HR has a challenge when it comes to contingent workforce management. It’s not that HR professionals don’t understand hiring these employees, or even that they don’t possess the tools needed to manage the varying contracts that come with them. In fact, companies depend on the expertise of HR departments for successful and satisfied contingent workers. The challenge often comes from misalignment of goals, which can result in poor collaboration with procurement and disengaging management strategies. And that’s a problem.
There’s a lot of intricacies at work, but HR pros shouldn’t go another day without understanding these key facts about managing contingent laborers:
Contingent Hiring is Transactional
Procurement professionals sometimes view workers no differently than the other line items they purchase. This may seem harsh, but is actually a realistic view of employment and talent acquisition. The benefit of this standpoint is that organizations gain an efficient stand on sourcing and hiring. Procurement teams analyze needs before identifying people to fill roles, and when they do pursue talent, it’s with the understanding of the specific responsibilities the worker will take on. If done correctly, hires will be made with keenly established pay rates and statements of work.
Read the 3 Most Influential Factors Procurement has on the Contingent Workforce for an even deeper look.
Unfortunately, this can be a little mechanical to Human Resource departments, who are trained to see the people behind the job title. HR pros develop skills to deeply understand personal development and succession planning initiatives, which is a stark contrast to most contingent worker plans. Even many of the hourly workers who fall into this diverse category aren’t looking for lasting careers with the company that contracts them. The fissure is clear, but not hopeless or even ruinous. Because…
HR Department Brings Balance
HR is always at the heart of business. Every single piece of a business runs through the hands of employees who depend on an HR team’s advocation. The very same is said for contingent workers, even if they aren’t going to be key players in long-term talent strategies. At a branding level, contractors, freelancers and hourly employees still hold power in determining employer brand, ultimately meaning they can affect the reputation you have amongst future hires. A bad reputation, can deter talent from even applying for permanent positions, with 75% of job seekers considering an employer’s brand before submitting an application.
All in all, the HR department has a way of reminding more financially minded functions, like procurement and executives, why it pays to dig a little deeper in hiring contingent. However, it’s important that HR pros still keep their eyes open to the strategic advantage to having contracted workers...
Your Workforce = Your Cost Strategy
Rates impact more than just your cost. They impact the amount of interested candidates in your candidate pool, how many hires you actually need to make, how long it takes to fill those positions and turnover. That’s right, all those metrics you consistently work around, worry about and strategize answers for are a part of cost strategy.
Workforce hiring and management is a cost and how your company chooses to lay the framework of one will affect the other. That’s why procurement and HR are encouraged to work closely together when it comes to the contingent workforce. Procurement might know all the ins and outs of staffing agencies or how to best work with MSP to offer the right compensation, but without HR’s insight on how that relates to the overall employment strategy, there will be massive and costly disconnects.
One might be overpaying unnecessary talent or underpaying your most valuable employees. However, for global brands, it could go right to compliance, as Raleen Gagnon (@RaleenGagnon) of Manpower Group Solutions pointed out in our recent webinar:
“As an organization, to be truly compliant with the labor laws, you have to have a sense of how your contractors or your agency workers or subcontractors or your freelancers map back to your full-time staff.”
Organizations, as Gagnon explained, run corporate taxonomy projects and restructure their internal employees, but too often forget to consider their contingent workforce in workforce planning. As Raleen continues, that makes it “virtually impossible for an organization to document that they are compliant with the labor law for whatever labor market they are operating in.”
Cost Analysis is Critical
Talent acquisition is an interesting metric and one that continuously alludes anyone who must work with its budget. Everything from skillsets and location to the time of year and economy has an effect on what compensation is right for a worker, long term or contracted. The problem is that hiring contingent workers calls for a completely different view of compensation. Salaried workers, of course, have their salaries and also have benefits and perk options that keep them productive and satisfied. For contingent workers, it’s usually more of a focus on the length of contract, rate for that contract and even potential interest in permanent placement.
These workers are often connected to employers through staffing agencies, relieving some stress, but eliminating some cost control. An agency bill rate can disguise the actual pay rate of their contingent workers. Without a clear understanding of what your contracted employee is actually making, you can’t be certain you are making the most strategic employment decision nor can you ensure you will in the future.
Curious on how contingent labor even started? Check out History of Contingent Labor: Welcoming a New, Elastic Workforce.
Our understanding of that complication is exactly what fueled the creation of PeopleTicker. We wanted it to be more like buying a car, and for the most part, hiring has been. You look for the features (skills) that will meet your needs, compare offerings between options (skillset and desired salary) then choose the one that most suits your budget. What was missing was that analysis of the market, the Kelley Blue Books and other guides that reported the always changing car facts (workforce trends).
Why should all this matter to HR? For one, your new hire could be starting their contract already highly disengaged just due to compensation, while you operate under the impression you’re offering the right compensation. Or, you might be disengaging your tenured, permanent employees while losing money on the skills that could be found internally all along. And without a deep look at employment strategy and how that relates to cost strategy, you could very well be risking compliance with labor laws.
No matter what department you work in, workforce hiring and management is complicated. We understand that. We created a white paper for HR pros to understand the contingent labor market better.
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