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Most businesses today recognize the fundamental importance of Learning and Development in both maximizing the potential of staff and maintaining a competitive edge in the marketplace. With work tasks becoming more specialized and requiring advanced technical acumen, skills development and expansion take on an ever more critical role. Companies in every industry are striving to upgrade their worker learning programs and make knowledge transfer more interactive, more ubiquitous, and less expensive. By making learning and skills development more relevant, interactive, and user-friendly for workers of all classifications, companies invest in future profitability, develop tomorrow’s leaders, and position themselves as worker-friendly organizations. Training can pay immediate benefits, as well, by retaining institutional knowledge, improving morale, and improving productivity.
The rates you pay your talent agencies may represent the largest percentage cost of your firm’s contingent labor program. Therefore, standardizing fees and bringing these costs under management has the potential to create impressive savings. As with all the inputs required to run your business, benchmarking costs to ensure consistency throughout the organization and conformity to industry cost norms is a critical component of external workforce management. Of course, contingent workers are not interchangeable parts, but rather heterogeneous resources with unique strengths, skill sets, and experience levels. They are not commodities, which makes determining their value more difficult, but no less critical. Many variables contribute to the cost of non-traditional workers and the fees agencies charge to find, manage, and deliver the talent you need.
A strategy that ensures participation of a variety of business owners in supplying your company’s contingent labor is not only good public relations; it also delivers positive return on investment. By including labor-supply companies owned by women, ethnic minorities, veterans, LGBT+, and other historically disadvantaged populations, companies expose their workforce operations to a wider worldview. Each vendor brings business insights, inherent strengths, and unique strategies to the marketplace; some may be mimicked and adapted to the client’s applications to create synergies and efficiencies within the organization. Some smaller suppliers may even specialize in finding and signing worker groups that would be difficult to tap otherwise – stay-at-home parents, college students, moonlighters, etc.
Companies on board with the non-traditional worker revolution understand the importance of effective supplier management. Indeed, the expanded use of statement of work (SOW) and independent contractors, freelancers, and consultants has been driven largely by the desire to control how much companies pay talent providers. Unfortunately, poorly controlled supplier relationships can cost organizations as much as half the cost savings they ordinarily would achieve through a comprehensive contingent labor program. The challenge is to bring talent vendor spend under greater control while maintaining security, fulfillment, and compliance and avoiding missing out on technology that can make the workforce more productive and labor demand more predictable.
If yours is like many forward-thinking organizations, you have joined the contingent workforce revolution. Company leadership is convinced the flexibility, scalability, and savings non-traditional workers deliver will make the firm more efficient and productive. Procurement and Human Resources have worked out a way to collaborate and manage independent contractors, statement of work providers, freelancers, and other consultants to your best advantage. And you have positioned your company brand to attract the most talented workers available.
Contingent workforce strategies have emerged in part to combat the shortage of specialized talent needed to quickly develop and implement customer and internal-process solutions. A reliable source of competent external employees can help organizations deal with fluctuating demand, changing regulations, and emerging market opportunities. It can smooth over the rough times created when key employees quit or retire.
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.
Today’s managed service providers (MSPs) struggle to distinguish themselves in an increasingly fragmented and competitive market. Locked into easy-to-duplicate service suites and slow to develop and adopt game-changing technologies, MSPs cannot easily unlock innovation, add creativity to their portfolios, or develop value-added services. As a result, they are forced to compete on price, slicing their profit margins ever more thinly as they cling to dwindling market share and relevancy.
You stand to gain many advantages when your organization hires a managed service provider (MSP) to handle your contingent workforce needs. Entrusting an MSP to identify and manage a stable of temporary staffing vendors, ensure fulfillment of worker orders, assure compliance with tax and labor regulations, and provide other services can deliver peace of mind and allow the company to focus resources on creating value and developing market share. But outsourcing the external workforce management function does not mean you can sit back and forget about how you engage contractors and freelancers. On the contrary, working with an MSP still requires in-house oversight, strategic direction and constant drive to improve workflow. Only by establishing a true partnership with your MSP can you realize the cost savings and efficiency gains outsourcing the contingent workforce function promises.
Racing to capture all the cost-saving and productivity advantages an agile workforce provides, work organizations need to expand their programs to encompass more sophisticated and complex types of external talent. They often find themselves striving to create efficiencies in three key areas: