Thought Leadership from November Issue of HRO Today Magazine – Total Workforce Planning: 3 Key Questions for Your Contingent Workforce Strategy

Given the growing reliance on staffing providers and just-in-time labor usage, what are some of the key questions HR Leaders should be asking as they incorporate their contingent workforce strategy into their overall HR strategy?

According to the McKinsey Global Institute’s June 2011 study An Economy that Works: Job Creation and America’s Future, 27% of the one million nonfarm jobs created in 2010 were temporary. In the same study, 58% of employers surveyed by McKinsey indicated that over the next five years they will use temporary, contract and part-time workers to meet peak demand. Research by the Aberdeen Group in their May 2011 report Contingent Labor Management: The Evolution of the Contemporary Contingent Workforce reflects this trend towards greater dependency on contingent labor. Aberdeen found “that the modern contingent labor umbrella encompasses over 22% of the average organization’s total workforce.”

Peter Cappelli, author of Talent on Demand: Managing Talent in an Age of Uncertainty, argues in his Workforce Supply Chain article in HRO Today’s March 2011 issue “As any inventory manager will tell you, that’s [“deep bench of talent”] very expensive to maintain. Traditional succession planning is a waste of time for most companies. Just like holding a basket of stocks instead of one, planners need to maintain a pool of talent loosely tied to a pool of needs, allowing the variables too cancel each other out. Scenario-based planning makes sense. Forecasting does not.”

The use of staffing firms to meet just-in-time and project-based hiring needs across all skill sets and geographies is now integral to an organization’s workforce planning strategy. Companies rely on the flexibility of contingent labor to adjust quickly to changes in the business cycle without having to add and shed permanent positions and contingent work is becoming more project based, more professional and, where work is performed, more dynamic. Temporary staffing provides a just-in-time solution to increasing demand and conversely it allows companies to more quickly apply the brakes.

With this evolution, the need for real-time contingent workforce data, analytics and advanced scheduling capabilities has become more critical. McKinsey reports that “technology makes it possible for companies to manage labor as a variable input rather than a fixed one. Using new resource-scheduling systems, they can staff workers only when needed – whether it’s for a full day or a few hours.” In their study, Aberdeen finds that companies with “Best-in-Class performance” have a “60% higher likelihood of maintaining real-time visibility into all subsets of contingent labor management.” As reliance on contingent labor continues to grow so will the demand for improved data management. When asked to rank their priorities for contingent labor management, Aberdeen reports that contingent labor buyers ranked “creating more visibility into their entire talent pool” their top priority.

1. Is your staffing provider enhancing your employer brand?

As you rely on staffing providers to source and manage a greater percentage of your talent, are you partnered with a staffing provider that has the expertise to both deliver best talent and enhance your employer brand, and in return your company brand? As recent headlines illustrate, a client’s employer and company brands are often what suffers when their staffing provider cuts corners in the area of recruiting and employment practices. Typically, the client name is a bigger draw and they are the ones in the headlines; even when those in question are not technically employed by them. The risk created by misclassified independent contractors has been well documented for good reason – but what about the risk to your employer and company brands created by the wrong staffing partnership?

Your staffing provider is a brand ambassador for your company. They have the opportunity to enhance your brand with every interaction with prospective employees and every impression they make in the marketplace. The very first impression begins with the first recruitment ad a prospective contingent worker sees and continues through the efficiency of the hiring process and the effectiveness of the onboarding and training processes. The way contingent workers are managed while on assignment at your company and ultimately how well their off-boarding is managed creates some of the most important brand interactions. The qualifications of your staffing provider’s management team, the depth of their training platform, the sophistication of the management structure and the infrastructure that support account operations are all critical success factors – and will make a difference in the employee experience and ultimately to how that experience impacts your brand.

Learn how Staff Management | SMX has reengineered the candidate experience to provide best talent and to enhance your employer brand.

2. Is your staffing firm the next headline? Are you?

Given the increased reliance on contingent labor, partnering with a firm that upholds the highest standards for employment practices becomes more important than ever. Since 2009, there has been increased scrutiny placed on the employer for everything from employee classification and workforce authorization, to safety and risk management. Headlines have included stories about staffing providers and clients alike that allowed for substandard employment practices for their contingent workforce; the repercussions have ranged from bad publicity and fines to incarceration in some extreme cases.

Beyond reference and financial checking, another important step to evaluating staffing provider integrity is to partner with those that have earned industry or government certifications that validate they are following best practices. For example, in an effort to help buyers identify staffing firms that uphold the highest standards for safety and risk management, the American Staffing Association (ASA) and Risk Control Services (RCS), a staffing industry specific risk management consulting firm, established Workers’ Compensation Risk Certification (WRC). Bill Nagel, CEO and President of RCS explains that “ASA and RCS established the ISO-9000 type WRC designation to provide a staffing industry standard of operational excellence in the area of safety and risk management.” Richard Wahlquist, President of ASA, says of the WRC designation, “it sets apart those staffing companies who lead our industry.”

Staffing buyers that partner with WRC certified providers know that those firms offer superior matching of talent, preservation of the safety record of their clients, lower turnover and increased productivity among the other benefits of working with a safety conscious staffing provider.

Learn about Staff Management | SMX’s Workers’ Compensation Risk Certification (WRC) designation and what it means to you.

3. Can you answer your CEO’s questions about your contingent workforce usage?

Studies show that visibility to your contingent workforce will help drive stronger program performance, increase cost savings and reduce risk. But more fundamentally, if your CEO asks you how many contingent workers are on assignment at your company, in a specific facility, for what duration, at what average bill rate, from how many suppliers – can you answer? Do you have real-time access to auditable documents to ensure that your contingent workforce has been drug and background screened and properly oriented and trained? How about easy access to proof that your contingent workforce is authorized to work in the United States, if the person asking happens to be a Department of Homeland Security Agent? What about the most basic contingent spend and turnover analytics for the entire organization?

With a greater percentage of contingent labor in your workforce than ever, it is imperative that your staffing provider uses workforce management software that allows for efficient workforce deployment and management and provides you with real-time access to workforce data and analytics. Accurate and readily available contingent workforce data has become critical to managing your business. Additionally, many organizations have moved towards just-in-time contingent workforce usage. Staffing providers must have advanced scheduling capabilities, allowing them to efficiently manage that demand, and a training tracking program, ensuring that workers are qualified for new positions in a more fluid environment. As part-time and flexible schedules also make-up a greater portion of the overall workforce, staffing providers need both the expertise and the software to enable non-traditional scheduling.

Learn about Staff Management | SMX’s unique to the industry Workforce and Vendor Management System (WVMS) and analytics.