A new report points to four major trends impacting contingentÂ labor programs.
By Arun Srinivasan
Gig economy. Uberization. Freelance nation. As theseÂ words become household terms, itâs clear that theÂ traditional workforce is changing right before our eyes. Itâs not about the 9-to-5 employee anymore. Today, 35Â percent of the total workforce is made up of contingentÂ labor, including temporary workers, project-basedÂ services, Statements of Work (SOWs), and independentÂ contractors.
This external workforce is flexible, mobile, on-demand,and important: 95 percent of businesses consider it vitalÂ not only to day-to-day operations, but also to overallÂ business growth and success, according to new researchÂ from Ardent Partners, underwritten in part by Fieldglass:Â The State of Contingent Workforce Management 2015-2016.
Just who are these workers? They are specialized nursesÂ and healthcare professionals working flexible schedules.Â They are highly experienced oil rig laborers, flown in toÂ remote drilling sites to fill a talent shortage. They areÂ IT developers, sought after for their deep technologyÂ expertise, or they are knowledgeable project managersÂ and consultants. These workers are filling important roles Â across all lines of business, geographies, and industries.
Now more than ever, talent is a differentiator for market-leadingÂ organizations in todayâs ever-changing globalÂ business environment. The use of external labor allowsÂ organizations to access top-tier, specialized talent toÂ complete mission-critical projects that directly impact aÂ companyâs bottom line.
Contingent workforce management programs haveÂ evolved: Nearly all business leaders agree (95 percent)Â that flexible labor is an important part of their corporateÂ strategy, and there are new strategies to optimize thisÂ workforce.
Even though external workers are a vital labor source,Â there are obstacles. According to Ardentâs research, 48Â percent of respondents find a lack of intelligence andÂ visibility as their top challenge, followed by a need toÂ enforce compliance. Many companies have standardizedÂ the management of this workforce under a formalÂ program, which is helping to streamline the process.
The report identifies four major trends that impactÂ contingent labor programs.
1. SOW management: room for improvement. OnlyÂ 28 percent of companies deem their SOW servicesÂ management a strategic part of their overall workforceÂ program. Further findings show that over the nextÂ 12 to 18 months, many companies are focusing onÂ increasing their efforts to manage services, includingÂ tracking headcount and equipment, improving supplierÂ management, and enhancing on- and off-boardingÂ capabilities for SOW.
2. Technology is increasing in capability. The roleÂ of technology has evolved beyond the simple useÂ of a platform to manage workers. Todayâs vendorÂ management systems (VMS) are integrating newÂ technologies like freelancer management systems (FMS)Â and incorporating advanced analytics, mobile capabilitiesÂ and more.
3. Total talent management is no longer a buzzword.Â Todayâs organizations are beginning to employ strategiesÂ to gain a more holistic view of the workforce acrossÂ employees and external labor. The study reports thatÂ 80 percent of respondents list total visibility as the topÂ benefit of incorporating a VMS.
4. Globalization creates organizational obstacles.Â The impact of globalization has made managingÂ the workforce much more challenging, and it willÂ only continue to grow in complexity. Nearly half ofÂ Ardent survey respondents say they lack operationalÂ standardization on a global scale. Plus, 40 percent ofÂ companies lack basic intelligence around these externalÂ workers, including their locations, assignments, andÂ performance.
Looking at Best-in-Class
Ardentâs report found that high-performingÂ organizations are significantly ahead in the contingentÂ workforce management game. When it comes to externalÂ workforce management, the gap between the dos andÂ the donâts is widening. Those that are considered best-in-classÂ are realizing benefits on a much greater scale. CaseÂ in point: Best-in-class companies:
â¢ Are 2.5 times more likely to be able to account for allÂ external labor and services in planning, budgeting, andÂ forecasting;
â¢ Achieve cost savings at a 94 percent higher rate;
â¢ Are approaching a 25 percent higher occurrence ofÂ achieving compliance to labor laws and independentÂ contractor standards; and
â¢ Have a 70 percent higher quality index score (a measureÂ of the quality of oneâs overall contingent workforce).
How are these companies able to achieve this level ofÂ success? They take a much more strategic look at theirÂ contingent workforce management activities and focusÂ on a few key areas. First, they take advantage of bigÂ data and use it to determine performance, predictÂ workforce trends, and make better decisions. Second,Â they stay focused on the core competencies of workforceÂ management, ensuring they have standard, efficientÂ processes built around a formal methodology. Third,Â they keep compliance front and center; best-in-class ofÂ survey respondents are 85 percent more likely to have aÂ cross-functional governance team in place. They also haveÂ implemented a total workforce management strategyÂ that incorporates holistic planning of all types of workers.
The way organizations manage talent is changing. As theÂ flexible workforce continues to rise and gain momentum,Â companies need to ensure that the management ofÂ such workers is in a place for growth and for change.Â Implementing a system to manage non-traditional talentÂ allows for the success of an organization at large.