If the pandemic taught companies anything, it’s that having the tools in place to communicate with their entire workforce effectively is critical. As...
Contingent Workforce Management: Shifting Ownership to Deliver Better Results
As companies face new pressures and priorities this year, they are thinking more critically about the future of their workforce. According to Aptitude Research, 80% of companies leverage contingent workers, and one in three companies plan to increase their investment this year. A flexible and extended workforce helps companies fill critical talent gaps, reduce costs, and improve overall productivity. It also helps companies adapt and adjust to changing business needs - especially during times of uncertainty. Even as the demand for and acceptance of contingent workers increased this past year, the challenges remain the same. Most contingent workforce strategies lack visibility, rely on antiquated technology, and erode business leaders' confidence. Companies understand the value, but they don’t always see the results. This needs to change as companies continue to adopt a more flexible workforce.
One such area is around who owns and is responsible for contingent workforce strategies. Historically, procurement has taken the lead, with HR having little to no visibility or input in the use of contingent labor. Thirty-five percent (35%) of companies are shifting their ownership this year to reduce overall costs. When asked how they are shifting ownership, 43% are moving this responsibility from procurement to HR and 24% are shifting from procurement to a shared services model. This strategic shift from procurement to HR will give companies a more holistic view of talent and create visibility into contingent and permanent hires.
There are a few factors that companies should consider when redesigning their contingent workforce management approach or shifting ownership from procurement to HR:
WHO is driving this shift today?
What has worked in the past for managing contingent labor will not work today. HR and shared services need to think more holistically about their workforce. They are held accountable for critical talent gaps and feel pressure to fill positions quickly in a tight labor market. The move to remote work in 2020 has amplified this pressure, and the need for contingent data to be integrated with an overall talent strategy is critical. In our research, 76% of companies stated that senior leaders are driving this shift in ownership from procurement to HR, including KPIs, budget, vendor management, and engagement. Often, this decision is met with little internal resistance.
Shell is an example of an organization that made this transition effectively with both procurement and HR “bringing different skillsets to the table” and collaborating to ensure that HR would take more of a lead. This resulted in an increase in the use of contingent workers from 3,000 to 12,000 (at its peak). The shift was not an aggressive takeover, but rather a partnership between procurement and HR on the best option for the business.
WHAT is the impact of shifting ownership?
We found significant improvements in visibility, satisfaction, and cost for companies that shift ownership from procurement to HR, with respondents stating they are two times more satisfied with their overall contingent workforce strategies. The chart below shows companies that have shifted ownership compared to those that have stayed the course, and the impact on visibility into spend, engagement, and the ability to track costs. When HR leaders are more involved, they think about contingent and permanent hires in a holistic way and want greater visibility. And, if data and insights feed into their current talent and workforce strategies, HR can make better decisions for recruiting, developing, and retaining talent. Because procurement professionals are not responsible for permanent hires, they don’t usually consider these broader talent strategies.
Engagement is a big driver of this shift in ownership as companies with engaged workers see positive impacts to productivity and absenteeism.
- Employee engagement increases productivity in the workplace. Engaged employees outperform their peers who report that they are not engaged. Overall, companies with high employee engagement are 21% more profitable.
- Employee engagement reduces absenteeism. In fact, a Gallup study shows that highly engaged workplaces saw 41% lower absenteeism.
WHY are companies shifting ownership?
For companies changing ownership, the most obvious reason is the value of having a unified view of both contingent and full-time employees. But we found other factors influence the decision to switch ownership, including greater collaboration between HR and procurement and more alignment between HR and business objectives.
When asked what is driving this change, companies cited dissatisfaction with how their contingent workforce is currently managed, lack of visibility, desire to reduce costs, and the need for a total talent acquisition strategy.
Every company is at a different stage in its contingent workforce journey. For companies looking to have a more effective strategy with greater visibility and a broader view into total talent needs, shifting ownership to HR can bring tremendous value. For HR to take the lead on their contingent workforce, companies must also revaluate KPIs, their technology stack, and the resources that they have available. Procurement has relied on outdated VMS systems that are not designed for the modern HR leader. A shift in ownership requires companies to reevaluate talent strategies and emerging solutions.
The following two blogs in this series will explore shifts in technology and strategies for improving visibility.
[Webinar] - Total Talent Management is the Key to the Future of Work
Join Utmost's COO and co-founder Dan Beck and Aptitude Research founder Madeline Laurano on June 8, 2021, at 10 am PT | 1 pm ET for a discussion on how companies are starting to think critically about how they source and retain talent, talent strategy ownership, technology needs to support total talent management, and what components of visibility are required to make better business decisions.
Madeline Laurano is the founder and principal analyst of Aptitude Research. For over 18 years, Madeline’s primary focus has been on the HCM market, specializing in talent acquisition and employee experience. Her work helps companies both validate and re-evaluate their strategies and understand the role technology can play in driving business outcomes. She is a frequent presenter at industry conferences including the HR Technology Conference and Exposition, SHRM, IHRIM, HCI’s Strategic Talent Acquisition conference, Unleash, GDS International’s HCM Summit, and HRO Today.