Jeff Nugent: Contingent Workforce Program Managers often ask me what they need to do to take their programs to the next level of maturity.
The first thing I do is to have them take a step back to identify and rediscover what their original objectives were. In other words, what defined the success of the CW program in the first place? Was the organization interested in acquiring better quality talent, gaining visibility of external workforce spend, reducing employment and tax law risk, driving cost savings and or creating efficiencies and standardizing process? After carefully considering your corporate objectives, you can then have a conversation on how you can enhance your program, while ensuring you are aligned with your organization’s business objectives.
Here’s a quick look at some current trends that mature staffing programs are implementing to take their programs to the next level:
Even within the most mature programs it always fascinates me when a program manager states “we have no rogue spend” i.e. contractors or vendors working outside the program. This is typically the same program manager that then mentions they don’t control the provisioning of access to physical or IT assets or don’t really have a clear policy with accounts payable for paying external service provider invoices. When asked, these folks aren’t sure who Information Security categorizes as an external worker or an internal employee or even what the policy is for accounts payable to pay an invoice brought to them by a manager. When looking to minimize rogue spend within a CWM program, Information Security and Accounts Payable must be the Program manager’s best friends. By creating a clear definition of what types of external workers are to be in the scope of a program, Information Security teams will help identify contractors that can or should be working with the program before they start on a project. On the other hand, when a manager is looking to pay a vendor, it will be the accounts payable folks that will bring potential in scope vendors/contractors to the program managers attention.
In many programs the definition between in scope contract worker and out of scope “consultant” or “SOW” is not clear, giving vendors and managers the opportunity to avoid the policies and pricing constraints of a CWM program. In other cases, managers may require education/comparison on the cost escalation that comes with using SOW providers instead of contingent workers – especially when there are no guarantees of deliverables. By incorporating SOW, Consulting, Task-based external workers into your CWM program, it will give the program more insight into all external workers to determine if the workers are in scope of the CWM program or if they are truly SOW/consulting-based workers. By taking this determination out of the hands of the vendors and managers, CW program rates and policies can strictly be enforced, ultimately saving the company money and reducing potential legal liability. In addition to catching pseudo contract worker spend, incorporating SOW and Consulting workers into the program allows for the team to bring efficiency to the administration process. Your team will be able to do a more accurate comparison of resource costs between Consulting projects and projects utilizing contract workers with similar skills. In making the comparison and helping shed light on the cost differential, program managers can empower hiring managers with information that will help them make more informed buying decisions.
Technology is having a tremendous impact on talent acquisition. Program managers are finding a larger percentage of their contract workers directly, without the using traditional staffing channels. By combining internal talent acquisition strategies and referral programs with use of career sites, social networks, and freelancer/applicant tracking systems, clients can identify contract workers directly into their programs while engaging them compliantly through a low-cost employer of record and payrolling vendor. By pre-identifying contingent workers directly, organizations are saving millions of dollars, while increasing the quality of talent they are bringing into their organizations.
As the usage of contingent workers expands globally, large Multinational organizations are looking to leverage the benefits of the standard CWM process globally. Although the model of managing the program may vary by county, the use of a single VMS across all territories is the most efficient strategy to gain insight into your global contingent workforce. It’s important to be aware of regulatory differences while promoting an inclusive workforce strategy. Departments can make efforts to reduce fees or change simple processes to accommodate geographical differences. For example, in some cases it makes sense to only track worker profiles and document management in the VMS. That way, it’s easy to replicate across varying jurisdictions and the best way to have all worker/vendors participate. By bringing more people into the conversation, your program will ultimately get better visibility into worker spend, workflow processes and the key users. In time, you’ll start to gather insights on the nuances of each jurisdiction. Program teams will be in a better position to implement program policies and processes to improve ROI by standardizing the program across the globe.
As programs mature and become more strategic, organizations look to work with best in class vendors and category specialist that enhance their programs. In the early stages of a program’s development many program managers look to select vendors that can offer a “one-stop-shop” for MSP, VMS, IC compliance and payrolling services. As programs grow it is often discovered that these one-stop-shop solutions are often not the best option and can even restrict a program from evolving with new trends. I’ve seen departments re-evaluate these bundled solutions and look to implement best in class solutions within each category. By doing so, programs are gaining more functionality and reducing conflicts of interest while gaining more control over their CWM programs.
After 5-10 years of steady operation, many programs that have implemented an MSP/VMS, are re-evaluating the external management of the program. In some cases, they have chosen to bring program management in-house. In others, the program managers determined that it made sense to keep the program operating through a third party. When looking at a typical large program of $400-500M in spend that has an MSP/VMS fee of 2-3%, this equals a budget of $12-15M. This is a base line that a client program manager can use to evaluate if they could hire capable internal resources to run the program. In many cases these evaluations have discovered that it costs less to hire an internal program team than what an organization would have to pay the external MSP annually. When determining to bring a program in-house, a program manager should think about more than just cost. Before bringing a program in-house it’s important to determine the existence of two key success factors; internal program management capability and organizational readiness. Even if the team is capable, if the organization itself isn’t prepared to support the internal team, their efforts will fail.
A first step programs can take in determining capability to run a program internally is to talk to their VMS provider to ensure they would be capability to support the program’s VMS technology without an MSP. The next step is to truly gauge your executive’s support for the program. Once capability and organizational readiness is determined I’ve also seen a trend in organizations deciding to keep the vendor-funded MSP/VMS fee model in place to help pay for the internal program team.
Jeff Nugent Bio
Jeff Nugent Has over 20 years of Contingent Workforce Management experience and is the Founder of Contingent Workforce Solutions. As CWS’ Managing Director Jeff has lead the company to become one of North America’s top vendor neutral contract IC compliance, Employer of Record & payrolling companies. Recently Acquired by People 2.0, CWS & People 2.0 combined administers and pays over 18,000 contract workers weekly on three continents. Prior to CWS, Nugent served as a Vice President of Business Development & Strategic Solutions with one of Canada’s largest IT staffing firms and held progressive positions with companies such as UPS, Lexmark, Spectra Energy & Open Text. Bio picture courtesy of Canadian Business.
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