5 Ways to Minimize Contingent Labor Costs in 2017

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Posted in Blog by Marc Wong
Mon Oct 17 2016

The contingent workforce, when hired and managed efficiently, can present cost savings, bridge skills gaps and even add a competitive and innovative edge. Many companies face the question of acquiring contingent workers in a time of business influx or when facing the extended leave of a key team member. Remaining cost effective and time efficient in hiring contingent workers is heavily reliant on the procurement and management strategy being used.


Strategize Before Sourcing

As with any hiring initiative, sourcing and recruiting the right contingent talent is just as much of an effective cost savings measure as it is for permanent employees. Of course this means the obvious plan of clearly establishing what type of skills and expertise will be needed within the role. An effective contingent sourcing program will also consider your current workforce and SOW risks associated when reviewing each potential hire.

It might sound like a waste of time to consider how a temporary worker or remote freelancer will adjust to your company’s established culture, but these individuals need to be able to adapt to your practices just as much as any other employee. If there is any struggle to communicate or deliver on deadlines, then productivity will be affected. When it comes to the SOW, there is no denying that it takes time to write up terms that both parties agree on, but the more solid your company is on its own terms, the better. No matter how talented your potential contingent hire might be, the business side of talent acquisition cannot be overlooked. 

Be Organized

All the above steps translate to hours of communication and documentation - and that only includes what will take place during the recruitment stages. Once your talent is hired, there is the matter of payment, compliance and all other components of the employment agreement. It is important to understand that creating a contingent workforce within an organization saves time and money in employment options and opportunity, not in paperwork.

While compiling job descriptions and SOW, begin organizing how your team will file documents and details of hired talent. The internal filing process, digital or physical, should in no way be considered obvious, but should instead be thoroughly discussed and explained to the team. It is so easy for even the most coordinated company to overlook something as simple as organization of documents and agreements. This is another part in which an MSP is beneficial to those companies who have large contingent workforce or are new to managing one.


Have you strategized ways to lower contingent labor costs in 2017? Try these 5:


Leverage Performance Data

Today’s talent management programs encourage performance data and analytics. These tools help them to better understand how their current employees are excelling, where there is potential for growth and what management techniques could deliver even more productivity. In addition to management, acquisition professionals can learn a great deal about the current and future employment needs. Performance data can often reveal patterns in retention and satisfaction, which will aid in more educated sourcing and recruiting.

When it comes to a contingent workforce acquisition program, performance data helps companies evaluate industry cycles where temporary hires will be necessary and where a slight decline can be expected. These analytics can pinpoint necessary skills and experience needed to support the existing team and projects, while revealing areas that might need a little shaking up. The more your organization understands its own needs and shortcomings, the better you can address the talent being hired. This includes all types of employees, from permanent executives to entry-level or intern.  

Effective Management is still Key

As mentioned, recruiting the person with the most experience and the shiniest resume doesn’t automatically translate to the most effective hire. Part of that success depends on an employee’s synergy within the company and it’s culture. Sometimes the approach to performance management will affect satisfaction. While some of those elements are out of your control, there are portions of management that should never be in question. For the contingent worker, elements such as SOW breaches can be detrimental to retention and negatively affect the company’s reputation and employer brand - something still very important in the world of contingent worker acquisition.

Be sure the SOW is clearly defined and followed. If there is a set time frame for the contract, it should be honored unless otherwise noted. If there are remote working arrangements, then be crystal clear on when in-office meetings will be scheduled and how travel will be addressed. There are many small contingencies that cannot go forgotten and if an agreement is made, then follow through. The cost of a displeased contingent worker extends past productivity and turnover and often reaches directly to their contingent network.

Don’t Fear Outsourcing to a Managed Services Provider

Hiring contingent workers can be complex and often involve legalities and specialized agreements. The needs of these employees calls for an attention to detail that permanent hires may not require. An MSP will understand these nuances, streamline the hiring process and manage the statement of work.

MSPs can assess the current workforce and performance program to discover holes and potential issues that could potentially hinder success. These organizations simplify the current and future approach to contingent labor management, including finding cost saving measures and providing strategic oversight in the event of an unforeseen issue. Their prime focus is to minimize contingent labor costs. As any company with a budget, it’s in your best interest to understand the details of the MSP or contingent staffing firm your company utilizes. Do not hesitate to research the local contingent workforce industry, negotiate terms and price match. These providers are working for you, not vice versa.

As the fourth quarter begins, budget planning and looking towards the financial future of your organization reigns supreme. A contingent employee can be the answer to some of the changes within your industry’s cycle or staffing challenges. Don’t let the fear of unexpected costs or compliance risks cause your company to miss the opportunities of this booming workforce.

In an employment pinch, it can be pretty overwhelming to negotiate competitive pricing with staffing agencies for the best services and deal. Don’t let it be. PeopleTicker brings all the details of contingent labor costs into one easy to search platform.

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