Talent is an organization’s greatest asset, and in most cases, its greatest expense. In today’s tight labour market, the power in employment dynamics has changed, and the best talent is increasingly becoming only available through non-traditional worker relationships.
Last year alone saw 31 per cent of the U.S. workforce performing gig/contract work, with total revenue generated by contingent or part time labour amounting to $864 billion.
Yet, even with the emergence of this diverse workforce ecosystem, Deloitte’s 2018 Human Capital Trends report finds 84% of organizations lack established policies and practices to manage a blended workforce. And the ones that aren’t streamlining their processes are missing out on valuable opportunities to control costs, mitigate risk and increase visibility into their workforce.
Why could this be happening?
Organizations must classify workers depending on their employment status (or face misclassification penalties and/or fines), and more often than not, this results in drawing a distinct line between workers, splitting management responsibilities between Human Resources and Procurement.
Yet, when HR is concerned with talent opportunities and Procurement cares about cost and compliance, companies end up operating their traditionally employed and contingent workforces like they’re separate entities.
But, just like their full-time colleagues, contingent workers participate in and help create an organization’s company culture. They bring skills and perspectives that contribute to innovation, knowledge sharing and employer branding. They also represent the brand to clients, customers and partners. Managing workers separately is a missed opportunity to leverage the positive impacts and mitigate risk regardless of worker status.
Further more, the data suggests that contingent workers aren't being screened using the same assessment factors as full-time employees, and therefore, can lack the soft skills or cultural fit factors that a traditional HR hiring strategy would uncover during the screening and qualifying stage.
How can HR and Procurement work together?
To achieve a successful and cost-effective workforce, HR and Procurement must foster collaboration and communication to promote the types of cross-functional strategies that create greater visibility, access to data and enhanced control.
Breaking down the silos
While HR will track metrics like engagement and retention and Procurement KPIs will focus on cost and risk, it’s critical for each function to identify and embrace a shared goal. This means breaking down the silos between departments to understand what drives the other and what objectives they must meet. Understanding the needs of both departments and connecting priorities encourages each one to work towards their common goal: filling skill gaps with high-quality workers in the most cost effective manner.
Identifying, defining and exchanging knowledge
A respectful and mutually beneficial relationship won’t be successful without communication. As HR’s expertise is talent and policy and Procurement’s is contracts and suppliers, each department will not only have its own motivators and objectives – but unique processes and terms that will be unfamiliar to the other as well.
For instance, HR teams may not be familiar with industry lingo like “spend under management,” and terms like “peripheral labour force” may fall flat with Procurement. To effectively communicate, each function must take the step to define their language/jargon and share with the other department to better understand terms and best practices.
Lax communication can be costly. If an organization needs to hire a highly-skilled specialist, for example, Human Resources may enlist an outside recruiting firm to help source the talent. The HR team spends time working with the firm from sourcing to onboarding without consulting Procurement. Had the two functions collaborated from the beginning, HR would be aware that the organization already had a relationship with a preferred vendor and could have acquired a highly skilled worker at a much lower cost— leaving room in the budget for future strategic hires.
By Human Resources gaining deeper insights into supplier management and Procurement understanding what drives HR, both functions are better equipped to find the talent they need in the most cost effective manner.
The role of a staffing agency
Managing contingent labour comes with cost and risk. Often, organizations will adopt a unified approach by outsourcing the management either in its entirety or in part to a third party. A great staffing partner will support an organization's total talent needs, streamlining its workforce program to elevate quality and drive efficiency across the entire talent lifecycle. A partner with a reliable Vendor Management System (VMS) will also control costs and manage the risks associated with contingent labour.
As a trusted partner, Procom is committed to advising our clients on the best solutions available to meet their business goals and deliver innovative services that transform how they acquire and manage talent.
Failing to collaborate isn't the only risk organizations face when managing a contingent workforce. If you're interested in engaging contingent talent, or want deeper insights into how to manage the risks posed by your current program, download our free whitepaper: A Checklist for Contingent Worker Risk.