A guide to creating a talent strategy including contingent workers

November 3, 2021

Acquiring the right skills at the right time and for the right cost is one of your fundamental sources of competitive advantage. However, some skills and occupations are in permanent short supply, others are only needed at the ‘right time’. This means a talent strategy that includes an extended workforce of high quality, skilled, flexible, agile and resilient contingent workers is essential for your organisation to compete effectively.

What is your talent strategy?

Your talent strategy will match the needs of your business strategy with the right human capital resources, or the people, who can deliver that strategy. This alignment of talent strategy and business strategy is your talent optimisation strategy.

Unless you are a start-up, or a new internal business unit, you are probably not starting with a blank sheet, and your organisation has people already. Your talent optimisation process could look like this:

  • Understanding your organisational strategy
  • Identifying the human capital requirements to deliver it – the people you will need
  • Assessing your existing employees and contingent workers – do they have the skills and capabilities?
  • Gap analysis – having assessed your existing workforce, what are you missing?
  • Talent acquisition – going out to the labour market and sourcing the talent you don’t have, and retraining/focusing the talent you do have.

The above process is building your talent organically to meet strategic needs. An alternative approach is to buy your talent, through acquiring another organisation that already has all the talent in place and bolting it onto your business, or through contracting out the services.

Acquisitions can be highly effective and faster than organically building your talent. However, there are risks, such as culture misalignment. For example, if your talent comprises knowledge workers, and they are highly mobile. A culture clash that reduces morale could drive your most valuable human capital, your knowledge workers with their portable knowledge assets, to leave, leaving your acquisition a failure.

Contracting out is also a potentially swift solutions to access talent, plus you are accessing an organisation that provides the services you need as part of its core competencies, so you would expect them to be good at it. Careful specification at the outset is essential to avoid contractual scope creep and variations that may lead you to spend more than originally planned or hire the wrong service provider.

Why your talent strategy needs contingent workers

Acquiring those right skills for your organisation during your talent optimisation process is only going to get tougher. Research by McKinsey highlights that nearly two thirds of global executives believe that within the next five years half of their workforce will leave the organisation or need retraining. That is a lot of workers to find, especially if all your competitors are facing that same challenge.

So, actually your source of competitive advantage is not just your talent. It is how skilled you are at identifying the mix of employed and contingent talent, of identifying the right people, then hiring them faster and more cost effectively. Your ability to identify and acquire the right skills therefore underpins whether you respond to market challenges and opportunities faster than your competitors.

The benefits of hiring contingent workers typically include:

  • Short-term access to strategic skills
  • Capacity management
  • Agility and flexibility, the ability to scale up and down
  • Reduced employment risk – employees have rights.
The most important benefit is your ability to use contingent workers. If you have a strategy and processes that facilitate rapid talent sourcing and acquisition, and these are more effective than your competitors, then you will compete more effectively. The converse is true, poor talent acquisition skills will mean you get left behind in the race for the best and most effective talent.

Tools to deliver the contingent worker talent strategy

Having established what mix of employed versus contingent talent you need, human resources departments (HRDs) and procurement functions face several challenges in delivering contingent talent to an organisation:

  • How do you create job requisitions that identify the talent you need? What experience and skills do you need, and will the workers adapt to your culture well?
  • Having created the right specifications, how and where do you locate the talent you need?
  • Once you start hiring and managing the contingent talent as part of your talent strategy, how do you know how well these people are performing?
  • How well are your employment business and staffing agencies, or your vendors, performing?
The focus of contingent workforce performance management, and the various tech platforms used to manager contingent workers, is all too often on the costs, and not on the performance. After all, contingent workers are people, not pieces of machinery.

A tech solution that enables you to understand how well contingent workers are performing, as well as how much they cost, is essential. You might be spending under budget, but the project is not achieving its milestones because the cheap labour you’ve hired lacks the skills and experience to effectively deliver the strategy. You need a system that will tell you if milestones according to statements of work (SOWs) are being achieved, as well as how much it is costing.

Analytics tools, potentially aided by artificial intelligence (AI) that can remove your unconscious bias, will highlight trends and themes within your organisation, providing you with actionable insights. The reason SOW milestones are falling behind may not just be cost-related.

For example, you might have contract developers used to a T-shirt and jeans workplace being managed by suit-wearing back-office banking operations managers who are purely process driven and who have no concept of how developers work. Half the team will leave the project in a week and the other half will stay because they are not good enough to get another contract.

Create effective talent strategies using a vendor management system

A vendor management system, VMS, provides you with data and analytics tools that make it incredibly easy to track and manage the activities and performance of your contingent workers and vendors. It enables you to track costs, with analytics highlighting the differences between your vendors’ performance.

The right VMS will go a step further and give you people insights. You can identify worker churn, those leaving a role because it is not a good fit, and consistent missed milestones, or other signs that something is wrong. Perhaps the reason one vendor supplies fewer and more expensive contractors than its peers is because they better fit the job requisition, so meet milestones without churn.

To learn more about what a vendor management system is, what its key features are, and what benefits they can bring to your organisation, download our free guide. It’ll give you all the information you need to understand how a VMS can aid in contingent workforce planning, forecasting, management, and even procurement.