The External Wokforce Dilema
As competition becomes fiercer and tighter, companies are constantly looking for strategies to maintain or grow their market position. C-level execs are constantly looking for new ways to innovate, create new business models and maintain customers satisfied. To accomplish this, one of the main directives in many executive strategic planning sessions is to increase the focus on their core business and to assure innovation continuum. This is where, the external workforce, both, contingent workers and external providers is becoming a necessity to assure increased focus on company’s core business.
In 2022 a study lead by the Economist Impact Report, which involved interviews of over 400 executives, found that close to 50% of organizations are sourcing talent by increasing the use of external workforce. This finding is overwhelming, and this number is expected to maintain an upward trend.
Although the answer to shifting to a larger external workforce model makes sense, it also creates new challenges that executives are currently questioning:
- Who are the workers executing the different services? Do they have the experience, knowledge and certifications to do the job? Have they taken all the necessary training to ensure corporate standards and compliance and ensure their own safety?
- Where are these workers located? Are they where they should be? Is there visibility of where each of them is located? Are they really there? In what branches are they doing their job? What areas are they servicing?
- What access do they have to physical premises and logical systems within the organization? Are these the right accesses based on their role? Are accesses being revoked once the service is completed?
- What are they doing? Are the delivered tasks and deliverables completed in a timely basis? Are these delivered within corporate quality standards? Which of these workers excel at what they do and which don’t? Is there an objective evaluation throughout the service execution?
- Is the payment accurate? Are the invoices received aligned with the work completed? Are the evidences and proof of the work completed in place? How cumbersome is the invoice reconciliation process? Are the invoices aligned with the contracted amounts? What is the comparison between invoices received and budget for a specific service?
These are some of the questions that executives face and that many times refrain companies to expand their external workforce practice. These are more difficult to resolve, if you add the fact that services are being run by different areas, with no real governance, different processes, decision and approval workflows. Let alone that services can vary considerably. For instance, compare the process that demands the maintenance of an industrial equipment versus the process of monitoring the cleaning service in an office branch.
The array of different services, lack of governance and the fact that service contract management comprises different areas that go from procurement, legal, accounting, planning and different business units make the task of controlling, monitoring and having visibility on external workers and service providers a real challenge, becoming an Achilles heel in many organizations.
Below are some of the considerations that should be considered to ensure such visibility, control and streamline external workforce management:
- The ownership of Service Contract Management is not legal, purchasing or a business unit. It is a cross responsibility and should be managed as such, as a collaborative area among different stakeholders.
- Running this type of initiative is transformational and will indeed bring many benefits to organizations. But in order to be successful, a strong sponsorship from upper management needs to be in place.
- If putting an internal team together to run the external workforce management practice could be a challenge in the organization, you can consider using a Managed Service Provider (MSP) that understands the ins and outs of the program, that will run the program based on your own business needs and attributes and also will help the organization with thorough change management campaigns and KPI monitoring.
- You will need a technological enabler (instead of the tool of choice- Excel), a vendor management system (VMS) that will be key to be able to:
- Monitor the end-to-end process in one platform, getting read of siloed processes and systems
- foster collaboration and alignment between the different internal stakeholders and service providers and external workers to standardize and streamline processes, reduce paper, and most importantly, have realtime visibility.
- One single source of truth, where all the data generated during the service execution is logged consistently to then be used to have strong insights that can allow for better business decisions.
There are many cases of companies that have tackled the external workforce management challenge head on, with many interesting results, allowing them not only to better improve control of all kinds of service contracts while improving providers relationships but also eliminating the fear of increasing their external workforce, allowing them to really focus on what they excel at.
Are you ready for the challenge?