The Critical Importance of Contingent Workforce Post-COVID-19
Optimizing the value of a contingent workforce ultimately comes down to how a company applies and manages the capabilities of each individual type of resource.
- Temporary workers: Although these professionals are not direct hires, they are specific named individuals. The company engages them for their unique skillset, directly managing the work that he or she does and (typically) paying them on an hourly basis for a specified contract term. These workers fulfill a range of role types in companies, and examples range from ABAP developers to warehouse staff.
- Statement of Work (SOW) and Services Procurement leverage people-based services that are more focused on achieving a business objective than occupying a specific role within the company. These suppliers are engaged to get a project done. The supplier’s management team or project lead chooses who will work on the project, how many people will be involved, and what skill sets they ultimately need. The company may pay the supplier on an hourly basis, as deliverables are met, for a set fixed price, or other combinations. Examples include corporate video production and the creation of a new mobile app.
Having a contingent workforce is good for business recovery, regardless of the exact form it takes and the need it meets for the company. Resources can be brought in quickly, cost effectively, and flexibly. In addition, the advantages of a contingent workforce are particularly apparent in today’s uncertain and challenging business conditions.
The recruiting process has been complicated by travel restrictions and shutdown requirements.
Hiring workers right now is not only difficult – it is risky. The interview process has been complicated by the inability of candidates and managers to travel for face to face meetings. Even if a hire is made, effectively onboarding new employees presents an unforeseen challenge. At the same time, companies can’t go without the talent they need to keep the business operating and maintaining established quality and service levels. Even though contingent workers are ‘external’ they may still come into direct contact with the company’s customers and can be managed to ensure consistent adherence to expectations with the assistance of vendor management system-enabled tracking and reporting capabilities.
Companies can’t reliably predict the impact of the anticipated fluctuations in demand.
No company wants to be in the press for laying off or furloughing employees, especially if they could have postponed those hiring decisions altogether. Rather than going through the process of having a position approved, and overcoming obstacles to recruiting, hiring, and onboarding only to have to lay the person off because of another dip in demand, temporary hires support flexible capacity increases and decreases through a cost-effective model. This practice has long been used to address seasonal or business-driven volume surges in call centers, but it can be applied to any type of workforce challenge where capacity requirements are unpredictable.
The time has come to optimize on the new ‘virtual’ reality.
In addition to responding to today’s unique workforce challenges, contingent workforce presents an opportunity to strategically rethink talent altogether. Market leaders are experimenting with ways to leverage an external workforce in such a way that they take advantage of distributed talent without sacrificing coverage or business requirements. Location is a key lever that can be pulled to source top talent; if the majority of the workforce is currently functioning remotely, the time is right to bring in an external service provider that can meet labor needs with an extremely competitive cost structure.
The key is not to hold the business back, but to quickly find and connect with the best people for every effort. This is more critical than ever in today’s environment. In fact, some providers are offering complimentary access to their talent marketplaces to support their customers’ demand for specific talent categories.
For all the advantages of a contingent workforce, there are also process and documentation considerations that must be handled appropriately to make the program sustainable:
- Companies must manage their spend intelligently and holistically, but services and product spend are very different. While procurement practices have to be consistent, regardless of the category of spend in question, professional services spend is far more nuanced than material buys.
- Since time is always of the essence, having access to a ready ecosystem of providers will speed up resource comparison and selection without constraining the scope of each search. With the right parameters in place, individual buyers and managers can even be empowered to meet their own contingent workforce needs, without increased risk or loss of visibility.
- Most regulations and compliance standards apply whether roles are filled by direct hires or an external workforce. Companies must be confident that they are not inadvertently increasing their risk by transferring responsibility to external partners – especially on a global scale. A global contingent workforce must be supported by controls for tax requirements, pay rule regulations, data privacy laws, etc.
Talent is always a critical factor in determining which companies will succeed or grow and which will not. Fortunately, there are as many ways to get the best-fit talent today as there are types of talent required in the workforce. Leadership teams should consider all of the requirements and contingencies associated with each role before deciding whether to go through the process of hiring in-house talent or quickly filling a gap with external resources, either contingent workforce or SOW-based services.