One area where companies are increasingly focusing attention is the contingent workforce. In some industries, the ratio of full-time employees to external staff is 50-50. Is this poor spend management? Or a smart approach to leverage a wider pool of talent and skills in the next-generation workforce?
I discussed these questions and the trends shaping the total workforce with Arun Srinivasan, VP of Marketing and Strategy at Fieldglass. Arun has spent more than 20 years examining contingent workforce management. From his vantage point, the nature of contingent work has undergone a fundamental shift partly driven by the work style preferences of a new workforce. This blog post is the first in a two-part series of my talk with Arun.
The common perception is that external labor largely encompasses low-skill, temporary workers. According to Arun, the nature of today’s contingent workforce is much more dynamic. It ranges from independent contractors, consulting engagements, offshore, and outsourced services. Contingent workers include highly-skilled professionals, such as doctors, nurses, architects, and paralegals. In fact, many contingent roles are so highly-skilled that it’s become difficult for companies to recruit full-time employees for the work. It’s a war for workforce talent.
For external workers with high-demand talent, the opportunities can be quite profitable. Benefits also extend to work flexibility, which includes work locations and hours to the variety and nature of projects assigned. This level of work flexibility is especially appealing to the newest generation of workers, who value assignments that they view as purposeful and that offer interesting learning experiences.
Q. Aside from visibility, what other factors are driving companies to improve their contingent workforce management?
There are several. Take compliance for example. Healthcare and other business sectors with strict regulations need to track certifications of all workers. These companies are subject to audits, and inaccurate or lapsed documentation could result in the suspension of business operations.
Regulatory rules can vary across geographies, including in the U.S. at the federal and state level. It’s important that companies ensure their management of contingent workers correctly follows the laws required in each locale where they operate. In Europe, policies can be much more restrictive than in the U.S., where work councils play an important role in labor rules and practices.
Compliance issues also concern business processes. Are companies monitoring how their employees and contingent staff follow business practices to ensure quality results? A lack of attention could trigger product recalls or worse.
Q. What risks do companies face when it comes to contingent workforce management?
Some companies look at the contingent workforce as a spend problem. There can be several functions across an organization that source contingent workers through multiple vendors. Leaders may see this as a low-hanging opportunity to cut costs, such as consolidating vendors and instituting volume discounts.
Companies also need to understand the available supply of workers in the marketplace. If a competitor opened a facility in your locale, could they hire away critical contingent workers?
Some companies may look to concentrate spend with one or two contingent workforce suppliers. What happens if one of those suppliers goes out of business? How will companies maintain teams of workers that aren’t employees?
Looking to learn more? Fieldglass hosted a webinar earlier this year with two customers to discuss the industry’s most pressing concerns. You can access the webinar recording at the Fieldglass website.
Stay tuned for part two of my discussion with Arun. The next blog post will cover characteristics that are common among companies with best-in-class practices and how business networks can help optimize contingent workforce management.