When a company tells you that you can learn from the business and tech giant Elon Musk, it’s usually something inspirational and positive. Well, this time the message is on ‘what not to do’, and we’d like to take a moment and learn from Tesla’s recent mistakes managing their contingent workforce.
On Monday, May 7, 2018, it was reported that Elon Musk was planning to purge Tesla factories of all contractors, both independent and those through a staffing company. In an email obtained by Electrek, Musk warned that outside workers would be denied entry into Tesla factories on Monday morning - unless a Tesla employee was willing to place their own head on the line and vouch for their quality of work.
The contingent workforce can make up to 40 per cent of the total workforce in many modern organizations, and with the many benefits it offers such as better access to talent and lower costs, it would be a mistake for many companies to ignore this vast talent pool. Yet without proper management, contract workers come with risks.
CEOs must make sure they improve the visibility of their contingent workforce headcount and spend, and in turn not underestimate the size of the contract workers within their ranks.
Without improved visibility, organizations will find themselves with poor decision-making abilities on who to hire, inefficiencies with the hiring process, a lack of worker productivity / quality and higher workforce costs.
Here are four strategies to help you avoid making the same mistakes as Tesla:
1 - Consolidate and centralize
Your first step to the successful management of your contract workforce is to put all of your contract worker’s information in one place. The use of a Vendor Management Technology (VMS) can help you build a central system that consolidates and stores the information of all the different non-permanent workers you hire across your organization.
2 - A company-wide strategy
Worker records and hiring decisions are generally managed over different departments, meaning the information stored by many companies is often disjointed and saved in separate locations. Implementation of a VMS should be a company-wide strategy. This central database will allow an organization to automate and streamline the entire contract worker process, from sourcing, acquisition, and management to the payment of the workforce.
3 - Management and best practices
CEOs must make sure that their managers understand the importance, and the value, of centralizing the management of their contingent workforce. They should be able to speak clearly on the positive impact this will have on the business. CEOs should roll out contingent workforce best practices across all departments and divisions of their organization, so that the entire company is on the same page when it comes to the process - from onboarding to offboarding.
4 - Catalog contractors
Once a central database has been created, it’s time to create a catalog for all of non-permanent workers. This should be a detailed look into each of the contract workers, what work they do and the skills they bring to the company. This will help analyze how they benefit the business, as well as help classify them correctly. Remember, not all of those who claim to be independent contractors are eligible to work as such.
Once information has been consolidated about your independent contractors, and a company-wide strategy is in place, your organization will be poised to optimize and scale its contingent workforce.
A well designed program will allow you to compare rates, standardized procedures, manage your contract workforce, gain better access to talent, and reduce any risks involved in hiring non-permanent workers.
Your organization will have the visibility and control it needs to make the most of what is now a highly important workforce for any business. Most importantly, you won’t have to make a drastic decision like Elon Musk and consider purging a large portion of your workforce to address a problem with qualifications, skills, productivity or quality.
Contact HCMWorks today and find out how we can improve your contract workforce visibility.