An innovative strategy is necessary to effectively manage all types of workers.
By Russ Banham
Today’s workforce is an amalgam of many different types of workers, from traditional employees to widening ranks of contingent labor. Effectively managing this disparate and often far-flung human capital is no easy task. To assure close collaboration, enhance employee engagement and productivity, and achieve global compliance objectives, organizations must insist upon centralization and accountability. In many organizations, this responsibility falls to external managed service program providers.
MSPs are a mark of the modern company from a workforce perspective. The providers and their vendor management systems (VMS) help clients flexibly adapt their labor needs to market changes. No longer is MSP merely an administrative process—it has become an embedded part of a company’s holistic talent strategy.
Not just for large organizations, either. Many midsize companies now find urgent reasons to people their ranks with contingent workers, increasing the demand for MSP.
Take the case of Orbital Sciences Corp. An industry leader in the design and manufacture of small and medium-class space and rocket systems for government and private applications, Orbital’s workforce echoes the epochal changes that have redrawn the human capital map. Since 2005, the Dulles, Va.-based company has partnered with Broadleaf Results, Inc. to provide traditional staff augmentation services like direct hires and payroll. Today, there is much more to this pivotal relationship.
Orbital is an early adopter of an integrated workforce solution closely tied to its strategic talent objectives.
This includes SOW (statement of work) non-employees brought in for a specific project, as well as the occasional independent contractor and both full-time and temporary hires. But SOW recruitment is where Orbital is making great strategic headway, borrowing niche talent to fill a particular void or provide a specialized skill, albeit temporarily.
Elizabeth Mashakas, Orbital Sciences senior director of recruiting, provided a recent example of SOW involving Boeing Corp. “We are the proverbial ‘rocket scientists’ here—we make rockets,” she says. “If we’re building a dozen spacecraft in a given year that are all using the same antenna, strategically we need skilled scientists and engineers to design and develop the antenna. But, once the antenna is developed, we’ve now got a lot of specialized people not doing a whole lot. It makes little sense to have such individuals as full-time employees. What we decided to do instead was turn to Broadleaf to borrow these people for us.”
Boeing provided the employee loan via a SOW agreement. “They had the people we needed, who just so happened were underemployed at the time,” Mashakas says. “ Broadleaf ensures the usual non-competes and NDAs (non-disclosure agreements). We pay Boeing for this talent, who continue to be employed and paid by them. We get what we need, Boeing gets a nice revenue flow, and the engineers apply their knowledge productively.”
It’s a rare win times three proposition, one not possible without an MSP firm in the middle. Says Mashakas, “A flexible workforce is also a strategic one.”
Total Workforce Solutions
The days of solely full-time employees are long behind us. Contingent labor is king, according to a 2014 study by workforce solutions research and advisory firm Ardent Partners, which states that the contingent workforce will grow almost 30 percent in the next three years.
“With that type of growth ahead, enterprises will experience a higher concentration of contract talent being linked to critical corporate projects and initiatives,” says Christopher Dwyer, Ardent Partners research director and vice president, operations. “The modern organization, whether it be an SMB or a large enterprise, relies on contingent labor to meet core goals and objectives.”
Companies that fail to adopt blended workforces will increasingly be viewed as antiquated remnants of the 20th century. Dwyer says that Orbital Science’s example is increasingly the norm at sophisticated enterprises, because of the strategic talent objectives it fulfills.
“Enterprises are increasingly seeking out specific skillsets for critical corporate projects,” he adds. “Most often, this highest- level talent is only available on a contract basis. Contingent labor touches nearly every function within the modern enterprise today, from finance to IT to HR to operations to procurement. It’s embedded deep into nearly every aspect of many organizations’ core projects.”
This reality is a far cry from what existed only a decade ago, when contingent labor was viewed primarily as a cost center that had to be continuously evaluated for efficient performance. As Dwyer put it, contingent labor is now “light years away from the simple cost center days.”
These days, MSP is tied to so many crucial initiatives, including major and minor technology implementations, consultative projects, and even financial and tax-related efforts, to cite a few, that yesteryear’s MSP is, well, yesteryear’s. “These aren’t simple efforts utilizing simple talent (solutions),” Dwyer explains.
They sure aren’t, agrees Yvonne McAteer, vice president of sales at Buffalo, NY-based Broadleaf Results, Inc.. “Contingent labor used to be all about cost containment,” she says. “While this is still a driver, the war for talent has changed the status quo.”
Many world-class organizations realize that success and competitive advantage depend on having the best skillsets to achieve strategic objectives like speed-to-market, she explains. “Innovation is critical in this regard,” McAteer says. “Since people are where the ideas originate, you need to find this talent—even if it exists outside the current workforce. That’s what we do for them. Contingent labor enters the organization through the MSP program.”
Even midsize companies have come to realize the need to explore atypical workforce solutions that involve more than traditional sources of labor. “Certainly in the middle market, there is rising awareness that they must engage variable talent more,” says Pat McCall, vice president and sales and solutions design, Americas, at Atlanta-based MSP provider Randstad Sourceright. “This creates the need to manage this blended workforce more holistically, otherwise there is the risk of many parts moving independent of each other. That’s why an MSP program is critical—it assists SMBs to build sustained value around the management of variable talent.”
Cost Still Counts
While strategic talent deployment appears to be the primary driver today for launching an MSP, the cost efficiencies, as Dwyer alluded to earlier, are not to be discounted.
Others agree. “Our clients, both large and midsize organizations, are becoming or wanting to become a lot leaner, which in turn is compelling their supply chain and talent acquisition groups to more openly embrace the concept of outsourcing,” says Anne Osty, vice president of sales and marketing at Chicago-based MSP provider Staff Management | SMX. “An important part of the value that MSP brings is really the supplier management, which has evolved from a way to drive down costs to more comprehensive, end-to-end solution. This includes talent sourcing, as well as contract management, performance management, and compliance management.”
Many MSP providers see their work as neatly hinged to their clients’ overall corporate strategy and related talent objectives. Osty notes that her firm’s program directors typically sit at the strategy table with HR staff, business unit leaders, and even C-level executives to fashion workforce solutions to specific business needs. “Our program directors are seen as experts in the non-employee workforce, providing clients with aggregate market data trends and other crucial information to support their decision-making,” she says. “Clients are looking to leverage processes and technology that gives them the ability to manage the total workforce in all its variability. That’s where we come in.”
Rising Role of VMS
MSP is just part of the deal for many large and midsize enterprises. As Osty points out, technology—in this case VMS—is equally important. Dwyer agrees. “VMS platforms are linked to the next generation of contingent workforce management solutions helping enterprises better manage the talent acquisition and workforce aspects of their programs,” he says.
Simply put, VMS is the software automating the hiring, onboarding, and management processes involved in contingent labor. Recently, VMS has expanded to become more of an enterprise-value play.
“VMS allows processes that are very specific to contingent labor to be connected to other HR processes,” explains Matt Rivera, director of customer solutions at Yoh, a Philadelphia- based MSP provider. “In some cases, the VMS can even be a good bridge to other systems like the ERP (enterprise resource planning) system.”
Integration is the buzzword right now, and for good reason. “VMS gives you visibility into the entire MSP experience,” Rivera explains. “A hiring manager, for example, can use a VMS to order SOW people or independent contractors, get what they need, and then have the MSP manage them through the assignment via the VMS tracking tool, until they are eventually off-boarded.”
Used properly, a VMS can provide vital business intelligence into talent performance and pay, helping to drive better decisions around labor choices. “A sophisticated VMS leverages data analytics to shed light on total workforce costs, whether this talent is built or borrowed,” says McAteer. “Once you use analytics to bring visibility into the talent you’re borrowing, you can see if this aligns with internal hiring goals and where this may be off. This then creates conversations about which labor type might be the most cost effective and strategic.”
Ardent Partners has measured the value of VMS to enhance decision-making. “Our research ties both MSP and VMS solutions to performance improvements in contingent workforce management programs,” says Dwyer. “For instance, we’ve cited both `increased cost savings’ and `better spend under management’ improvements.”
SOW-ing Tomorrow’s Seeds Today
All this sounds almost too good to be true. But no one would deny that the forces of globalization, new technologies like mobility and the cloud, the blistering pace of business on the world stage, and the continuing compulsion to create extremely lean and efficient operations have conspired over time to alter the workforce, perhaps permanently.
A case in point is the explosive growth in SOW. The title of a December 2013 survey by Staffing Industry Analysts, a global adviser on the contingent workforce, says it all—SOW: It’s Here, There and Everywhere. Forty-seven percent of staffing firms derived revenue from SOW in 2013, the report states.
VMS provider Fieldglass, Inc., seems to affirm the study’s findings, reporting that its customer adoption rate for SOW grew 80 percent in 2013.
“More and more SOW is a definite trend,” Rivera agrees. “What we’re doing and a lot of our competitors are doing is helping clients make better decisions in this area. It used to be that SOW was an unknown spend or got lost in the project cost. No longer is this the case, with our clients wanting to be able to make better decisions about how to engage this non-employee population.”
Broadleaf Results also has increased the level of services provided to organizations seeking SOW skillsets. “The MSP needs to be the single point of entry for all things related to the total workforce, and that includes SOW,” says McAteer. “It’s increasingly up to us to recruit SOW non-employees, onboard them, ensure they are classified with the right insurance, sign the NDAs and non-competes, and attend to all other compliance-related aspects.”
Echoing her comments is McCall at Randstad Sourceright, who calls SOW “the major trend in the space right now,” one that has emerged “very quickly.” She adds, “We’re no different than many of our competitors with regard to SOW growing faster than any other category of revenue. If you look at our clients’ staff augmentation and temporary labor and compare this to their overall SOW spend, it is at least one times this spend in all of them and two to five times, on average.”
Certainly, this is the situation at Orbital Sciences, which has invested in SOW non-employees since 2007. “We were ahead of the curve, but in no way could have done what we did without a partner like Broadleaf,” Mashakas says. “They’re the mechanism by which we make all this happen—the invoicing, the billing, remittances, insurance and payments. All of this comes through Broadleaf.”
She adds, “Thanks to them, there are no misunderstandings or issues regarding this form of co-employment from a compliance standpoint. To have a partner that manages all of this seamlessly helps us achieve our ambitions.”
In Orbital’s case, those ambitions are literally sky-high.
Russ Banham can be reached at www.russbanham.com