Many of our previous posts discussed “big picture” considerations for establishing and implementing a wide-ranging contingent workforce management program. Over the next month we will drill down into the details and the how-to aspects for controlling costs and handling labor suppliers to your best advantage. Controlling labor costs while achieving the most effective talent portfolio possible will determine how well your organization accomplishes its mission and collects sustainable profits. Following are some of the topics we will delve into in the coming weeks. Be sure to check back often; the devil is in the details. Standardizing and automating as many of the routine functions as possible will reduce accounting, regulatory, and payment processing errors.
For instance, we can agree that establishing tight controls on all aspects of the workforce management program is crucial if a company is to achieve the cost savings and productivity gains that agile, contingent workers can bring. But practically, how can an organization bring all its labor spend under management, achieve buy-in from hiring managers, Accounts Payable, and Procurement, and collect the pertinent data it needs in order to accurately forecast contingent worker needs?
In future posts we will outline best practices for centralizing program oversight and clamping down on off-contract hiring even as demand for contingent workers and the need for expedited onboarding continues to grow. When payment processors, compliance, quality control, and other employees answer to the same authority, companies find it easier to coordinate activities and avoid redundancies. We will learn how to budget for worker requisitions and build in workflow for qualifying the skills each project requires so the centralized authority can produce the kinds of workers that will fit and add value to each department.
Consolidated control also helps reduce the company’s exposure to talent risks because the guidance team can keep tabs on every aspect of the worker utilization journey, from procurement to engagement to payment and off-boarding. Talent security is maintained when the firm slots the contingent workers with the necessary skills in the tasks that are best performed by their worker category. Instantaneous communication and mobile technology foster global sourcing and fierce competition for the most skilled and productive workers and put a premium on accessing these skills. We will take a hard look at how companies can corral these rare capabilities and collect them in sufficient quantities and qualities to maintain and increase their competitive capacities.
Talent risk mitigation now more than ever hinges on a firm’s ability to connect its overall talent needs with strong leadership and interdepartmental cohesion. With a wide range of talent types available, the potential risks expand exponentially. Supervisors and hiring managers will be required to conduct more sophisticated performance reviews because re-engaging the best workers will ensure shorter learning curves and greater muscle memory among contractors and freelancers. Managers will not only have to evaluate individual workers and worker classes, but also their own precision in delineating their skills needs. They also will play an important role in helping the central authority – HR, Procurement, or a managed workforce services partner – continually improve the process.
Some of the risk mitigation techniques we will discuss include integrating data collection and worker tracking platforms – including mobile apps – to ensure payroll taxes, pay rates, and worker classifications all match. The global marketplace also requires organizations to consider cultural fit among its full-time and contingent workers. If competitors use the same geographies or vendors, companies will want to develop ways to compete for talent.
An effective external worker management plan both complements the full-time workforce and helps overcome many of its weaknesses and liabilities. Turnover among traditional workers can leave talent vacancies that are difficult to fill quickly. Establishing a stable of statement of work or independent contractors builds a ready-made method for plugging the gaps and maintaining continuity on project committees and implementation teams. Still, understanding the true, total cost of turnover enables companies to plan accordingly to keep talent drain to a minimum, expedite replacement procedures, and institute programs to attract and retain critical in-house workers. Attrition can cost companies big. Many estimates peg the cost of replacing a worker at one-third to one-half of his or her salary. Building a suite of perks, competitive pay rates, and other attractive benefits should be at the top of every company’s list if it wants to keep full-time staff happy and position the organization as the client of choice for external workers. This is especially true today, as talented workers enjoy plenty of options for furthering their careers. The gig economy is booming and unemployment is historically low.
We will discuss how to structure these benefits – not all are financial – to minimize attrition and keep the talent pipeline full when replacing workers becomes necessary. High turnover could be a symptom of systemic failure. You may need to evaluate your company’s training, communication, compensation, and cultural aspects to uncover negativity that drives workers away.
How you select, manage, and utilize your labor suppliers goes a long way toward retaining key employees and winning the battle for top consultants and freelancers. Companies should adopt in-house measures or outsource to firms that will look for ways to improve supplier selection. The goal is to benchmark and balance the cost-savings possible through supplier consolidation with the creativity and coverage gained through supplier diversity. When considering vendor consolidation, it is important to qualify each potential labor supplier based on accepted criteria. Consolidation should not leave the firm vulnerable to geographic or job type scarcity. It should build a safety net so the company is not forced to scramble for order fulfillment if key players leave the pool. Firms need to find vendors that match their worker criteria and workforce strategy. Consolidating suppliers is made easier when the company or MSP incorporates the performance and fulfillment data generated by integrated vendor management software.
The diversity plan should include local suppliers that can capture individualized skills and adhere to regional mores. Working with smaller platforms and specialized marketplaces can also tap into pools of underrepresented populations to bring in inclusive skills, cultures, backgrounds, and viewpoints. To properly quantify diversity efforts, companies should rely on several metrics and not focus solely on spend to include candidate and hire representation.
Check this space regularly over the next month as we unpack these practical issues facing companies as they negotiate the future workforce and make decisions that will influence their competitiveness in the battle for right-skilled, flexible team members to implement strategies and solutions.
