While the growing interest in contingent labor offers the enterprise new agility and cost savings, it also sometimes drives a wedge between two camps of decision makers: Procurement and human resources (HR).
That’s mainly due to competing priorities in building a quality contingent workforce. While procurement is focused on controlling the short-term cost impacts of hiring talent, human resources typically directs its attention to compliance, retention, and the inherent long-term cost advantages of hiring the right people for the right positions.
While reconciling these differences is often an uphill battle, payrolling is one strategy that can bridge the divide, offering the best of both worlds to procurement and HR. This strategy is used by many companies who have large or small numbers of workers they already know and have worked with in the past, but for various reasons do not want to hire as employees.
Why HR & Procurement Are Seeing Eye to Eye
Put simply, payrolling displaces the time, effort, and cost of onboarding pre-identified contingent talent onto the balance sheets of an outside managed service provider (MSP).The client calls upon the MSP to provide a specific contingent employee they’ve worked with before. It might be a recent retiree, a former employee, a freelancer, or a consultant with whom the client had a strong working relationship. The MSP delivers the exact worker on its payrolls at the precise moment of a client’s need.
Though not new, payrolling is again back in vogue with large enterprises now that employment is picking up and procurement and HR are being pressed to set aside differences and focus on filling the assignments needed for growth. And in many ways, payrolling satisfies the understandable demands of both procurement and HR.
The Advantages of Outsourced Payrolling Services for Contingent Labor
From procurement’s perspective (and possibly finance as well), payrolling done correctly saves costs by reducing the internal administrative needs that accompany a new hire and sidestepping the cost of many corporate benefits—avoiding legal complications and challenges.
For HR, payrolling does away with the long and tedious screenings and avoids all the compliance issues, administrative burden and onboarding processes that typically accompany new employees, by quickly delivering a candidate that will meet the needs of the project or assignment. If your company is already in a growth phase, payrolling offers the fastest route to securing the pre-identified contingent workers you need.
Costly benefits administration
Benefits alone account for nearly a third of the compensation of an average full-time hire. Payrolling can avoid some of these costs by displacing the employment relationship on MSPs that will be the employer of record and responsible for employment costs and benefits.
Vetted contingent candidates
Under payrolling, the temporary workers you source have already been vetted in real world work situations within your company, allowing them to hit the ground running.
Reduction in total hiring costs
Then payrolling provides a better long-term glide path that allows you to land the talent you want, now, and make a larger impact on your organization.
Compliance or a legal advantage
As employee counts trigger increasing health care requirements and other regulations, payrolling is increasingly being used to manage the growing cost of compliance.
While HR and procurement might view the world through separate lenses, their epic battles are coming to an end. More and more, payrolling offers a solution that meets the needs of two disparate camps and is increasingly becoming a staffing tool of choice for companies eager to maintain the flexibility and agility learned during the recession but still important now that growth is the new rallying cry within the enterprise.
