In these turbulent times, CHROs can feel conflicting pressures to keep the budget in check, avoid layoffs and assemble all-star teams to maintain resilience for the future. According to Amy O’Donnell, chief talent officer at global contingent workforce solutions provider MBO Partners, all three can be possible—with a blended workforce.
O’Donnell spoke with StrategicCHRO360 to share best practices for deploying flexible workforce strategy, and common pitfalls to avoid.
With ongoing economic uncertainty, how can CHROs use a flexible workforce strategy to control labor costs without triggering layoffs?
With all the economic uncertainty right now, CHROs are under a lot of pressure to manage labor costs, but layoffs shouldn’t be the go-to solution. Instead, the smartest approach is building a flexible workforce strategy that allows companies to stay agile while keeping their core teams intact.
A blended workforce model—combining full-time employees with independent contractors, freelancers and contingent workers—gives companies the ability to scale talent up or down based on business needs. This way, they can manage costs without losing critical skills or overburdening employees.
Take a software company that needs to pause full-time hiring due to budget constraints but still has key product deadlines to meet. Instead of stretching their existing team too thin, they bring in independent UX designers and developers on a project basis to keep things moving.
Or consider a financial services firm that needs specialized expertise for regulatory compliance but doesn’t require a permanent hire, they can engage independent consultants to get the job done without adding to fixed payroll costs.
MBO Partners’ State of Independence report shows that 72 percent of independent workers actively choose self-employment, meaning there’s a deep pool of skilled professionals ready to jump in when needed.
How can CHROs make the case to CFOs that shifting to more independent talent isn’t just about cost-cutting, it’s about long-term resilience?
To get CFOs on board, CHROs need to move the conversation beyond just cost-cutting and focus on how independent talent strengthens the company’s long-term resilience. It’s not just about reducing payroll—it’s about creating financial flexibility, improving agility and staying competitive in a fast-changing market.
Independent talent allows companies to align labor costs with business performance, shifting fixed expenses to variable ones. That means when the market fluctuates, businesses can scale their workforce up or down without the financial strain of severance packages, benefit costs or long-term commitments.
Beyond financial flexibility, independent talent is also a powerful way to fill critical skill gaps quickly. High-demand expertise in areas like digital transformation, AI and data analytics can be sourced more efficiently through independent consultants than waiting months for the right full-time hire.
This gives companies a competitive edge by improving speed to market and accelerating innovation. Instead of viewing independent talent as just a short-term fix, CFOs should see it as a strategic advantage, one that makes the company more adaptable and better prepared for whatever comes next.
What are the biggest modern mistakes companies make when trying to integrate independent workers—and how can CHROs fix them?
As companies rely more on independent workers, I see the same mistakes repeatedly. Businesses want flexibility but often lack the right strategy. The good news is that these mistakes are totally fixable with the right approach. Here are the three biggest ones I see—and what CHROs can do about them:
Treating independent workers like full-time employees. This is probably the most common mistake. Companies bring in independent talent but onboard and manage them the same way they do full-time employees. The problem is that this opens the door to legal and compliance risks, since independent workers have completely different classifications when it comes to taxes, benefits and work terms.
How to fix it? One-size-fits-all doesn’t work here. Independent talent needs a separate onboarding and engagement process with clear contracts that define work scope, deliverables and payment terms.
Establish a dedicated process to manage compliance, classification and engagement for independent workers. This ensures they are properly categorized and set up for success. Also, don’t forget to educate managers—many aren’t aware of the differences in how independent workers should be interviewed, onboarded and managed.
Another mistake is not aligning independent workers with business goals. A lot of companies think of independent workers as just extra hands on deck. They’ll bring someone in for support but won’t fully tap into their expertise or connect their work to bigger business goals. That’s a huge missed opportunity—especially when you’re hiring highly skilled independent professionals who could be driving innovation or solving complex challenges.
Independent talent shouldn’t just be filling gaps, they should be adding value. Make sure they’re working on high-impact projects that align with company priorities. If it makes sense, invite them into strategic conversations. And don’t just assign tasks; set clear performance metrics so their contributions are measurable and tied to business outcomes. When independent workers are treated like true partners, they deliver much bigger results.
Another mistake is overlooking compliance and failing to build long-term relationships. Companies sometimes don’t pay enough attention to compliance, which can be a big risk. If independent workers are misclassified or paid incorrectly, it can lead to fines, audits and legal headaches.
On the flip side, another mistake I see is companies treating independent workers as one-off hires rather than a long-term part of their talent strategy. If you’re constantly starting from scratch when bringing in independent talent, you’re missing out on efficiency and continuity.
Compliance needs to be a priority; work closely with legal and finance teams to ensure contracts and payment terms align with labor laws. Implement a structured review process to regularly assess worker classifications, especially for long-term engagements.
And when you find great independent talent? Don’t let them slip away. Build a program that makes it easy for top performers to return for future projects, ensuring continuity and access to specialized skills when needed.
At the end of the day, independent workers aren’t just a temporary fix; they’re a strategic advantage. The companies that get this right will be the ones that stay ahead of the competition.
In an era of “quiet cutting” and hiring freezes, how can CHROs avoid reputational damage while shifting to a more flexible workforce?
With hiring freezes and “quiet cutting” becoming more common, CHROs need to be thoughtful about how they introduce a more flexible workforce. If employees feel blindsided or worry that their jobs are being replaced, trust and morale can take a hit.
The key is to be upfront, ensure independent talent feels like part of the team, and position the shift as a business advantage, not just a cost-cutting measure.
For starters, be transparent about the shift. Employees don’t want to feel like changes are happening behind the scenes without their knowledge. If they hear about a shift to more independent talent without understanding why, they’ll assume the worst.
Instead, be clear about the business reasons—whether it’s increasing agility, accessing specialized skills or responding to market shifts. When employees see this as a long-term strategy rather than a reaction to financial pressure, they’re far more likely to support it.
Next, make independent talent part of the team. One of the biggest mistakes companies make is treating independent workers like outsiders, which can create tension between them and full-time employees. If independent talent is siloed, collaboration suffers and resentment can build.
Instead, encourage full-time employees and independent workers to work together, whether through shared goals, joint meetings or cross-functional projects. When independents are integrated into the workflow, the company benefits from their expertise, and the entire team feels more cohesive.
And finally, frame it as a growth strategy, not just cost-cutting. If employees think this is just about reducing headcount, they’ll worry about their own job security. Instead, highlight how independent talent allows the company to scale faster, remain competitive and bring in specialized expertise when needed.
A flexible workforce should be positioned as a way to fuel innovation and agility, not just to trim expenses.
