In-House Contingent Workforce Management: Things to Consider

For many organizations, the option of managing the contingent workforce in-house is tempting. After all, an internally managed program using a vendor management system (VMS) to ensure consistent results and optimum pricing sounds like a clear path to reduced costs.

Under optimal conditions, the in-house approach can be viable, but those conditions are not common. For example, an organization that engages a very specific skill set in limited locations with predictable volumes may be suited to manage the process. On the other hand, the realities of talent and business can create real challenges for an in-house program. Fluctuating talent demands or inadequate resources for executing the program can create long lead times, lower quality of talent, and hiring manager frustration.

Consider Your Contingent Workforce Management Strategy Goals

These challenges ultimately stand in the way of long-term contingent workforce priorities. The priorities range from better attracting and retaining workers today to maintaining workforce readiness for new skills in the future. The potential issues are not just about cost and speed in a management process; they are connected directly to the performance and growth of the business as a whole.

Considering in-house options for managing the contingent workforce supply? Take a look at the following questions and their implications. If your in-house strategy is not positioned to address the challenges they pose, now is the time rethink your approach and consider the value of a contingent workforce solutions partner such as AGS to help you better achieve value for your investment.

1. Who will lead and execute program implementation and adoption?

Today’s VMS solutions provide robust capabilities for tracking supplier and candidate data. However, the quality of that data and success of the program depend largely on the implementation and change management associated with the process and technology.

The VMS provider is an expert on technology, but the client organization is the primary owner of all people-related aspects of the implementation. Consider the elements of implementation that follow, and identify who in the organization will be responsible for each: 

• Data Discovery, including aggregation of current and legacy sources
• Departmental participation and project management (Finance, HR, Legal, etc.)
• Training of end-users on technology and program process
• Change management including communications, education, and relationship building
• Reporting of implementation progress and ongoing performance to leadership and internal stakeholders
• Management of IT systems and VMS integration

2. How will we establish and maintain a consistent workforce strategy?

To achieve lasting impact, organizations must look beyond administrative tasks to address the fundamentals of recruiting and workforce strategy. The primary ongoing challenge will be to balance overall consistency with the need to accommodate the varying demands of specific jobs, skills, and locations.

When establishing a program, determine who will take ownership of key outcomes, and who will be responsible for executing the activities that drive those results. Areas of focus include the following:

• Sourcing strategy development, including adjustments for location and labor supply in particular skills
• Job definitions, including job descriptions and requirements
• Skill level identification, focusing on the appropriate range of competencies and availability of talent
• Application of a rate card methodology to establish common rate ranges across the supply chain aligned with current market conditions
• Exception rule creation to accommodate variations due to location, talent supply, or other factors
• Supplier metrics, including visibility into detailed performance data to ensure the use of the right suppliers for the right needs

3. How will we handle the administration of our contingent workforce management program?

Companies may easily misjudge the day-to-day resources required to fulfill the administrative demands of the program. For example, organizations may be tempted to forego a dedicated resource and add responsibilities to team members who may already work at capacity.

Underestimating administration needs may result in a cascading impact of poor service and reduced adoption and participation. For right-sized resource alignment, consider who will have the capacity to manage the administration of key activities at the outset, including:

• Program governance, managing ongoing workflow among suppliers, hiring managers, and related internal and external stakeholders
• Requisition management, including intake, refinement, and streamlining of requirements for best results
• Time entry, including approvals, exceptions, and all facets of the time and attendance process
• Management of invoices for consistency and accuracy, as well as financial requirements, invoice consolidation, and unplanned issues and changes

4. Who will be responsible for supplier management?

Over time, a company’s hiring managers may have built relationships with suppliers based on shared expectations that were refined over time. Bringing all suppliers into a single new framework requires focused management, both in terms of cost and performance.

To ensure the best contribution from all suppliers, a dedicated effort at communication is required. The resources aligned to supplier management should have experience at detailed administration and management of the network. Areas of focus include the following activities:

• Onboarding of suppliers, including contract changes and approvals, as well as agreement to related terms, program rules, fees and costs, insurance, and financial requirements
• Performance management of suppliers, which extends to areas such as scorecard development, continuous review and feedback, and periodic updates (e.g., quarterly business reviews) from each supplier
• Network expansion and activity related to monitoring the supplier marketplace and identifying and vetting potential new suppliers
• Auditing of suppliers, including review for financial stability, maintenance of insurance, diversity certificates, and other ongoing supplier requirements

5. Do we have the resources to manage our contingent workers?

When it comes to driving a great worker experience, the details matter. Today’s organizations cannot afford to allow suppliers or hiring managers to keep candidates in the dark about their next opportunity. Likewise, they don’t want to let red-tape get in the way when bringing the worker into the organization, or leave that worker feeling abandoned after the project is complete.

The demands of candidate care may be wrapped into program operations or executed as part of expanded responsibilities, among other internal resources. Key considerations include the following areas of focus:

• Contractor onboarding, including forms and approvals, IT allocation, and access to physical and virtual assets, as well as the introduction to managers and other team members
• Contractor off-boarding following the completion of the assignment, including reviews and feedback from the worker, as well as identifying potential new opportunities
• Tracking terminations, including contractor evaluations, and assessing lessons learned to improve results

6. What resources will we use to oversee regulatory compliance?

It is tempting to assume that in-house counsel can take on responsibility for all regulatory compliance needs of the contingent workforce. While the legal department may have the final say, monitoring evolving regulations in areas such as worker classification, privacy, and employment requires constant attention.

The resources to drive compliance should draw from expertise that covers the intersection of legal knowledge and workforce strategy. Assessing supplier compliance, meeting demands on data protection, and keeping track of the treatment and management of contingent workers are all part of the mix. Considerations include the following compliance issues:

• Identifying risks, including changes to regulations related to worker classification, immigration and visa rules, data privacy, and other issues
• Developing strategies to mitigate risks, such as data and activities of suppliers and internal resources
• Compliance audits for technologies and processes spanning the supplier network and within the organization
• Worker classification, requiring the use of manual or automated analysis to confirm contractor status and avoid co-employment penalties

7. Who will be responsible for performance and ongoing optimization?

Without an established process for tracking performance, initial cost-savings will decrease over time as the program fails to change with new economic conditions and variations in talent supply. Quality of talent and speed of delivery may also decline if suppliers and hiring managers are not held to measurable objectives.

To avoid erosion of value and make performance improvement part of the program’s DNA, all functions within the program should be monitored and reviewed continuously. At a high level, a designated decision-maker will need the knowledge and visibility to identify improvement needs, along with the authority to prioritize action, and resources to achieve results. The scope of ownership spans multiple aspects of the enterprise workforce strategy, including:

• Promoting technology automation and efficiencies, such as advances within the VMS and related internal systems, as well as deciding on and testing new features as they are made available in the technology
• Maximizing savings strategies, based on changing markets and innovations, including ongoing rate card refinement while avoiding unintended impacts such as slowed delivery or reduced candidate quality
• Program expansion for new areas of management such as freelancers and outsourced services (Statement of Work), including data capture and reporting

Turn Contingent Workforce Management into Business Agility

Change has always been a constant in business and talent, but today’s pace of change is more rapid than ever. Can companies and their contingent workforces stay ahead? Thanks to advances in best practices and technology, the answer is a clear yes. Commitment to flexibility, however, will have to be a priority.

Can an in-house strategy deliver immediate value while adjusting quickly to evolving conditions for your organization? If the answer doesn’t fit your needs, refine your approach with an open mind, ask the relevant questions, and keep the benefits of an MSP solutions partner as part of the conversation. The path to a competitive workforce advantage is out there. With an informed strategy, an organization can find the approach that’s right for a new future.