H R and procurement are at a crossroads. Research from Ardent Partners predicts the use of contingent labor will increase by nearly 30 percent over the next three years, and that contractors and temporary workers will make up 1/5 of the workforce by 2022.
With a war for talent already underway, it is clearly time to adapt.
With so much information on the subject and so much at stake, many companies may be wondering how they will handle talent strategies moving forward. We decided to share a few tips to help you overhaul your processes and prepare your organization for long-term success. Although you do not have to tackle everything at once, getting started now will give you a leg up on the competition.
The problem with current talent strategies
Human capital is a core source of competitive advantage. Most companies can identify a scarce resource within their organizations, but it is not oil, coal, or lumber. It is people. Specifically, it is people with specialized knowledge, skills, and experience. This scarcity is the reason why the need for contract talent is pressing and will continue to rise.
Contingent labor is a vital component in achieving primary goals and objectives for most businesses today, but many companies are not prepared to deal with the future of contingent workforce management. Managing complex contingent labor requires a multi-tiered program and robust project-tracking capabilities that most organizations do not currently have in place.
If the proverbial writing is on the wall in terms of contingent labor and workforce management, why are more firms not tackling the problem head-on? The answer may surprise you.
Why you might not be ready for the future of talent management
Most HR and procurement professionals have heard the news and seen the data. The problem is – just like the first prospectors during the California Gold Rush – many of us are so excited about the promise of a promising future that we rush to get started without the proper tools.
Have you ever seen pictures of those old-time prospectors panning for gold? Where are the shovels and pickaxes? Where is all the equipment? Maybe that is why so many of them never struck gold. Do know who was successful during the gold rush? Samuel Brannan. He was the first millionaire of the California Gold Rush. His secret? He had the tools.
What does this metaphor have to do with contingent workforce management? The components of today’s workforce are growing more complex and require better processes, strategies, and solutions to manage them. In other words, better tools.
Every organization faces a series of global challenges in its management of its non-employee workforce, including:
- the need for cost reduction
- the need for better visibility into contingent labor
- today’s workforce is becoming more “blended”
- concerns over compliance (federal, state, regulatory).
Preparing for the future of talent management and the impending changes in the industry will require organizations to address challenges even more complex than the ones faced previously.
According to Ardent Partners, enterprises looking to improve their contingent workforce management operations should prepare for “the strategic revolution of contingent labor: many new and varied forms of talent, spread across dozens (if not hundreds) of critical projects, [which] are connected to various expenses, milestones and objectives.”
How can companies prepare?
Design talent strategies for the future
Effective talent strategies for the future will require HR, procurement, finance, and other stakeholders to work together. Consider following these tips to get your contingent workforce program in order:
- Embrace Total Talent Management (TTM). According to Ardent Partners, 57 percent of companies in the State of Contingent Workforce Management (CWM) research survey cited TTM as the top industry-level change to come in the greater scope of contingent workforce management. Total Talent Management requires centralized management of traditional and non-traditional workers using a strategic mix of CWM-specific solutions (i.e., VMS, MSP, etc.) and human capital management platforms (such as RPO) in a collaborative manner.
- Take a holistic view. Use Ardent Partners’ Contingent Workforce Management Framework, designed to help enterprises evaluate the status of their contingent workforce operations and “develop a series of processes and capabilities to effectively manage the three major layers of modern contingent workforce management.
- Mix it up. Experts recommend blending workforce management strategies (i.e. onboarding, offboarding, talent management, etc.) with spend management strategies (supplier management, supplier identification, leveraging consistent contract language, developing a single master services agreement (MSA), etc.).
- Break down silos. Complex contingent labor affects different units across the organization. You must measure the financial implications of these projects and services on the entire enterprise.
- Get help. Solutions such as MSP and VMS offerings are designed to add value to your CWM program. MSPs are experts in managing day-to-day operations for contingent workforce management processes. VMS technology – with its deep Workforce Analytics, dashboards, and SOW/service-specific functionalities – is the perfect solution for your complex contingent labor management program.
- Ardent Partners research found that users of MSP solutions have achieved a 21 percent higher instance of temporary workers meeting or exceeding pre-defined and communicated goals and objectives.
- Ardent Partners research found that VMS users have a 20 percent higher instance of accounting for contingent workers in greater corporate financial budgeting, planning, and forecasting than non-VMS users.
- VMS users are 45 percent more likely than non-users to have supplier identification, onboarding, and offboarding capabilities enabled within their contingent workforce management program.
- Stay compliant. Keep compliance initiatives top-of-mind. If you are currently sourcing using a fragmented model, not only are you probably suffering from inefficiencies in your process, but also exposing yourself to serious compliance risks. Procuring and managing contingent labor has inherent risks and complexities. Each country has its own laws regulating the use and management of contingent labor. You must ensure your suppliers and managers are complying with all the rules.
- Develop a focus on business intelligence. Analytics will be increasingly important. Building an effective workforce strategy is much easier when you know how to make sense of all the information at your disposal. Better data leads to better decisions. You can use your analytics to glean insights that will enable you to identify high performers, retain the right workers, and shift human capital to other parts of the organization in conjunction with business strategy.
- Share the work. Although much is made of HR’s role in the future of talent management, procurement will continue to play an invaluable role. The heart of contingent labor programs involves pure procurement principles, like strategic sourcing and supplier management. As mentioned earlier, everyone will have to work together.