Extended workforces have become a source of competitive advantage and core operational capability. With complete data visibility across your organization, coupled with analytics and artificial intelligence (AI) turning information into actionable insight, a vendor management system (VMS) can help you to make better decisions.
Acquiring and managing your extended workforce effectively is an essential part of your total workforce optimization strategy. This means finding the optimal combination of permanent and contingent workers with the skills you need when you need them and within your budget.
However, how do you know that workers are arriving at the correct locations and with the right skills? Are your contingent workforce vendors pricing their workers competitively? Which assignments are more efficiently performed by contingent workers or contract service providers, and which by employees?
Unless you can answer these questions, your strategic planners and contingent workforce program office are working blind, negatively impacting performance, reputation, and profitability. However, add data and analytics to the mix, and then your organization can make the informed strategic choices it needs to be more competitive and profitable.
Data informs your total talent acquisition strategies
The process of total workforce optimization tells you the right mix of employees and non-employees to accomplish what your organization wants at the target quality and as efficiently and cost-effectively as possible.
With talent pools of permanent employees and your extended workforce to choose from, how do you know when to use an employed or contingent resource? At times, the choice is obvious because you may need short-term access to strategic skills, so using a highly skilled contractor or interim worker is the right choice.
But what if this requirement is ongoing across your organization in many different departments or locations? It is only by having data visibility of contingent worker use from across the organization that you would find out.
As a result, this skill requirement could be reclassified as a core skill so future hires for the role are permanent. This visibility ensures you always have the right skills available, improving performance and reducing business risk.
This example highlights that the ‘when’ of data is just as critical as the ‘what.’ If your hiring data is visible across the organization and an alert about a demand or assignment expiry pattern is triggered through analytics, you can make faster talent acquisition decisions. There could be assignments expiring in one part of the business as fresh assignments are activated, allowing a seamless transfer of skills and knowledge.
Skills and performance management using SOWs and data insight
When developing your workforce strategy, you need to understand whether your contingent workforce has the right skills and delivers statement of work (SOW) milestones on time and budget. Gaining this knowledge across your organization requires visibility, monitoring, and measurement of all SOW-based contracts.
With the SOW data, you can use analytics to identify trends and measure performance. This enables you to determine whether non-employees are delivering the target level of performance or whether a different resource is required. As part of your wider total workforce optimization strategy, you can also explore automation and outsourcing options.
Skills and experience are not the only criteria for a successful engagement. To add value, a contingent worker should start contributing from day one. This requires immediate integration with the rest of the team, which requires effective soft skills. Your data must provide those insights so you can choose the contractor or freelancer with the right combination of professional and interpersonal skills based on previous performance.
Optimal talent acquisition and vendor choice
Following your strategic decision to use contingent workers for a specific role, the next challenge is to locate and acquire them. Your choices are typically in-house and external vendors, and if you choose external vendors, which ones?
Again, visibility and data are the winning factors for optimal strategic decisions. Is your in-house talent acquisition function more effective than external vendors and how can you set KPIs to determine this? Perhaps it is less effective in some areas, so your best option may be to outsource those, and keep direct sourcing for others.
Data for your contingent workforce suppliers’ scorecards
When outsourcing, contingent workforce vendor choice is often decided by relationships or inertia – ‘we’ve always used them’ – and not metrics. Furthermore, processes, markups, and performance can vary widely, not just from vendor to vendor but also from location to location.
So, vendors need KPIs, too, which should be monitored, measured, reported, and analyzed using a scorecard focusing on quality, cost, and efficiency. Using this data from across your organization, you can discover which vendors are placing well-rated workers with competitive pay rates that retain workers alongside equally competitive bill rates and markups.
Churn from poor hires and poor quality reduces productivity and can be a significant hidden cost, affecting your business performance.
Take data-driven strategic decisions using a vendor management system
A vendor management system, VMS, provides 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 compare direct sourcing against vendors, and also compare vendor performance.
You have visibility of data across your organization, providing you with insights for creating more effective talent optimization strategies. The insights you gain from data analytics and AI drive real-time continuous improvement and control across your organization.
To learn more about what a vendor management system is, what its key features are, and what benefits it can bring to your organization, download our free guide. It’ll give you all the information you need to understand how they can aid in contingent workforce planning, forecasting, management, and even procurement.
