Ways to develop strategy around your non-permanent workforce.
By Madeline Laurano
With globalization, shifts in workforce demographics, and the shortage of critical skills, it is no surprise that organizations are rapidly embracing a more flexible workforce. In fact, nearly 27 percent of an average organization’s workforce is expected to be comprised of contingent labor by 2015. Although a flexible workforce can help organizations reduce costs, close talent gaps, and navigate change, developing a strategy around the use of contingent labor has become increasingly complex. In order to maximize the value of contingent labor and plan for future workforce needs, organizations must adopt a more systematic approach to the way they manage this critical talent pool.
Achieving these goals requires organizations to give their contingent workforce the same attention that they give their full-time employees. As a result, contingent labor is much less about enhancing staff augmentation or keeping track of staffing suppliers—and more about planning for the complexities of a network of independent contractors, consultants, and statement-of-work (SOW)-based projects and services.
The marketplace has several approaches that can be leveraged based on organizational needs. Some key recommendations for managing a contingent workforce:
Engaging in a managed services program (MSP). When outsourcing contingent labor management, 40 percent of best-in-class organizations are turning to MSPs compared to 20 percent of all others (industry average and laggard organizations). MSPs manage all aspects of contingent labor and serve as the primary point of contact for suppliers, contractors, and managers. In some cases, they provide additional offerings such as vendor management systems, SOW management, and workforce management solutions. Just a few years ago, the greatest benefit of an MSP was lifting the administrative burden placed on HR and procurement departments. Today, the value of an MSP is more strategic. Aberdeen research found that organizations that invest in MSPs are also better able to plan for future labor needs, handle onboarding, and mitigate risks.
Embracing a blended workforce. Many organizations are looking beyond the long-standing boundaries that divide traditional employee talent acquisition from management of the contingent and free agent workforce talent supply. Companies are adopting a single-integrated framework for employee recruitment and contingent workforce supply chain management, yielding what is known as a blended workforce approach to talent strategy. In fact, nearly 50 percent of best-in-class organizations listed a blended workforce as a top priority for 2013.
Distinguishing SOW-based projects. As contingent workforce management evolves, organizations are more likely to expand these programs to include SOW-based projects. Today, 50 percent of best-in-class organizations have standardized processes in place for handling SOW-based projects. The top strategies include a balance of both tactical and strategic elements. Tactical elements (management of master agreement and tracking of spend) allow organizations to stay compliant and lift the administrative burden placed on managers. Strategic elements (increased collaboration and ability to distinguish SOW from contingent in the requisition phases) ensure that SOW-based projects are aligning to business objectives in order to plan for future workforce needs.
Onboarding contingent workers. Onboarding is one of the most critical yet underutilized elements of contingent workforce management. Sixty-six percent of best-in-class organizations have a proper onboarding strategy in place compared to 54 percent of industry average and 34 percent of laggard organizations. This represents a significant increase from the 40 percent of best-in-class organizations with a proper onboarding strategy in 2012. A negative onboarding experience can leave an organization at risk in terms of compliance, lost productivity, and negative branding. Organizations that invest in strategic onboarding or leverage third-party providers are able to get contingent workers up to speed and contribute to business-driven initiatives much more quickly. These organizations are also better prepared to handle the forms management aspect of onboarding contingent workers as well as the training of time-keeping and company policies.
As the contingent workforce grows in complexity, organizations must consider a new approach to managing this critical talent pool through improved strategies, and service and technology options. Organizations will achieve success by recognizing the best practices and key trends in contingent workforce management and selecting solution providers that meet their unique contingent needs.
Madeline Laurano is Aberdeen Group’s research director for talent acquisition solutions. She can be reached at firstname.lastname@example.org.