Companies are adopting a strategic view of free-agent talent, but reaching that group will require adjustments.
By Rebecca Callahan
As HR professionals know, the recovery is moving forward, and the war for talent is once again heating up. But this time around, free agents—consultants, contractors, and contingent and temporary workers—will play an increasingly vital and lasting role. To succeed, companies will need to find new ways to reach this critical group of workers.
That is the picture painted by the preliminary findings of a new SourceRight Blended Workforce Strategy and Trends Study, a multiphase, cross-industry effort conducted by Bersin & Associates. In the study, respondents cited a range of talent-related pressures that are top of mind, including the need to drive growth, changing customer demands, the importance of innovation, and the impact of workforce and budget cuts made during the recession. At the top of the list, however, was “increasing competition in the marketplace for top talent.”
What’s more, the study found that more and more of that top talent is being found among free agents who, along with traditional full-time employees, are part of an increasingly blended workforce. Nearly 70 percent of respondents said that the blended workforce is important or extremely important in their effort to meet business objectives. Free agents make up about 27 percent of their workforces. But that percentage is likely to grow, because 45 percent say they plan to increase their hiring of free agents in the next 12 to 18 months.
However, many companies might not be in a position to do that, or at least to do it well. The study found, for example, that just 6 percent of companies are emphasizing strategic blended workforce planning to accomplish long-term company objectives. It also found that they are often failing to take full advantage of new recruiting tools that are critical to reaching free-agent talent.
It’s clear that many HR professionals now recognize that free agents are an increasingly critical part of the workforce. Now, they and their companies need to adapt to this new reality if they are to truly leverage the power of free agents—and the Blended Workforce Strategy and Trends Study points to a number of actions that can help them do just that.
SMART FREE AGENCY
Free agents have long been used to control employment costs, and, as the study points out, that is still an important consideration. But today, more companies are seeing these workers in a strategic light and as a means through which they can meet the challenges of a fast-moving, competitive world. Asked what is driving their increased focus on the blended workforce, 67 percent of study respondents cited “workforce agility and scalability to rapidly align with changing business needs.”
At the same time, about one-third of respondents cited “getting access to critical skills.” But the study, reflecting overall trends, also suggests that this figure is growing. Indeed, the free-agent labor pool has evolved to include a great deal of talent with specialized skills. A growing number of people are intentionally turning to free agency in order to gain greater control of their work lives—and these are often the highly motivated and skilled workers who are in a position to sell their skills on the open market.
In short, free-agent workers have shown that they have a great deal to offer in terms of valuable, in-demand skills. In addition, free agents also draw on the experience they have gained through their exposure to a variety of companies. This means that often these workers can bring fresh perspectives and best practices to each new project they join. Not surprisingly, then, the study found that among companies that use large numbers of free agent/contingent talent, high-value skills are very much in evidence:
• 75 percent use professional consulting, legal, and marketing free agents;
• 63 percent use accounting and finance free agents; and
• 60 percent said they use IT and engineering free agents.
A client’s supplier sourcing had ballooned. Its contingent workforce management needed recalibration.
By Steven C. Hinckley
The client was the largest bank holding company in the United States, with more than $150 billion in revenue. The institution counts more than 6,000 U.S. branches and has operations in more than 150 countries
How USC pioneered higher education’s use of MSP.
By Andrew P. Zarkadas
The University of Southern California enjoys a reputation as one of the world’s leading private research universities. Located in the heart of Los Angeles, USC educates approximately 33,500 students each year and employs 18,500 people, including 3,200 full-time faculty members, 6,800 student workers and a contingent staff of 8,500
How one workforce was optimized, diversified, and economized.
By Bruce Morton
Our customer, one of the world’s largest automakers, traces its roots back to 1908 and employs 235,000 people, with thousands of contingent workers providing services at hundreds of facilities across the United States on any given day. Using nearly 100 suppliers to support these vast contingent workforce needs, the customer’s objectives are several-fold for a workforce management solution:
• To gain awareness of contingent
workforce usage, fluctuations,
and spend and to use such information to make strategic business decisions;
• To obtain control over contingency
spend and maximize the investment of those dollars;
• To improve the quality of staffing
supply chain performance; and
• To mitigate risks associated with the
use of contingent workers.
In 2002, Allegis Group Services (AGS) was awarded a master vendor contract with responsibility for administering the procurement and management of contract workers for our customer’s U.S. operations. In late December 2006, AGS’ strong relationship with the customer was again reaffirmed with the awarding of a five-year contract extension to continue as their managed contract services provider. In 2009, AGS was awarded an expansion opportunity with the customer‘s business in Canada.
AGS’ customized and comprehensive workforce management solution includes various components:
• Customized, integrated web application (Allegis System) for streamlined automation of all staffing requests and systems integration;
• Dedicated, experienced program office to serve as single point-of-contact for customer and staffing supply chain, and program, user, contractor, and supply chain support;
• Policy and procedure standardization;
• Standardized job descriptions, bill rate structure and management;
• User and supplier training;
• Contract employee on-boarding and off-boarding;
• Candidate screening, drug screening and background checks;
• Supply chain management (vetting, agreements, compliance, and quality performance management);
• Program performance tracking and reporting;
• Performance-based service level agreements;
• Minority supplier development and mentoring program; and
• No-cost program model.
Through the Allegis System, an automated and integrated online workforce management tool, our customer is able to analyze which areas of the business use contingent workers, when, and for what purpose. They can also provide accurate contingent workforce usage and spending reports to management. In-depth reporting enables the customer to make intelligent use decisions, forecasts, and contingent workforce plans.
The dedicated AGS program office facilitates all processes associated with the supply chain including supplier vetting, agreement management, compliance and insurance auditing, and performance management. The program office continually monitors supplier performance, reviews performance levels with them, and works with suppliers to increase the quality of their services.
In 2007, AGS worked with our customer to implement a supplier optimization program in an effort to improve cost savings and overall efficiency. The optimization of suppliers resulted in:
• Increased minority-owned supplier spend by $6.2 million annually;
• Five of the top eight suppliers in the program are minority-owned;
• Optimized 85 suppliers;
• Transitioned 607 contract workers;
• Estimated yearly cost savings of $1.1 million;
• Higher quality supply base;
• Cost avoidance / cost savings;
• Improved contract worker quality and retention;
• Avoidance of long-term contract worker disruption;
• Flexible supply base; and
• Total project timeline of eight weeks.
Inside an unprecedented MSP for complex contingent workforce management.
Interview with Doug Cutrell, director of professional services, and Mary Hassler, program manager for professional services, at Siemens
Siemens AG (NYSE: SI) is a global powerhouse in electronics and electrical engineering, and operates in the industry, energy, and healthcare sectors. For more than 160 years, Siemens has built a reputation for leading-edge innovation and the quality of its products, services, and solutions. With 405,000 employees in 190 countries, Siemens reported worldwide sales of $102.9 billion in fiscal 2010.
Siemens’ United States headquarters is in Washington, D.C., and reported sales of $19.9 billion—employing more than 60,000 people throughout all 50 states and Puerto Rico.
IN PURSUIT OF STREAMLINING
As a global giant, Siemens’ contingent workforce was large and growing, and the procurement process was complex. The goal was to have a single point of contact, a single platform, and a single supplier. Siemens wanted to streamline the contingent workforce program and make it more efficient, cost-effective, and transparent. There wasn’t a central IT system, nor was there an easy way to compare costs and supplier quality. A strong and consistent compliance program was another key goal.
SourceRight Solutions, which had been working with Siemens Healthcare since 2006, was awarded a multiyear contract renewal and a significant expansion of its service footprint to additional business units in a competitive selection process. SourceRight’s resources, knowledge, and technical expertise to run a highly complex MSP were contributing factors to the win.
With a demonstrated ability to run complex managed services programs (MSPs) for companies worldwide, SourceRight took an innovative approach, with an inclusive supplier program, cost transparency, and significant cost savings.
The solution is designed to enhance compliance, increase efficiencies, improve cost-effectiveness, and centralize management and operations for the procurement of more than 5,000 contingent labor positions. The SourceRight program encompasses Siemens operations in nearly all 50 states, as well as Canada and Puerto Rico. SourceRight manages supply chain strategies across all Siemens job families, including IT, engineering, professional, technical, administrative, light and heavy industrial.
To overcome one of the major hurdles Siemens faced—an inability to evaluate its contingent labor programs—SourceRight’s centralized MSP not only drives measurable advantages in terms of cost, quality of hires, and efficiency, but also establishes meaningful metrics.
In the U.S., the Siemens/SourceRight solution is the first MSP designed in this unique commercial configuration on the Fieldglass technology platform, which is aimed at neutralizing the economic strains that both staffing suppliers and large employers are facing. SourceRight’s optimized services approach enables all parties, including suppliers, Siemens, and SourceRight, to have a clear view of the program’s financial structure, achieve cost advantages, and increase efficiencies, while delivering high-quality talent. Specific benefits of the delivery structure include:
• A break-out of statutory costs, such
as state, unemployment, social security, and workers’ compensation to provide maximum cost transparency and minimize risk exposure;
• Graduated supplier gross markups
based on sourcing demands and difficulty levels by job family;
• Realization of cost savings
through tenure discounts and volume incentives;
• Distribution of volume incentives
based on market share to ensure equity across suppliers; and
• Process optimization leveraging
Fieldglass, a leading vendor management technology system for contingent labor procurement.
SourceRight delivered a scalable outsourcing model that includes flexible configuration options, global program management oversight, optimized supplier management, and decision support analytics. Siemens will also benefit from SupplierEdge, which streamlines order processing and supplier management to ensure a measurable ROI, access to high-performing preferred suppliers, performance quality, and compliance with supplier diversity programs.
With one comprehensive technology platform, compared to seven or eight previously, efficiency and ease of use have skyrocketed. SourceRight also provides data and trend analysis to help Siemens develop better-informed strategies. Another success is SourceRight’s ability to provide proven, high-performing staffing suppliers, even in remote locations.
A Q&A WITH SIEMENS:
Doug Cutrell and Mary Hassler of Siemens discuss the implementation of the first-of-its-kind managed service program (MSP) to meet the needs of a growing and complex contingent workforce.
WHAT WERE YOUR MAJOR CONTINGENT LABOR CHALLENGES AND WHAT WERE YOU HOPING TO ACHIEVE?
Cutrell: Our contingent workforce is large and growing, and the procurement process is complex. Our goal was to have a single point of contact, a single platform, and a single supplier. We wanted to streamline the process and make it more efficient, cost-effective,and transparent. We also wanted to have a strong and consistent compliance program.
How Sara Lee outsourced its way to a stronger, thriftier contingent labor force.
By Caroline Storey-Sabetti
For many years Sara Lee, a global provider of brand-name food and household products, managed its contingent workforce via a master supplier model. Sara Lee’s master supplier was contracted to staff all of its contingent needs for approximately 200 domestic facilities. Light industrial positions represented the bulk of their contingent labor usage, with information technology, professional, and administrative positions making up the rest.
Over time, dissatisfaction with contingent worker quality and unfilled requisitions had caused end users to source their contingent workers outside of the program and rely on overtime hours. In 2006, Sara Lee estimated that in excess of 30 percent of their total contingent usage was outside the program. To address end-user dissatisfaction as well as the risk and lack of visibility created by rogue spend, Sara Lee procurement assigned a team to assess the master supplier program. The team was responsible for conducting a thorough current state analysis and for making recommendations on how to better manage the contingent workforce going forward.
We rank the top providers in managed service programs based on customer satisfaction surveys.
By the Editors
The rankings contained within the Baker’s Dozen for Managed Service Programs and other service areas in HRO Today are based on customer survey data. The indices result from a multi-step process. HRO Today identified the top MSP providers
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