Talent Management Processes

Contingent Workforce Management: Control

by Taleo Research

For more than five decades, virtually all large corporations have used contingent workers to augment full-time staff, with little or no centralized emphasis on controlling cost, compliance and/or service delivery. However, recent economic, legal and technological changes have placed renewed urgency on the necessity to clean up corporate policies and procedures for acquiring, using and managing a contingent workforce.

A well-designed and well-implemented contingent workforce management strategy that is supported by a thoughtfully conceived supplier program provides an excellent vehicle for:

  • Returning value to the shareholders by controlling costs and leveraging spend;
  • Enhancing the company’s competitive advantage by improving the quality of its workforce;
  • Protecting the company – including corporate brand – by mitigating/transferring risk;
  • Ensuring good corporate governance, accountability and compliance with Sarbanes-Oxley by managing the myriad contingent workforce data and spend.
Key Factors for Control
To begin, a Contingent Workforce Management (CWM) program implementation requires a clear definition of goals and participation by key stakeholders. Once the appropriate participants are engaged and the corporation’s CWM goals and objectives are established, the next step is to design the structure of the program covering the basics of cost, compliance and control, while planning for adoptability and adaptability.

No Contingent Workforce Management program is self-managing. In order for the company to realize the benefits gained by establishing new Contingent Workforce Management policies and processes, and by negotiating new CWM contracts, there are two key factors that create the necessary “control”:

  1. Day-to-day administration of the Contingent Workforce Management program is managed by a dedicated and specialized team of professionals;
  2. The company utilizes a Vendor Management System software tool to function as the infrastructure of the program: to automate processes, measure compliance, and manage and report data.

Managing Quality
To manage quality effectively, a company must develop solid business relationships with the vendors who can and will meet all service requirements. Client companies should not operate at the mercy of their vendors. There are many vendors in the marketplace; companies should make sure their vendors are consistently exceeding service delivery expectations.

Vendors should be held accountable for:

  • Complying with all corporate Contingent Workforce Management policies and procedures
  • Understanding individual managers’ business environments and skills requirements
  • Responding to service requests in a timely manner
  • Managing administrative tasks, including specialized contractor screening requirements (background checks, drug screening, etc.) and back-office administration (invoicing, payment reconciliation, etc.)

In order to ensure quality standards are consistently met, companies should develop evaluation criteria and routinely analyze vendor performance metrics.

Biggest Mistakes
Designing, implementing and administering a comprehensive Contingent Workforce Management program is an extremely challenging initiative. With any project as complex as this, there are many opportunities for things to go wrong.

Some of the most common mistakes made when designing a Contingent Workforce Management strategy include:

  • Failing to involve all the stakeholders (at a minimum: HR, Procurement, Corporate Counsel, Finance, Security/Risk Management, Compliance/Audit, AP, and last but not least, representatives from the user community);
  • Failing to address all three of the key areas: cost, compliance, control;
  • Believing that the selection/acquisition of a “tool” or an “outsourced solution” relieves the corporation of the need to go through the painful process of devising its own Contingent Workforce Management philosophies and strategy;
  • Simply automating existing inefficient processes rather than reengineering and streamlining (OP + NA = EOP, old process + new automation = expensive old process!);
  • Turning over control of Contingent Workforce Management to a staffing supplier (the “fox in the henhouse” model).
Successful Contingent Workforce Management
A successful CWM strategy crosses many enterprise boundaries. It is part HR, part Procurement, part Finance, IT, Security/Compliance/Risk Management. It demands a walloping involvement from the thousands of various business users, and involves “many moving parts” on a daily basis. Contingent Workforce Management does not reside comfortably in any one traditional corporate department; it is a beast of its own nature.

An effective CWM initiative must be both strategic and comprehensive; it must take into consideration all issues related to this resource (cost, risk, administration, user satisfaction/adoption), and it must address the needs of all the key stakeholders. Contingent Workforce Management programs can create immeasurable benefits and value company-wide. Improved program management coupled with a services e-procurement technology solution enable companies to see savings that can total more than twenty percent of the amount they spend on these services.