Vendor management systems (VMS) are fundamental to the success of any large companies contingent workforce strategy, but what lessons can a business learn from a VMS to improve the way they hire non-permanent workers in the future?
Before we dive into the lessons your company can learn from your VMS software, let’s first look at what a vendor management system actually is and how it can boost your contingent workforce strategy.
Simply put, a VMS is a cloud-based or SaaS software that acts as a central hub for your company to record every detail about your contingent workers and the vendors who provide them. This includes management, payment, the method of sourcing, worker classification, analytics and much more.
This automated approach will streamline your approach to managing your on-demand workers, and will make the complex issues surrounding them - such as on-boarding, candidate selection, compliance, time management, expenses, evaluations and payments - that much easier.
A VMS, however, does much more than making the management of contingent workers easier. Improving the transparency and visibility of your non-permanent workers gives your company the opportunity to review data and ask a series of key questions that can improve your future hiring strategies.
HCMWorks has listed five of the most important questions a VMS can help your company address:
1 - Are we paying competitive rates for contingent workers?
The contingent workforce programs of many companies is still unorganized, fragmented, inconsistent and in need of an overhaul. This results in a plethora of problems, but perhaps the biggest of all for many companies is the overpayment of contingent workers.
Overpaying contingent workers can hit your bottom line and negatively impact profits, but what if there was a way to analyze and evaluate what you pay non-permanent workers? A VMS gives businesses the necessary tools, as well as the visibility, to evaluate whether they are paying workers more than the market rate.
2 - Can we reduce overtime?
Another costly expense for companies is overtime, and it’s often the case that workers who work in the project and contingent world use more overtime than they normally would in a full-time employee role.
Many companies struggle with the recording of time management and the evaluation of non-permanent workers performance. These, however, are essential to cutting down overtime each month.
Avoidable overtime pay can seriously dent your company’s yearly profits, and they can be pretty simple to remove with the proper insight and management that a VMS offers.
3 - Why do we have worker turnover?
Despite the contingent workforce being based on non-permanent work, it’s still highly beneficial for your company to keep partnerships with the best talent available and create long-lasting working relationships.
That’s why it’s essential that you understand why workers both leave, and stay with your company. Using a VMS to understand worker satisfaction will allow you to work with departments to improve company policies and improve the retention of non-permanent workers.
4 - Where are our workers located?
The contingent workforce, as we discussed in a previous blog named “How Technology and Communication Tools Have Fueled the Gig Economy”, has largely been born from huge innovations in communication technology.
Companies can now search and acquire top talent from across the world, and solutions such as live chat, video calls, internet meetings and cloud-based intranet systems allow workers to work from any corner of the globe - so where are your workers located?
Knowing where workers are located, what facilities and systems they have access to and what regulations or laws they need to abide to is crucial for your company’s risk management and the visibility of your workforce. A VMS will store the data needed for this analysis.
5 - With which sourcing methods do we hire the best talent?
As with every business, your company more than likely has made some poor hires, but you probably also have a list of top talent that you trust with multiple projects and keep turning back to time and time again. The thing is, how did you first hire those workers?
Once you’ve hired the perfect worker, it’s easy to let the sourcing method you used to find them slip your mind. However, if you don’t keep track of this information, how is your company ever going to find out the sourcing method that best helps you find world-class talent.
By using the company-wide data stored in your VMS, your business will be able to identify the sourcing methods that best help you find the top talent in your industry, and the projects within your organization that are in the most need of these workers.
The one thing we can learn from these questions is that the use of a vendor management system empowers your company to be proactive, as opposed to reactive. This means your business can learn about your current inefficiencies, and implement processes right now to streamline the hiring and management of your contingent workers.
Want to learn more about implementing a VMS into your contingent workers processes? Contact HCMWorks today.