Why Your Diversity and Inclusion Efforts Need to Include Contingent Workers

As more studies show a positive correlation between workplace diversity and benefits like increased financial performance, higher employee engagement, and more innovation, the business case for corporate diversity and inclusion initiatives continues to get stronger. Not only in the balance sheet but also in the ability to attract talent, customers, and investors while enhancing engagement with these key stakeholders.

Top executives know this, which is why 76% of business leaders surveyed by PricewaterhouseCoopers say diversity and inclusion programs are a value or priority. However, that same survey reveals that many companies fall significantly short of their diversity and inclusion goals — and that building effective programs remains a challenge.

“Diversity” isn’t the only part of the workforce diversity problem that companies face; many businesses also struggle to define their “workforce.” Now that more than 40% of the American labor pool is made up of contingent workers, that definition must expand.

Contingent workers (i.e., individuals that work on a temporary, part-time, or project-based schedule) aren’t just serving as fill-ins until employers can find more permanent solutions. Many have long-term relationships with the companies that hire them; increasingly, these nontraditional workers contribute to organizational strategy and fulfill critical business objectives. As such, companies can’t ignore them when devising plans to further diversity and inclusion in the workplace.

But before we can explore solutions for incorporating this important segment of the workforce into corporate initiatives, we must answer one fundamental question.

What Is Diversity and Inclusion?

Though the terms “diversity” and “inclusion” are often used interchangeably or lumped together as a single objective, they are not the same. Diversity refers to individual characteristics such as gender identity, race, LGBTQ status, disability status, and other attributes that employees might consider part of their personal identities. Inclusion refers to the practice of fostering a culture in which all employees feel seen and heard — and in which everyone has an equal opportunity to connect, belong, and grow.

It’s certainly possible to have a diverse workforce that’s not inclusive, and vice versa. That said, companies that adhere to a few diversity and inclusion best practices while creating their initiatives stand the best chance of making progress on both fronts. These tactics include:

Capitalizing on data:

When it comes to achieving workforce diversity, companies must use key metrics to track their progress. These should be used as both internal benchmarks and measuring sticks that show where an organization stands in relation to its peers and diversity leaders. Companies like Accenture and Microsoft share their program goals and numbers publicly on their websites to promote accountability and transparency.

Establishing mentoring programs:

Research suggests that companies with formal mentoring programs are better able to engage and retain ethnic minority talent. Ongoing mentorship can help reinforce “inclusion” in the workplace by creating opportunities for employees from diverse backgrounds to learn, grow, and advance within an organization. These programs benefit both mentees and mentors, especially when pairing individuals from different backgrounds. While this arrangement might be more challenging to set up, it can foster individual and organizational growth by exposing employees to new ideas and perspectives, creating a culture that values people for who they are instead of what they look like.

Focusing on talent integration:

Diversity and inclusion in recruitment is just one element of comprehensive diversity and inclusion programs. These efforts should also extend to career development and promotion practices. If companies don’t invest in ongoing initiatives that span an employee’s entire tenure with an organization, then diversity and inclusion hiring practices won’t solve problems; they’ll just expose them.

Employees who feel like they’ve been hired so that a company can simply check a box won’t stick around for long. That attitude needs to expand to include the handling of contingent workers.

How Diversity and Inclusion Enhances Contingent Worker Staffing

The use of contingent workers was on the rise before COVID-19, and nontraditional worker arrangements will become even more prevalent in the post-pandemic world. Organizational agility will be a top priority for business leaders in virtually every industry, and contingent workers can add flexibility and efficiency to the workforce. And thanks to the near-universal pivot to remote work, more companies now have the digital infrastructure necessary to support distributed teams.

Most companies with diversity and inclusion programs advertise their efforts in recruitment marketing materials and during the hiring process, but these programs don’t just help with the recruitment of full-time employees. Greater demand for contingent workers means this talent segment will have more options when choosing the companies with which they do business. The companies that lack diversity and inclusion programs could find it significantly harder to engage some of the most talented contingent workers available.

Of course, incorporating the contingent workforce into your diversity and inclusion programs will present challenges related to technology, program management and duration, worker feedback, and other factors. But they are challenges worth solving.

Capture the Benefits of Diversity and Inclusion Within a Global Workforce

Cultivating a diverse workforce comes with a myriad of organizational benefits. Some of these are obvious and measurable, while others are more indirect and take longer to materialize.

Perhaps unsurprisingly, most executives that make diversity a business imperative understand that doing so leads to improved financial performance. According to research from Harvard Business Review, companies with diverse management teams achieved EBIT margins that were nearly 10% higher, on average, than those of companies with below-average management diversity.

Additionally, diverse leadership is highly correlated with an important, albeit less tangible, outcome: innovation. A 2018 study by the Boston Consulting Group looked at companies spanning eight countries and found that those with above-average management diversity generated 19% more innovation revenue than their counterparts with below-average diversity scores. That same study found that even small improvements in leadership diversity led to substantial gains in terms of a company’s capacity for innovation.

Moreover, returns from progress on the workforce diversity front tend to grow exponentially over time. Recruitment, retention, engagement, and performance are all closely linked. By making diversity a priority in any one of these areas, the others also often improve. The impact is especially transformative when it comes to recruitment because a diverse workforce lends itself to an attractive employer brand that appeals to today’s top talent. Although discussions around workforce diversity typically focus on ethnic and gender diversity, employers that are also open to hiring different types of workers — including freelancers, contractors, and other nontraditional employees — can similarly enhance their brands.

This makes sense. By fostering a culture that values contributors regardless of gender, ethnicity, employment arrangement, or any other factors unrelated to performance, you can create a company that everyone wants to join and an employer brand that stands out in the labor marketplace. That’s no small victory given that three-quarters of job seekers consider a company’s employer brand before applying for a role within that organization.

Barriers to a Holistic D&I Approach With the Contingent Workforce

Despite the growing ubiquity of contingent workers, some companies are still hesitant to include them in diversity and inclusion programs. One concern contributing to this hesitation is a perceived increased co-employment risk, especially if a company has any policies in place prohibiting “non-employee” contingent workers from participating in groups or initiatives that pertain to its direct employees.

Considerations on how to include contingent workers in a diversity and inclusion program to keep the co-employment risk low are important and should be discussed. But by taking steps to separate internal staff members from the contingent workforce, companies unwittingly create silos that undermine the benefits of diversity and inclusion initiatives.

Discussions on how to include this workforce in your D&I initiatives are important. Here are a few questions you should ask when deciding how to integrate contingent workers into existing initiatives:

How are we promoting diversity and inclusion efforts?

Most job seekers, especially younger ones, consider corporate diversity and inclusion initiatives when deciding whether to apply for or accept a job. Hiring managers and recruiters aren’t shy about promoting these programs during interviews with prospective full-time employees, but they sometimes neglect to do the same thing for contingent workers.

Are your direct-sourcing teams and staffing partners communicating the same values and initiatives in their recruiting and interview processes? Does the day-to-day reality of working at your company reflect the D&I values you promote? Companies that advertise an inclusive environment without taking steps to foster such an environment will be hard-pressed to retain workers who value inclusivity.

How are contingent workers treated compared with full-time employees?

In some companies, contingent workers and full-time employees work together on a daily basis, whether remotely or in person. They might be present at company events, team status updates, and performance reviews — and they might otherwise receive the same treatment as their full-time counterparts. In other companies, there might be strict policies in place prohibiting contingent workers from participating in company events, limiting access to certain systems, or giving them different badges or email signatures.

While there are reasons for these policies, are there ways to include contingent workers in your D&I initiatives that don’t increase your co-employment risk? For example, if you have a diversity goal to hit a certain percentage of diverse candidate interviews for every open position, consider including this objective for both internal and external hires. This can help to move your company forward on its diversity objective without increasing your co-employment risk.

Are managers up to the challenge?

Management will be a critical factor contributing to the success or failure of a diversity and inclusion program. It’s the frontline managers who have the biggest impact on the day-to-day experience of workers — full-time employees and contingent workers alike. If there is any misalignment in the commitment to creating a diverse and inclusive environment, that can sabotage the effectiveness of the program and lead to turnover. It’s important for companies to provide leadership training and tools that reinforce inclusivity and to also look at their management team to see whether diversity is reflected.

Despite the obstacles, many of today’s top companies are successfully incorporating contingent workers into their diversity and inclusion programs — and benefitting tremendously. If you want to be one of them, keep these three principles in mind:

1. Know your goals.

Achieving your diversity and inclusion goals will be a team effort, and everyone on your team will need to be on the same page to make it happen. Make sure your employees understand how these goals align with overall business objectives while being clear about your vision for success.

Whether you’re aiming for quantifiable metrics like improved financial performance, increased worker retention, or more diverse hires — or a less tangible outcome like a stronger company culture — you’ll need to convey the potential benefits of your efforts in a way that incentivizes your team to invest. Furthermore, you should capture your goals in a clear, concise diversity and inclusion statement that you review periodically to keep everyone on track. Share it in job postings for both full-time and contingent positions, and display it on your website to promote accountability.

2. Seek alignment of values.

If you work with vendors to fuel your contingent worker program, make sure they understand your values and diversity and inclusion goals. Ideally, they’ll have their own similar initiatives, and you should request metrics that show a material commitment to recruiting and hiring a diverse contingent workforce. While that data shouldn’t inform your decisions about specific candidates, it will allow you to determine whether your partners align with your objectives.

3. Realize that diverse talent is everywhere.

At this point, most companies understand the benefits of hiring remote workers. When you give workers flexible work opportunities, you can cast a wider net in your candidate search and access top talent from anywhere in the world. The end result? A team with diverse backgrounds and experiences that brings unique perspectives and ideas to your company.

Creating a more diverse and inclusive workforce is an ongoing endeavor, and you’ll inevitably face challenges and setbacks along the way. By ensuring your initiatives account for and benefit your entire workforce — including contingent workers — you’ll give everyone a reason to help you pursue and achieve these goals.

As technology continues to shrink the size of the world, your workforce is going to surely include people of different cultures, backgrounds, and even worker classifications. To learn how to navigate this new normal, download the IES whitepaper “Take Your Business Global, Without the Hassle” to learn how to bridge global gaps in your workforce and how an employer of record like IES can help.

Sara Jensen is the vice president of business development at Innovative Employee Solutions (IES), a leading global Employer of Record in more than 150 countries that specializes in contingent workforce solutions such as outsourced payrolling, independent contractor compliance, and contractor management services. Founded in 1974, IES has grown into one of San Diego’s largest women-owned businesses and has been named one of the city’s “Best Places to Work” for 10 years in a row.