Disparate, decentralized and huge
Today, up to 35% of the workforce in most organizations is contingent (temps, consultants, SOW and others), but you might never know it. Most businesses lack visibility on their non-permanent workers. But if you don’t see them, your organization could face serious financial consequences, including the hefty cost of employee misclassification.
EXECUTIVE SUMMARYUNNECESSARILY EXPENSIVE SEE YOUR WAY CLEAR TAKE CONTROL |
Project leaders, hiring managers and department heads in multiple locations – facilities, offices, branches and divisions – throughout the state, the country or even the continent are all doing their own thing to meet rising demand, fill skills gaps and replace Boomers reaching the age of retirement.
The traditional view of contingent workers sees them as temporary workers hired through staffing vendors to fill short to medium-term gaps in the workforce: replacements for maternity leave, sick leave, seasonal hires to shore up capacity in peak periods, etc.
But when you start peeling back the layers and look beyond this traditional view, a very different image emerges. The contingent workforce is changing and, as a result, so must contingent worker accounting.
Today, the contingent workforce is made up of many faces and these faces are hiding in plain sight. They function inside your organization, or on the periphery, largely undetected by HR. These workers are your directly sourced temporary workers, interns, consultants, freelancers, SOW and contract workers, as well as Independent contractors.
You’ll find them in IT, technology, engineering, health care, transportation, retail, and more. According to recent estimates, the contingent workforce can represent as much as 35% of the total workforce in most organizations. Meanwhile, organizations consistently underestimate the size of the contingent workforce among their ranks.
As the saying goes, you can’t manage what you can’t measure. So a lack of visibility of contingent workforce headcount and spend can translate into some significant challenges for an organization. To name just a few:
Lack of contingent workforce visibility can potentially represent millions of dollars in needless overpayments and hidden rogue spend, as well as potential liability for misclassification and co-employment challenges by the IRS and DOL.
Throw in the risk of class-action lawsuits by contingent workers themselves and it becomes clear that getting a handle on the full extent of your contingent workforce is a strategic and urgent undertaking.
Here are some steps you should consider:
Consolidate and centralize – Put information on all your contingent workers in one place, regardless of their type and source. Build a central repository that consolidates all the various types of non-permanent across your organization.
Catalog, classify and validate – Create a comprehensive job catalogue of all non-permanent positions in your organization. Understand the nature of the work they do for you. Make sure they are properly classified and, if they are independent contractors, verify that they actually qualify to be classified as such. Not everyone who claims to be an IC is eligible to work as an IC.
Document, educate, propagate – Success depends on managing change. Make sure your managers understand the value of centralizing the management of your contingent workforce. Demonstrate the positive impact on the business. Then roll out best practices across the various departments, divisions and locations.
To achieve all this, many organizations turn to a Contingent Workforce Managed Services Program, often referred to as an MSP. It used to be that MSP solutions were reserved for large enterprises, but now they are accessible to mid-sized organizations across a wide range of industries.
In addition, there are several intermediary solutions that enable you to gain better visibility and control over portions of your contingent workforce, including Independent contractors and directly sourced candidates.
Want a clearer view of your Contingent workforce? Need some help? Ask one of our contingent workforce consultants how HCMWorks can audit your contingent workforce and build a roadmap for greater visibility and control. Request a no-obligation discovery call to learn more.