Are you confident that you are getting the best contingent workers at the best rate while maintaining the latest labor guidelines and compliance measures? It’s an intentionally loaded question because managing your contingent workforce is full of complicated checks and balances. When HR and procurement are working in unison, they can effectively manage the processes and costs. But, how do you know whether your program is flawed when you can't see the full picture?
Organizations that employ hundreds if not thousands of contingent workers, such as freelancers, independent contractors and SOW engagements, tend to hit a breaking point in its contingent workforce program. Deciding whether to keep the program in-house or outsource contingent labor management can easily turn into a heated discussion.
How to Drive Efficiencies in Contingent Workforce Management
Think of running your contingent labor program like training for a marathon. Every runner, regardless of experience, knows there is a degree of preparation required, but the most seasoned runners know the importance of setting a steady pace. For buyers of contingent labor, the race to source, hire, and manage increasing volumes of contingent workers can come with or without warning. When this business function is either lumped onto an existing role or managed by a new resource, over time it tends to evolve with the needs of the business.
So, as your contingent workforce multiplies, so do the pay rates, governance and risks, and community of contingent workers all of which fluctuates with current market trends. If not managed properly, new managers, or our amateur runner, hit a wall where the task at hand simply becomes too overwhelming.
Identify the Stakeholders
It should be of no surprise that the use of contingent workers is on the rise. Depending on size of your organization’s contingent workforce or the experience level of internal buyers, be it HR, procurement, or a combination of the two, it’s important to understand who is doing what exactly when managing a workforce as complex as contingent.
The key with contingent or flexible talent is that while HR generally sets the guidelines for things like screening and on-boarding, most HR departments don’t have the staff to actually manage or monitor the process. So clearly, HR’s job as a stakeholder in the process starts with compliance issues (helping to manage employment risk) and should include extending the employment brand to include flexible workers wherever possible. In other words, it’s all about setting the stage for procurement. Cost is not king, but quality can’t trump budget. So, where does the balance lie?
Optimize Contingent Labor Program
Without question, human resources should play a role in screening talent throughout the organization. Similarly, procurement, finance, and department managers need some level of control over the management of contracts, services, and expenditures. Flexible talent crosses all of these areas and as a result, you need to assess what will give you the level of control you seek; self-performing or outsourcing.
Surprisingly enough, the perception by many organizations is that these controls are in place, when in reality, very little is being done to reduce risks and manage this population. Human resources and procurement need to be on the same page when deciding how and when flexible workers are used. When alignment cannot be achieved or the scale of the program simply becomes too large, often companies will turn to a Managed Service Provider (MSP) program to outsource this function. During the initial stages of implementing an MSP program, questions surrounding specific policies governing these segments of the workforce are addressed, and often it is determined that little, if any, control really exist.
While companies are spending millions on flexible labor, many of them don’t know how and where buying decisions are made, and more importantly, how they can to effectively manage this workforce. Regardless if you decide to keep this function in-house or outsource it, all parties involved in contingent workforce management need to understand their precise role in the overall process.