A new report points to four major trends impacting contingent labor programs.
By Arun Srinivasan
Gig economy. Uberization. Freelance nation. As these words become household terms, it’s clear that the traditional workforce is changing right before our eyes. It’s not about the 9-to-5 employee anymore. Today, 35 percent of the total workforce is made up of contingent labor, including temporary workers, project-based services, Statements of Work (SOWs), and independent contractors.
This external workforce is flexible, mobile, on-demand,and important: 95 percent of businesses consider it vital not only to day-to-day operations, but also to overall business growth and success, according to new research from Ardent Partners, underwritten in part by Fieldglass: The State of Contingent Workforce Management 2015-2016.
Just who are these workers? They are specialized nurses and healthcare professionals working flexible schedules. They are highly experienced oil rig laborers, flown in to remote drilling sites to fill a talent shortage. They are IT developers, sought after for their deep technology expertise, or they are knowledgeable project managers and consultants. These workers are filling important roles across all lines of business, geographies, and industries.
Now more than ever, talent is a differentiator for market-leading organizations in today’s ever-changing global business environment. The use of external labor allows organizations to access top-tier, specialized talent to complete mission-critical projects that directly impact a company’s bottom line.
Contingent workforce management programs have evolved: Nearly all business leaders agree (95 percent) that flexible labor is an important part of their corporate strategy, and there are new strategies to optimize this workforce.
Even though external workers are a vital labor source, there are obstacles. According to Ardent’s research, 48 percent of respondents find a lack of intelligence and visibility as their top challenge, followed by a need to enforce compliance. Many companies have standardized the management of this workforce under a formal program, which is helping to streamline the process.
The report identifies four major trends that impact contingent labor programs.
1. SOW management: room for improvement. Only 28 percent of companies deem their SOW services management a strategic part of their overall workforce program. Further findings show that over the next 12 to 18 months, many companies are focusing on increasing their efforts to manage services, including tracking headcount and equipment, improving supplier management, and enhancing on- and off-boarding capabilities for SOW.
2. Technology is increasing in capability. The role of technology has evolved beyond the simple use of a platform to manage workers. Today’s vendor management systems (VMS) are integrating new technologies like freelancer management systems (FMS) and incorporating advanced analytics, mobile capabilities and more.
3. Total talent management is no longer a buzzword. Today’s organizations are beginning to employ strategies to gain a more holistic view of the workforce across employees and external labor. The study reports that 80 percent of respondents list total visibility as the top benefit of incorporating a VMS.
4. Globalization creates organizational obstacles. The impact of globalization has made managing the workforce much more challenging, and it will only continue to grow in complexity. Nearly half of Ardent survey respondents say they lack operational standardization on a global scale. Plus, 40 percent of companies lack basic intelligence around these external workers, including their locations, assignments, and performance.
Looking at Best-in-Class
Ardent’s report found that high-performing organizations are significantly ahead in the contingent workforce management game. When it comes to external workforce management, the gap between the dos and the don’ts is widening. Those that are considered best-in-class are realizing benefits on a much greater scale. Case in point: Best-in-class companies:
• Are 2.5 times more likely to be able to account for all external labor and services in planning, budgeting, and forecasting;
• Achieve cost savings at a 94 percent higher rate;
• Are approaching a 25 percent higher occurrence of achieving compliance to labor laws and independent contractor standards; and
• Have a 70 percent higher quality index score (a measure of the quality of one’s overall contingent workforce).
How are these companies able to achieve this level of success? They take a much more strategic look at their contingent workforce management activities and focus on a few key areas. First, they take advantage of big data and use it to determine performance, predict workforce trends, and make better decisions. Second, they stay focused on the core competencies of workforce management, ensuring they have standard, efficient processes built around a formal methodology. Third, they keep compliance front and center; best-in-class of survey respondents are 85 percent more likely to have a cross-functional governance team in place. They also have implemented a total workforce management strategy that incorporates holistic planning of all types of workers.
The way organizations manage talent is changing. As the flexible workforce continues to rise and gain momentum, companies need to ensure that the management of such workers is in a place for growth and for change. Implementing a system to manage non-traditional talent allows for the success of an organization at large.