Keeping track of your contingent workforce is complex. You simply cannot manage what you can't measure, and most of the organizations we speak to do not have efficient processes, technologies and strategies in place to properly manage their temporary workforce.
It's likely that your organization has hiring managers in different branches of your company engaging contingent or non-permanent workers, without a centralized management process. This means your business is creating unseen workers who are not entirely visible to your human resources department, resulting in rogue spend and wasted money.
Contingent labor can be a significant part of your budget, depending on the size of your non-employee workforce. In fact, figures from Deloitte, suggest that some large companies estimate that up to 30 percent of their procurement spend goes towards contingent workers.
That is a huge amount of money, and shows just how crucial it is for your business to adequately control spend and optimize the processes around contingent workforce management.
Visibility and the ability to aggregate HR and vendor data across an organization, however, can be a challenge. Thankfully, opportunities exist in several areas to help manage contingent workforce costs. To help you get started, HCMWorks has listed three strategies.
We will look at the first strategy in this blog, and dive into the remaining two in the second part of this blog - which you can find here.
#1 - Better sourcing of your contingent workforce
One way to help keep contingent costs down is having access to the best possible talent, who will be readily available for the job you have to fill at a moment's notice. Without fast access to the right talent, your organization will be rushing to fill positions. More often than not, this will result in your company drastically overpaying for your workers or making poor hiring decisions that impact productivity.
On top of this, you need to utilize the the right resources at the right time to access the best talent for your organization, it goes without saying that you pay a large premium when you source through your supply base. When left unchecked, staffing vendors in North America tend to markup anywhere from 30 percent to over 75 percent on your labor.
So how can you reduce spending on your contingent workforce?
A popular method for sourcing talent is through referral candidates. These tend to be your best hires since employees will generally only refer someone who is a good fit for the job, has a decent work ethic and fits well with your organization.
Furthermore, internally sourced workers are usually the most cost-effective hires you can source.
Having a solid attraction strategy will give you better quality candidates and will save you from vendor markup cost and multiple sourcing costs. An example of an effective attraction strategy would be a referral bonus for the person who refers the successful candidate.
Develop an internal talent pool for your company. This central database will contain contingent workers who have previously worked for you - people who have proven their skills and have the work ethic that you are looking for.
This speeds up the process because the candidates have previously been screened, interviewed, vetted, been inducted into your organization and have demonstrated their ability to produce tangible results for you. Within this talent pool, you can include candidates who are deemed as high value, be that via referral or people you know.
Interested in learning more? Read the second half of this blog, where we will discuss the second and third strategies to help manage your contingent workforce costs.
Want to discuss your contingent workforce sourcing further, or simply want to explore some other methods to manage your contingent workforce and better control costs? Get in touch with one of our contingent workforce management advisers today.