Welcome to this issue of The Contingent Compass. Each week, I send two essays to help you navigate the complex world of the Contingent Workforce. If you need support on your journey, upgrade to a paid subscription where you’ll instantly be able to interact with the community through group chat, live Q&A’s, gain access practical program tools and useful how-to guides.
Let me ask you something.
If your CEO walked into the room tomorrow and asked, “Which workforce channel is giving us the best return on investment?” - could you answer without breaking a sweat?
Most leaders can’t. They can tell you headcount. They can show you spend. They might even pull out a vendor scorecard. But ROI by channel? Silence. And that silence is costing millions.
The Wrong Scoreboard
For decades, headcount has been the de facto scoreboard for workforce success. “We grew to 12,000 employees.” “We hired 437 people last quarter.” Those numbers look impressive in glossy reports. They make executives feel like progress is being made.
But here’s the uncomfortable truth: headcount is a vanity metric. It tells you nothing about whether the work got done profitably.
CFOs don’t care how many people you hired. They care about whether those hires expanded margin, sped up delivery, or reduced risk. Boards don’t want headcount. They want ROI. And right now, most workforce strategies can’t deliver that story.
When was the last time your workforce report actually told the board what return they were getting, not just what they were spending?
Why This Matters Now
The pressure on businesses has never been greater. Margins are tight, growth is harder, and talent is scarce. CFOs are dissecting every line of spend, looking for return. CEOs want speed to market without locking themselves into fixed costs they can’t unwind.
And yet, when it comes to workforce decisions, most organizations default to the same old reflexes. Hire perm. Bring in a contractor. Throw it at an SOW.
That isn’t strategy. That’s guessing. And in today’s climate, guessing is expensive.
What Channel Confusion Looks Like
Here’s how it usually plays out. HR looks after permanent employees. Procurement manages contingent labor. Project managers bring in SOW. Meanwhile, Marketing or IT quietly experiments with freelancers. Each group operates in its own silo, focused on its own metrics.
On the surface, it feels like control. In reality, nobody owns the whole picture. And when the board asks, “Where’s the ROI?” what they get isn’t strategy - it’s just a spreadsheet of spend.
That’s when waste creeps in. Companies hire permanent staff for projects that last less than two years, leaving them with bloated payrolls. Contractors are brought in at premium rates to fill roles that should have been permanent. Freelancers, who could deliver flexibility at lower cost, get overlooked. And suppliers take advantage of the gaps, selling into multiple channels with different markups for the same skill set.
I’ve seen it firsthand. On paper, the numbers look managed. In reality, ROI is invisible.
A Tale of Two Strategies
Take two companies with the same challenge: building a new digital platform.
Company A does what feels safe. They hire 40 permanent developers at a cost of $5 million a year. The platform gets built, but when the project ends, the company is left carrying people it no longer needs. Payroll balloons, productivity drops, and the CFO isn’t happy.
Company B takes a different approach. They scope the work into a blend of contractors and a structured SOW team. The right work being done by the right channel. The project costs $3.2 million, is delivered on time, and when it’s over, the costs disappear with it.
Both companies delivered the same platform. Only one can look their board in the eye and say, “We maximized ROI.”
The Supplier Arbitrage Problem
There’s another layer to this most companies miss. Suppliers are smart. They know how to play across channels. I’ve seen staffing firms place the same candidate three different ways: once as a contractor, once inside an SOW, and once through a “freelance” affiliate - each at a different markup.
It’s not malicious. It’s rational. Suppliers follow the incentives you give them. If you’re not managing channel ROI holistically, you’ve left the door wide open. And make no mistake: they’ll walk through it.
The Global Picture
Channel ROI doesn’t look the same everywhere.
In Germany, strict labor laws make permanent employment the dominant model, with contingent labor carrying heavy compliance risk. In the U.S., contingent is often the go-to because flexibility trumps stability. In APAC, project-based SOW arrangements dominate, aligning with local norms. In LATAM, informality is common, with gig and contractor models proliferating in a compliance gray zone.
Multinationals that fail to account for these differences end up applying the wrong playbook. U.S. logic in Germany? It fails. German rigidity in Singapore? It fails too. Without a global channel strategy, you’re not managing ROI - you’re managing chaos.
The Human Fallout
It’s easy to think of channel strategy as a numbers game. But misalignment has human consequences too.
Hiring managers get frustrated and start bypassing programs when they need speed. Workers feel mismatched - permanent employees stuck in short-term projects, contractors disengaged because no one thought through their experience. Suppliers lose trust when expectations shift with the wind.
When nobody owns the channel strategy, everyone loses - not just the balance sheet.
The Executive Lens
Here’s what the C-suite actually wants:
CFOs want to know how workforce investment is expanding margin.
CEOs want to know if the channel mix is helping the business move faster.
Boards want to know whether risk is being reduced, not just pushed around.
They don’t want to see headcount. They don’t want to see spend. They want to see ROI outcomes.
If your reporting doesn’t tie channels back to ROI, you’re speaking the wrong language.
The Future of Work Raises the Stakes
As messy as channel strategy is today, the future will make it even more urgent. AI and automation will replace some roles while creating entirely new categories of project work. Freelance and gig platforms are scaling globally, giving companies on-demand access to niche skills. Hybrid models - where permanent employees, contractors, SOW teams, and AI all collaborate - are already becoming reality.
Without a channel ROI strategy, companies will drown in complexity. With one, they’ll thrive.
So the question is simple: are you building for the workforce you have today, or the one you’ll need tomorrow?
A Playbook for Leaders
So how do you move from channel chaos to channel ROI? Think like an investor. Treat workforce channels as a portfolio.
Start with the work. Is it core to your business? Is it strategic? Specialist? Short-term? A surge demand? Define the nature of the work before you decide the channel.
Then match the channel. Permanent, contingent, freelance, SOW, or digital — each has strengths and weaknesses. Don’t default to the channel you’ve always used. Test assumptions. Challenge the “we always do it this way” mindset.
Measure return. Not just cost. Look at speed, quality, risk, and contribution to growth. Did contractors reduce time-to-market by six months? Did freelancers inject innovation at a lower cost than a consultancy? That’s ROI.
Set governance. HR and Procurement need to share accountability, with Finance acting as the referee. Joint ownership keeps the focus on outcomes, not silos.
And finally, rebalance constantly. Just like an investment portfolio, your channel mix will shift with market conditions. Review it quarterly. Keep it moving.
The Closing Challenge
Channel ROI has been hiding in plain sight. The question is whether you’re ready to measure it.
Because headcount doesn’t matter. Spend doesn’t matter. The only thing that matters is whether the work gets done - profitably - through the best channel available.
So I’ll leave you with this. If your CEO asked tomorrow, “Which workforce channel delivers the most ROI for us?” - would your answer build confidence, or expose the blindspot you’ve been avoiding?
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If you need support on your journey, upgrade to a paid subscription where you’ll instantly be able to interact with the community through group chat, live Q&A’s, gain access practical program tools and useful how-to guides.