The massive shift in the structure of labour away from traditional permanent employment to greater use of contingent labour presents significant management challenges to businesses and organisations.
Published on Procurement Leaders (30 July 2015)
Companies in Europe typically have in the region of 5-20% of their workforce made up by temporary workers, up 25% compared with five years ago. This figure varies from country to country with The Netherlands as one of the highest users of non-permanent staff, currently at 21%.
Contingent labour is typically not hired by HR departments, but procured at departmental or project level. They are also paid in very different ways; hourly/daily rates or per project and fall under different taxation rules and rates and governed by different national and regional regulations.
For example, the Dutch Civil Code treats ZZP’ers differently in regards to social security contributions, taxes and insurance. Therefore it is important that there is a clear distinction between employed workers and the ZZP’er workforce. Incorrect categorisation and management of ZZP’ers can have a financial impact on the employer as well as the contractor with tax authorities fining both parties.
On the whole, procurement departments are tasked with obtaining the best suppliers at an optimum rate, while taking a sensible and strategic approach that reflects the organisation’s ethos, core values and vision. If we move away from the transactional side, tailoring organisational requirements with compliance, risk and financial considerations is complex.
In a recent Manpower survey, a quarter of companies in EMEA said that contingent workers are key to their overall workforce strategy. However many CPOs are in ‘heads down’ mode to maintain levels of service and avoid the chaos of change; but for those who lift their heads above the parapet, the future is bright.
Far from control being taken from procurement and placed in the hands of Human Resources, innovative organisations should be grabbing the opportunities that a global workforce can bring, with the measures and controls that Procurement are skilled at. Imagine the economic value to organisations of tapping in to the global marketplace of non-employed workers. Lower costs and expediting time to fill by utilising resources internally and then a seamless transition to extending the resource search outside the organisation are all possible with a number of technologies.
Total Workforce Management (TWM) is not a new concept but, until now, was too complex to implement. Can procurement move beyond a cost control and project management role? Follow these six key steps for success with a TWM programme:
Create a roadmap – Assess from a holistic viewpoint the organisation’s ambitions and current areas for concern, taking into consideration marketing and industry trends. Create a plan with clear and agreed mutual goals for each stakeholder identified in the process.
Manage transformation – Determine who is responsible for driving change and agree and gain buy-in from all stakeholders, especially Board and C-Suite level. Procurement leaders are already in a good position to head up this change management – they understand the suppliers and economic constraints.
Change the goalposts – Consider overall value to the business rather than just pure cost play. Getting the best price will no longer be the ultimate goal for procurement. It will be a combination of finding the best talent, in the shortest timeframe at an attractive or acceptable price.
Work together – Create a culture of cross-departmental sharing of responsibilities. Industry trends indicate a considerable blurring of roles and responsibilities between different departments. This trend needs to continue to achieve the benefits afforded by total talent management. Bringing together the necessary specialist skills from all areas of an organisation is key to form the right alliances to create best practice.
Be data smart – Collect, append and supplement data to enable informed talent acquisition and management decisions. Utilise external services such as screening, certification or referencing to enrich your data and better facilitate the match between workers and tasks or projects.
Invest in the right tools – Bringing the right tools to visualise and share insights with the wider organisation is also fundamental. Reducing rogue spend by introducing a ‘single source of the truth’ with the control of spend that procurement will appreciate and the control of talent quality that HR strives for, will enable a workforce strategy that is achievable today.
With the right kind of support in place, procurement has the skills to lead the vision for global workforce management and harness the benefits of a growing contingent workforce.
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Innovating to Future-Proof Your Workforce
The way work is done is being transformed. By 2020, more than half the world’s workforce will be contingent.