A new report outlines a roadmap for leveraging contract workers.
By Christopher Dwyer
With the newfound reliance on contingent labor now an accepted slice of a multi-tiered business plan, organizations have found that the simple “fill-and-run” contingent workforce strategy of choosing candidates when or where needed is not the ideal approach to this area. Contingent labor in 2013 was perhaps the most complex supply component that the modern organization leveraged, managed, and utilized. This thought is owed to the fact that that contract talent is split into three very intricate “layers” that each warrant their own specific set of capabilities, processes, strategies, services, and solutions (see sidebar: Contemporary Scope of the Non-Employee Workforce).
The need for contract talent is pressing and will continue to rise, but the components of this workforce are growing more complex and require better processes, strategies, and solutions to manage them. Ardent Partners research has determined that that the utilization of contingent labor will increase by nearly 30 percent over the next three years, further cementing the need for more robust capabilities within this arena.
It would be easy to dismiss the newfound complexities of contemporary contingent labor, if not for the current marketplace perception of contract talent and what it means for their business plans and achievement of corporate goals and objectives. Ardent Partners research has discovered that 62 percent of organizations cite contingent labor as a vital component in achieving their primary goals and objectives this upcoming year. In the five-plus years since the economic downturn, contract talent has become just as critical as other key components of the average enterprise.
There is now recognized value in leveraging a non-employee workforce across enterprise projects and other key internal roles. The contingent workforce is still actively driving corporate value for the modern enterprise and will continue to do so as this type of talent is linked to key organizational objectives.
It is no secret that the average workforce is becoming more blended, featuring a mix of traditional employees and contract talent working together for the common good of the greater group. Within this aspect is the rise of “total talent management,” a concept that 58 percent of companies in the State of Contingent Workforce Management research survey touted as the top industry-level change to come in the greater scope of contingent workforce management.
With contingent labor expected to increase significantly over the next few years, many organizations are focused on utilizing similar strategies and processes from their management of traditional full-time employees into their strategic plan for contract talent.
Visibility into overall contingent workforce management is an area that needs improvement for the typical enterprise. Analytics has become one of the more powerful tools in the modern executive’s arsenal over the years as the non-employee workforce has evolved. In fact, analytics and reporting rank as critical components of a successful contingent workforce management program as more and more enterprises realize the value of linking contingent workforce data to greater business planning and budgeting. As contract talent continues to be utilized in high-leverage enterprise projects, data and intelligence related to these initiatives becomes more useful in helping understanding total corporate performance.
Organizations in this research study echo the vitality of contingent workforce: 51 percent of enterprises believe contingent labor will be relied upon even more in the future as more and more critical enterprise projects utilize this type of talent.
As the contingent workforce industry continues to evolve, it becomes critical for enterprises across the globe to build and develop a proper program that can effectively address all layers of contract talent and support the overarching capabilities that link these layers together under a cohesive umbrella and improve performance and corporate value.
The contemporary scope of contract talent is rapidly evolving and forcing organizations to institute more complex measures to drive ultimate value from their non-employee workforce. Ardent Partners recommends the following strategies and approaches for those enterprises seeking to improve their contingent workforce performance:
- Understand the ramifications of contract talent. Where is contingent labor currently being utilized? Which projects are tied to contract talent? What are the milestones and delivery items attached to those projects? Is there a clear picture of the contract workforce? These are all valuable questions to ask; those organizations that cannot answer these inquiries are the ones that do not have the capability to drive value from their contract talent and properly align these workers with the enterprise projects that require their skillsets.
- A little “help” goes a long way. Solutions such as MSPs and VMS offerings are designed specifically for the contract workforce industry and offer veritable value in managing contract talent. MSPs are well-known experts in managing day- to-day operations for all contingent workforce management processes, while VMS technology is the ideal solution for driving efficiencies within complex contingent labor management.
- Compliance initiatives need to be top-of-mind. In the pursuit of top-shelf talent, enterprises are turning to independent contractors. It is imperative to implement robust compliance measurement strategies to ensure that independent contractors are properly classified and managed.
- Analytics is the key to an intelligence goldmine. Many enterprises sit on a goldmine of contingent workforce data, most of which can be leveraged to improve the greater contingent worker management program and gauge the performance of key contingent workers. Agile analytics represent the next wave of business intelligence within this industry and will help enterprises drive multi-functional value out of contingent workforce data. Procurement can utilize spend and supplier data, while HR will benefit from talent management intelligence.
- Identity management capabilities must be streamlined and enhanced to avoid the loss of intellectual property and sensitive information. Too many contractors and temporary workers walk off-site with continued access to enterprise systems. A well- thought offboarding process can go a long way in securing IP and sensitive financial data/information.
For the Future
The recommendations below can help organizations best prepare for what’s ahead in the contingent workforce industry.
- The “blended” workforce is real, and total talent management is an ideal strategy to manage this talent mix. The lines are becoming blurred between traditional and contract talent, as more and more enterprises blend these two very different workforces together for the greater good of the organization. Recruitment process outsourcing will arise as an important offering in the pursuit of total talent management, as its engagement functionalities will prove to be a positive force in managing the modern blended workforce.
- The pressure to find, engage, and retain top-tier talent will intensify. The talent wars will continue to rage, and enterprises across the globe will see their need for unique skillsets increase as the months pass by. Social sourcing and social networking will be ideal strategies in the next generation of contract talent acquisition.
- eWaaS will throw a wrinkle into contingent workforce management. Enterprise-workforce-as-a-service (eWaaS) is the freshest tactic in the contingent worker management toolbox, and organizations will seek to source more contract talent from online labor marketplaces. However, executives must be able to effectively balance cost, compliance risks, and talent.
Contemporary Scope of the Non-Employee Workforce
Ardent Partners defines the contemporary contingent workforce as falling into three main buckets, each of which has evolved significantly over the past half-decade:
- Traditional temporary labor is the “classic” view of contingent labor and involves an enterprise sourcing a variety of short- term roles with candidates from staffing suppliers, agencies, and vendors.
- Complex contingent labor includes statement-of- work-based (SOW) labor, professional services, and non-professional services, and is perhaps the most evolutionary aspect of modern contract talent. These aspects are complex due to the fact that they touch various divisions within the typical enterprise and need to be managed from a variety of angles, including procurement, HR, and finance.
- Independent contractors is the category comprised of freelancers, consultants, and contractors. They are sourced directly by the enterprise. Independent contractors (colloquially known as ICs) carry a variety of risks (namely federal audits and co- employment) if misclassified, but often represent a superior level of talent.
Christopher Dwyer is research director and vice president of operations of Ardent Partners and author of The State of Contingent Workforce Management 2014: A Framework for Success. This is an excerpt of the report.