new environments quickly.

Flexible staffing

The contingent staffing model provides employers with flexibility and immediate control, enabling them to circumvent issues such as hiring freezes or other headcount, time, resources and workload pressures. The need to invest time and other resources in on-boarding and training is often minimal, given the depth of expertise and experience of most contractors. This translates into a minimal amount of disruption to the existing operation, taking less time from other staff, including HR.

Cost efficiency and risk management

One of the greatest benefits of a contingent workforce approach is the cost efficiency and ability to lower risk. The total cost of a permanent hire can greatly exceed that of a non-permanent one and have a real impact on the books in terms of statutory costs, insurance, and tax benefits, to name a few.

The opportunity for recruitment value added services

Recruitment consultancies that provide specialist contracting services as part of their holistic service offerings are engaged - and accountable - from sourcing the candidate right through to the duration of the assignment. Because they are providing services across the board, it means that they can also provide companies with the option to "try before they buy," riding on their thorough understanding of and relationship with both the contractor and organisation.

A case in point

An experienced accounting executive who had been recently placed in a permanent CFO role with a well known hospitality company, found himself quickly at a critical cross roads. As he settled into his new role, he discovered several alarming problems with his company's front office IT system and its integration with the finance function. At the time, there was no one within the business who had the time or the expertise to properly rectify these problems. As the new CFO, he needed to ensure that there was a comprehensive IT system installed which could provide him with an accurate financial picture.

The recruitment consultant who placed the CFO suggested he consider hiring a contractor to address the problems with the company's IT and Finance systems. The CFO knew the benefits that hiring a contractor for this purpose would bring and through engaging Talent2's specialist Accounting and Finance Contracting team, was able to source a contractor within a week of providing a brief. The new contractor already had experience in the IT Finance system that the company was using and as a result, was able to work swiftly to identify a new solution that fit well with the company's broader IT infrastructure.

Within three months, the problems were solved and the CFO was delighted that the situation was rectified so quickly and smoothly. The contractor fit well into the organisation, and after his initial project was completed, he was recruited to support another project team and his contract was extended for another nine months.

While this is just one example, the case demonstrates the value that a contracting approach can bring beyond just one, immediate need.

The talent pool and the growing future of executive contracting

In line with the global trend, the pool of professional contractors in Australia is growing as the benefits of freelancing become more evident. In fact, according to recent stats from the ATO 4.1 million of the current Australia workforce are non permanent employees and this is on the rise.

The opportunity for greater remuneration is a key driver, with employers willing to pay higher rates for contractor skills they do not possess in house. This is a major challenge for many organisations as supported by PWC's Global CEO Survey which cited 66% of CEOs as saying that a lack of required skills is their biggest talent challenge.

The greater level of freedom that contracting offers professionals is also making it increasingly attractive. Contractors can enjoy the freedom to pick and select their clients/projects according to their passion and can also have greater control over their schedules, making work-life balance achievable.

Contracting also enables professionals to gain a wealth of experience and increased opportunities to work with leading companies, as contracts generally range from three to 12 month periods. It also offers them the flexibility and vision to train in cutting edge skills to further their career and build a stronger professional network. In fact, 89% of freelancers consider working independently as an important part of their career strategy.

Other benefits include relocation opportunities, where high-level contract work can open up doors to exciting opportunities, tax savings and other incentives based on the market.

The bottom line

With talented professionals recognising the value that contracting offers their careers, and businesses starting to clearly reap the benefits of engaging contingent staffing, the future of contracting as a strong value proposition, is a powerful one.