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Managing a Blended Workforce: Partial Visibility Isnt Enough

A Peoplefluent White Paper

In the wake of economic uncertainty, many organizations are relying on contingent labor to advance
their business objectives. According to the Bureau of Labor Statistics, the number of temporary workers in the workforce has increased by 29 percent since September 2009. Recent projections indicate that the contingent workforce will continue to be among the fastest growing workforce segments, with an increase of 23 percent from 2010 to 2020, or an additional 631,300 jobs, to reach a total of 3.3 million.1 Hiring contingent labor offers significant business advantages -- reduced benefit and overhead costs as well as greater access to specialized skills while providing flexibility to meet business demands. Contract or temporary labor represents significant spend, yet many organizations rely on manual processes or disparate systems for managing the contingent and permanent workforces. Historically, there has been a disconnection in how temporary and permanent workers are managed, with HR responsible for the permanent workforce and contingent labor under procurements domain. However, disparate systems and segregation between the traditional and flexible workforce result in a lack of total visibility into human capital. This increases risk and limits an organizations ability to effectively source talent and optimize costs. With contingent labor playing a growing role in how work gets done, organizations require a more global program to understand the total talent they have access to as well as what they are spending on contingent workers. Organizations that put best practice methodologies in place can optimize their contingent services spend and procurement methodologies and get the right talent in place where and when they need them at the right cost. As organizations seek to improve the effectiveness of contingent labor management programs, a holistic view of the workforce and strategies for optimizing spend is essential. This paper explores the challenges of managing a blended workforce, the risks associated with partial visibility and how the right contingent labor management solution provides the business intelligence needed for informed staffing decisions.

Challenges of Managing the Contingent and Permanent Workforce

While the use of contingent labor is gaining momentum in the U.S., European markets are clamping down on hiring contract or temporary workers and becoming more aware of what theyre spending on contract workers due to changes in the regulatory environment. A European Union ordinance known as the EU Temporary and Agency Workers Directive was introduced in 2008 to regulate contingent labor practices. Its intent was to protect temporary workers and ensure they receive benefits, pay and other working conditions similar to permanent staff. ____________________
1

U.S. Department of Labor, Bureau of Labor Statistics, Monthly Labor Review, January 2012 (http://www.bls.gov/opub/mlr/2012/01/art4full.pdf retrieved 7/12/12)

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Organizations operating in the EU need to comply with the directive and ensure contingent labor employment practices align with its requirements. For example, temporary workers are eligible for the same pay and benefits as permanent workers after 12 weeks on the job. Yet, this has led some organizations to disengage contingent labor before the qualifying period to avoid an increased wage bill. Because the regulation impacts rates, Managed Service Providers (MSP) and agencies need to perform additional tracking, management and reporting when hiring contingent workers. Some organizations are sourcing contingent workers directly, which also requires additional management. And, forthcoming legislative changes may require employers to provide pension contributions to contract workers following the 12-week engagement, further complicating an already complex environment. The burden of additional rules and compliance requirements puts pressure on contingent recruitment in terms of what companies are willing to pay for contingent labor, as well as what they are actually paying. While the laws were put in place to protect temporary workers, it may have the opposite effect and subject them to early termination as organizations look to control costs. While European laws create a need for strategies to comply with new requirements, the need for visibility into contingent labor spend, strong systems and robust processes transcends all geographies. Organizations need greater visibility into the total workforce and better reporting into what they are spending on contractors for all labor types, whether thats temporary, consultative or professional services workers. Organizations also require better insight to understand their total workforce and be able to control, contain or optimize costs and ensure alignment with business objectives. Organizations with visibility into what they are spending -- and on what type of talent -- can make more-informed decisions when it comes to human capital investment.

The Perils of Partial Visibility

With limited visibility, organizations lack detailed information to determine the best source of talent contingent or permanent for a particular role. As noted earlier, managing the flexible workforce requires navigating evolving regulations, stringent compliance requirements and varying sourcing strategies that can include multiple agencies or direct sourcing, as well as tracking the fulfillment of requirements. With disparate systems that do not communicate, organizations lack a complete picture of the skills that are available, whether or not talent is onsite and the associated spend. They also dont have visibility into the talent that is needed.

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Separate systems also create compliance risk. Without a clear snapshot of the contingent workforce, it is difficult to track onboarding and offboarding activities, such as ensuring new hires have completed a background screening or that onsite workers have required certifications and adherence to regulations such as the EU Temporary and Agency Workers Directive. In addition to increased risk, labor-intensive activities, such as tracking if a worker turned in the security badge at the end of their engagement, take resources away from more value-added pursuits. Additionally, manual processes can contribute to overspend because they limit the ability to evaluate and compare vendors and perform accurate market rate rationalization to ensure the organization has access to the best talent at the best cost. For organizations that operate globally, manual processes and multiple systems make it difficult if not impossible to achieve consistency across the organization. Conversely, organizations with a single vendor management system in place can ensure proper protocol was followed by automating onboarding and offboarding processes. Such a system not only ensures procedures are followed and completed, but also stores support documentation for easy access and retrieval as well as to demonstrate compliance. A vendor management system can also provide the business intelligence needed for informed decisions, risk management and strategic spending. The right vendor management system provides total visibility into the flexible workforce and decision-support tools to better evaluate labor sources and improve effectiveness of contingent labor programs.

The Role of a Vendor Management System

The right vendor management system provides cross visibility into the permanent and flexible workforce. Organizations that implement a contingent labor management system realize efficiency gains and visibility into the extended workforce, enabling them to better manage spend, compliance and risk. A solution that combines information about permanent and contingent workforces provides visibility into total talent and allows organizations to more effectively source talent, control costs and manage a blended workforce. With a holistic approach, organizations gain access to detailed information about the workforce and decision-support tools to determine the best labor type for a particular role (permanent or contingent) and execute the right sourcing strategy to procure the best talent at the right cost. Visibility into the flexible workforce also allows organizations to determine the talent they have and where there are opportunities to redeploy skill sets upon project completion. For organizations sourcing hard-to-fill positions or hard-to-find skills, this ensures top performers remain with the organization and that the company has access to the talent it needs to meet business requirements. With full visibility, organizations can perform market rate rationalization and take advantage of optimization opportunities based on statistical data. Rather than using manual processes to generate rate cards, organizations can set market rates for specific job descriptions based on vendor guidelines or not-to-exceed rates to assist with spend management.

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The right system will support location-specific variations through workflows that can be tailored based on country-specific needs, including language, currency, data privacy requirements and more. A system with multi-currency capabilities also provides visibility into exchange rates and local currencies, offering managers both a global perspective as well as the ability to see total spend on a local basis. A vendor management solution also facilitates compliance with government requirements and company policies by proactively tracking action items and tasks throughout the lifecycle of an organizations traditional and flexible workforces. Because everything is automated, it reduces the cost and complexity associated with time-intensive administrative activities and provides a full audit trail of documentation to demonstrate global compliance. And, as social media is used increasingly by job seekers, a vendor management solution with social collaboration capabilities can help organizations optimize talent sourcing through LinkedIn, Facebook, Twitter and other networks. This increases speed and efficiency in connecting with passive and active candidates and enables organizations to interact with talent sources, raise brand awareness and create a streamlined talent acquisition process. A vendor management system provides visibility and control through automation and best practices. As organizations seek to increase efficiencies in contingent labor management programs, an end-toend approach offers measurable improvement and helps organizations achieve maximum value from their technology investment.

The Benefit of Total Visibility

As the flexible workforce gains a more permanent place in how work gets done, organizations that continue to rely on disparate systems and processes for managing the traditional and flexible workforce can result in increased costs, exposure to risk and missed opportunities for competitive advantage. A system that offers a streamlined, collaborative approach and more robust analytics can help organizations gain a more comprehensive view of available talent and associated rates to better manage its total workforce. Using a system to keep tabs on contingent labor, especially in a regulatory rich environment, is critical to control spend, increase efficiencies and improve the quality and performance of contingent labor suppliers. With the right solution in place, organizations can create efficiencies across the entire process from the initial requisition to off-boarding of contract workers and improve the way they source talent to support business goals.

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About Peoplefluent Peoplefluent is transforming Talent Management through best-of-breed technology and expertise. With a deep focus on business intelligence and analytics, the Companys social, mobile and cloudbased technology gives clients the actionable insight required to make strategic decisions that drive better business results. Nearly 80 percent of the Fortune 100 use Peoplefluent Talent Management, Vendor Management and Workforce Compliance and Diversity solutions to manage salaried, hourly and contingent labor across their organization. These solutions manage the entire talent lifecycle from recruiting to onboarding and through the ongoing management of each persons career while helping organizations measure, analyze and empower their existing workforce. The Companys solutions currently support more than 5,100 organizations ranging in size from large, global corporations to small and medium-sized businesses, and it is used by more than 5 million users in 214 countries and territories around the world.

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