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Report: Contract Workers Are More Productive than Full-Time Employees

Initial findings from the 2016 Workforce Productivity Report, released by World Market and KRC Research, reveal that less than one in three business leaders (31%) believe their company is as productive as it should be, and many are turning toward on-demand contract workers with specialized skills to boost productivity.

Happy workers

Work Market, an on-demand workforce management platform, commissioned the new research report through KRC Research to evaluate the views of CFOs and line-of-business managers on productivity and workforce utilization across a diverse range of industries and business sizes.

“In a time when labor costs are typically the largest expense in any company’s operating model, forward-thinking business leaders are laser focused on driving the highest possible return of that spend,” said Stephen DeWitt, Work Market CEO, in a press release. “The question is no longer, ‘Should I use full-time or part-time workers?’ The question has now become, ‘How can I most effectively build and operationalize a ‘mosaic of labor’—including contract workers, [full-time employees] FTEs, and service providers—to meet rapidly shifting customer demands and modernize our business through automation, algorithms, and data.'”

Key research findings reveal that:

  • Nearly every company (96%) is using contract labor.
  • 34% of employers claim contract workers represent between 21% to 40% of the workforce, while 40% of employers claim contract workers make up 0% to 20% of the workforce.
  • 83% of business leaders believe that contract workers are considered more or equally as productive as FTEs, however, despite that, only a minority (25%) plan to increase the size of their independent workforce over the next 3 years.
  • Three-quarters of business leaders (78%) believe it is possible that in the near future a Fortune 2000 company will have full-time employees exclusively in the C-suite, with the rest being either part-time or contractor workers.

Contract Workers More Productive, Specialized, Driven, and Flexible

Nearly one in two business leaders (48%) believe that contract workers are more productive than full-time employees. Among this group, nearly three in four (71%) believe that contractors are specialized workers that can be more skilled than full-time employees. Half of this group also noted that the cost-effective nature of contractors makes them more valuable than full-time employees.

“The lack of workers with specialized skills and the inability to find the right worker at the right time were cited as two of the top barriers to productivity—so it comes as no surprise that more employers are turning to a workforce model that supplements full-time employees with experienced professionals available on demand,” said DeWitt. “Our research also shows that business leaders value the drive, motivation, speed, and efficiency of contract workers.”

Productivity a Priority but Not a Day-to-Day Focus

Most business leaders (76%) agree that productivity is a high priority for their business, and 82% agree that productivity is one of the top indicators of financial success. Despite the acknowledged importance of productivity, less than half of CEOs and presidents (49%) are involved in discussions about driving productivity.

Furthermore, nearly half of business leaders (49%) are concerned that not enough people at their company are concerned about productivity, and almost one in four (23%) believe that their company is less productive than it should be.

Measurement Critical but Do Companies Actually Have the Right Tools?

Nearly all business leaders (92%) agree that productivity needs to be monitored in order for companies to be successful, and most business leaders (84%) believe that they have the right tools and mechanisms to measure productivity. Yet, among employers leveraging contract workers, one in three business leaders (34%) do not have access to contractor data such as pay, time, and attendance.

“While many business leaders may think that they have the right tools to measure productivity, data about compensation and hours worked are critical parts of the productivity equation—especially when managing a variable workforce,” said DeWitt. “Some business leaders even admitted as much, highlighting the lack of transparency into total workforce costs as a barrier to the productivity of their workforce.”

Despite self-reporting that they have the right tools, there is a wide disparity in just how productivity is measured. Business leaders cited everything from revenue to employee satisfaction and time management as key measures of productivity. Interestingly, employee performance (67%) and customer satisfaction (60%), ranked more than 10 percentage points higher than the third-place productivity metric, increased revenue, and profitability (49%).

While there are varying opinions about how productivity is measured and defined, nearly every business leader (93%) agrees that their company’s productivity has a significant impact upon their industry and the economy overall. Conversely, three in four business leaders (78%) believe that a decline in global productivity levels will cause a significant economic downturn.

About the Workforce Productivity Report

The 2016 Workforce Productivity Research Report surveyed 200 business leaders on topics ranging from workforce productivity to business impact, effective workforce management practices, the use of contract labor and compliance. Fielded in September 2016, the online survey polled 100 CFOs and 100 line managers across a broad range of industries and company sizes. Participants were selected as a representative sample of the U.S. economy. The margin of error is ± 3.5%. Additional research results focusing on compliance challenges will be released over the coming months.

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