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HCMWorks Insights

How to Manage a Contingent Workforce, a Procurement and HR Perspective

Posted by Julia Fournier on 26 Apr 2018

With an ever-increasing rate of adoption for all forms of contingent labor, human resource departments are experiencing challenges when dealing with the management of their contingent workforce.

This has nothing to do with the HR professionals, or their understanding of contingent processes. It has more to do with the fact that they do not have the tools, experience or time necessary to manage these contracts due to the varying complexities involved.

Potential issues with contingent labor only present themselves when there is incorrect management, further reinforcing the importance of a clear contingent workforce strategy. There are a range of challenges that could occur, from mismatched management strategies to inadequate partnerships with procurement or talent stakeholders.

Procurement and HR departments often look at contingent workers from different angles. Procurement departments tend to see them as a contractual asset, looking at their specific skill-set and how that can help their company over a certain period of time or for a specific task. Meanwhile, HR may look more at the worker’s character and role in complementing the organizations talent requirements.

Neither view is more correct than the other. The benefit of the procurement approach is that they analyse the exact needs of the role before finding the talent to fill it. The human resources approach, as the name alludes to, focuses on the human element of the role, which could include leadership traits, fit with corporate culture. Some would say this HR approach doesn’t quite gel with the contrasting contingent workforce, but HR teams will succeed as long as they are willing to adapt.

HR has always been a vital core element of any business, and it will continue to be as we shift towards an increasingly growing contingent workforce. Contingent labor does, and will if it doesn’t already, play a huge role across many industries. HR teams need to be prepared to engage with this medium.

Contingent workforce rates have a larger impact than just your costs. They directly impact how many potential workers enter your pool, the duration it takes to fill gaps, worker turnover and the volume of hires you need to make.

This is why HR and procurement need to work together to best create an effective contingent workforce strategy. Procurement brings their knowledge of staffing agencies and MSPs, while HR brings insight on how the contingent strategy can work alongside the company’s overall employment strategy. Without synergy between these two departments there will be additional costs and the potential for rogue spend.

An issue with hiring contingent workers without a clear strategy relates directly to the compensation structure. Your internal workers will be salaried with a range of benefits and perks to keep them satisfied, this may be deviate significantly for your contingent labor.

For the contingent workforce there is a focus on contract length, the rate and the potential to develop into a full-time employee. Contingent workers normally are sourced and work through staffing agencies, and although this reduces the strain on the internal departments, the rates are often disguised and are dramatically higher than market value.

The contingent workforce can be complex, but it doesn’t have to be, unlock and understand the vast amounts of benefits you can get from implementing an effective contingent workforce strategy today.

Check out our free ebook on taming your contingent workforce.

Tags: Contingent Workforce

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