Recently, Ardent Partners released its research report titled “The State of Contingent Workforce Management 2015-2016: The Future of Work is Here”, to underscore the rise of the contingent worker class. The report finds 95 percent of enterprises consider non-traditional staffing as vital to their overall corporate strategy and that 35 percent of the average company’s workforce fell into the contingent or contract-based category. The report also predicts that by 2017, 25 percent of companies will report workforces primarily composed of contingent workers while an additional 34 percent will have an even mix of traditional employees and temporary workers. Together, these categories represent 59 percent of all companies! Another workforce report claimed that 30 million classify themselves as independent workers, either as “solopreneurs” who work independently as their only source of earnings, or those who pick up outside assignments for extra income and predicted that this number is set to grow to nearly 40 million by 2019.
It is an acknowledged fact that contingent workers represent a recruiter’s opportunity to quickly access niche talent. This on-demand talent is an essential component of the much touted Total Talent Management that companies are buzzing about. But, those of you who participated in the recent DCR webinar in which Ardent’s Research Director delved into the data behind the research report, now know what Christopher Dwyer meant when he stated,
“No longer does the contingent workforce remain a mere spend category or arena of human capital; there are social, economic, political, and labor-oriented impact areas associated with today’s non-employee workforce that are changing the modern business environment in such a way that its influence will be irreversible.”
Consider the four false beliefs that will result in poor decisions, low performance, and/or high risk when building and managing a blended workforce.
Today’s on-demand workforce is complex and high-tech in nature and refuses to be discounted as ”temp workers” who leave at the end of the assignment without a backward glance. They also offer much more than just clerical or light industrial work. They could be engineers with extensive skills in software programming, setting up firewalls, oil prospecting or installing intricately designed equipment to get your manufacturing plant operating. They may be doctors or healthcare workers.
To achieve total talent management, you must begin to examine all workforce needs, determine the right category of worker for each role, consider how to find the best talent in each case, and establish the means to manage the total workforce, accounting for the differences where required. At DCR, we encourage our clients to consider the following:
Workforce Planning – Most companies conduct detailed annual headcount planning as part of their annual budgeting efforts. While regular employees are specified in terms of number of FTEs, job descriptions and compensation, third party resources are often lumped into “discretionary expenditures”. True workforce composition planning requires careful consideration of the best type of worker for each assignment. At DCR, we help clients to do this using an Engagement Tool Kit that takes into consideration the work, required skills, whether the work is “one time” or recurring, and other client-specified factors. In developing budgets, call out expenditures for contingent workers. If using a Managed Services Provider, expect their assistance in weighing the cost of an agency-supplied worker vs. a freelancer vs. a team delivering an outsourced project.
Organizational Impact – After many years of wrangling, most companies have settled on a model for agency-supplied contingent workers in which Procurement takes the lead in sourcing the agencies, and Human Resources (perhaps with the aid of a Managed Services Provider) manages their day-to-day use. The model does not readily apply when applied to other types of contingent workers. Who sources, screens and onboards independent contractors or project teams?
Sourcing Techniques – New online sources of talent are emerging every day. They are not all equally effective in finding or qualifying workers, and they generate new challenges in terms of contract negotiation, payment, and other administrative details. Their effectiveness may change over time as they grow in popularity. You need to decide which of these should be included in your approach to recruit the talent you are looking for.
Legal Compliance – Mixing up one’s management of full-time and contingent workforces could violate federal, state and even city laws and render an employer liable to fines and back payments of wages and taxes. Contingent workers must be treated equitably in terms of wages, FLMA rights, healthcare coverage, collective bargaining agreements, and OSHA protection. However, the management styles of your supervising managers can result in costly and embarrassing worker claims of co-employment and misclassification. Human Resources professionals who are experts in employee rights and responsibilities may not be equally knowledgeable about the rights and responsibilities of contingent workers.
Financial Management – Most companies have a solid understanding of the cost of their employee base. They know the number of employees, their compensation, the cost of recruiting a new worker, average time to come up to speed, etc. Those models don’t readily apply to the use of contingents. Budgets reflect “hard costs” such as bill rates paid and discounts applied, but must also factor in “soft costs” such as productivity gains, and impact on the utilization of internal staff.
In this blog, we have referred to the use of Managed Services Providers (MSP). If you have engaged a MSP, ask for a detailed plan for evolving your current program to total talent management. This might require a multi-year effort, but the MSP should be able establish a path forward. Before doing that, we encourage you to download a complimentary copy of “The State of Contingent Workforce Management 2015-2016: The Future of Work is Here” from the DCR website. And, of course, get in touch with us if you want to learn more about preparing for total talent management.
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