According to the 15th Annual Price Waterhouse Cooper Global CEO Survey, 66 percent of the 1,258 CEOs responding said they would like to spend more time “developing leadership and talent pipeline.” I guess their people are pretty important to CEOs. In fact, I do not know any CEOs who, when asked about their top five concerns for competitive advantage, do not mention (yes, you guessed it) the workforce.
The workforce is composed of three parts in many companies. The permanent workforce is first and is heavily programmed by HR and line management for retention and performance, incentives, and motivation; it has succession planning tools and sophisticated metrics to manage it. According to Aberdeen Group’s 2010 Contingent Labor Management Study, the permanent workforce represents about 80 percent of the labor pool.
The contingent pool represents about 20 percent on average. In parallel come findings from the 2012 Metlife Study of Employee Benefits Trends, released two weeks ago: “The study found that employee loyalty continues to wane. The percentage of employees who feel a very strong sense of loyalty towards their employer is at only 42 percent—a seven-year low. One in three people would like to work for a different employer in 2012, but that number climbs to one in two for Gen Y employees.” This portion of the workforce composed of contingent workers is projected to rise. Workers might very well want to be hired as contingent labor and companies might want to hire them that way in the future. For the 20 percent that are contingent labor, there are typically no programs to measure performance.
Where does the third group come from? It is the consultants on Statements of Work and the independent contractors; most companies use them by the thousands but, inexplicably, do not think of them as part of their workforce. Which is nonsense. Most of the companies providing MSP are the largest and most sophisticated human capital management providers in the world. They have capabilities vastly exceeding the ability to produce centralized invoicing (although that is a very convenient feature of a standard MSP program). While the savings opportunities of MSP are well documented, and the efficiency is easily demonstrated, more HR-related objectives can be realized through these programs. To date, however, MSP in many companies has been led by procurement.
HR should begin (it will take awhile) to use the MSP provider and their VMS software platforms to produce performance measurement and productivity improvement programming for contingent labor. This is a new frontier and an important one for HR to pursue as the overall workforce moves toward what some are calling the “free agent economy.”
The aforementioned Aberdeen study concludes, “companies enjoying best-in-class performance share several common characteristics [and are] 60 percent more likely than all other companies to define/communicate metrics for contingent worker performance measurement.”
Most of the major MSP providers offer other HCM services that can be integrated into MSP platforms over time. It is critical for HR to more often partner or lead the efforts on the contingent labor programming and stop treating contingent as the “other workforce” or not part of the workforce. As, on average, 20 percent of your workforce or higher is contingent labor, they should not be an afterthought as this point. It is a significant resourcing strategy, and a one percent shift in performance productivity could result in millions to the bottom line for your company—and a feather in the cap of HR for leading the charge.
This month, we rate the top MSP providers in our annual HRO Today’s Baker’s Dozen
Customer Satisfaction Ratings in MSP. Beginning on page 14, there is a list of the best
companies in the MSP industry, and according to all of you, they do great work. If you work with them strategically, they can also help you and your company do even greater work.
-Elliot Clark
The Total Workforce
