Written by Peter Oreb, CXC Global, CEO
Originally published in ATC Hub News
It’s well-known in today’s continually changing workplace, that engaging contingent workers is a great strategy for….
- filling skills gaps in your business
- reducing payroll costs, and other PAYG costs
- gaining access to high-end talent for specific, clearly defined projects
- boosting efficiency of project delivery, especially as ‘time is money’
- increased flexibility of upscaling & downscaling as your business demands
So much opportunity, so many benefits!
However, where most organisations tend to come unstuck – and hence fail to realise these benefits – lies in the management piece. They fail to strategically navigate the, at times, complex landscape of contingent workforce management, so the opportunity is lost, and the concept of engaging contractors becomes a massive headache, and an epic failure!
So…. read on. If your current program DOES suck, then the following will be very insightful for you. And like anything, what you don’t know really can hurt you….
The Four Pillars
Every successful contingent workforce program is built around the concept of Four Pillars. These are the central tenets of a commercially successful, streamlined and risk-mitigated contingent workforce program. By partnering with a Managed Service Provider (MSP) or a Contractor Management Outsourcing organisation, you’ll have the Four Pillars down pat in no time.
There are a host of deliverables you should be realising if your contractor management program is working well – and the Four Pillars will help you get there.
So…here they are:
Pillar #1: Quality
Quality refers not only to the standard of contract talent you attract to your business, but also the way you attract them, and how you manage them once they’re on-boarded. Your key quality considerations are:
- your supply chain is robust, well-selected and operating efficiently (so, for example, you’ve negotiated better rates for your contractors from your panel of preferred suppliers)
- when you’re sourcing directly, your internal processes are streamlined & efficient (sound foreign?)
- payroll & contractor management is streamlined via a third party
Pillar #2: Efficiency
If your internal processes and procedures are running like a well-oiled machine, you’ll have access to data that enables you to measure the performance of your contractor workforce. Key to success here, is visibility:
- Visibility of performance metrics:
- how long it takes you to source, approve, hire & on-board your contractors
- internal processes are streamlined so you can see the commercial value of your contract talent
- you can seamlessly re-engage contractors because your internal processes are so slick
- Visibility of your Supply Chain deliverables:
- Keeping tabs on your suppliers, to ensure they’re meeting their KPI’s
- Ensuring your internal processes are uncomplicated, will assist your suppliers in servicing your business
- Technology can take on tactical, process-based tasks, creating greater efficiencies in the management of your contractor workforce program
- The data generated from technology will also deliver better visibility of the performance of your contractor workforce program
Pillar #3: Risk
Risk comes in many shapes & sizes. The greatest potential for risk comes from:
- Work rights and pre-employment checks: making sure your contract workers are legitimately allowed to work in Australia
- Worker classification/co-employment risk: where the worker may be deemed an employee by more than one employer
- WHS: ensuring your contractors are covered for workplace health & safety
- Statutory and tax payment: the right worker classification will mean the right taxes are being paid
If you don’t have this part of your contractor management house in order, you could be breaking the law.
Pillar #4: Cost
Is the cost of your contract workforce exploding? Then, yep, your program is in bad shape! Cost blow-outs occur for a number of reasons….
- Rogue supplier spend: where your suppliers aren’t keeping tabs on the cost of your contract workers
- Above market pay rates: an unnecessary cost burden, where benchmarks haven’t been set around contractor pay rates
- Unnecessary overtime costs: where a contract worker has negotiated an hourly pay rate, for example, their overtime costs can blow out, particularly if there’s little awareness or transparency around how they’re paid
- Invoice inaccuracy: where the recruitment agency is loading their margin onto charges outside of the contractor’s fee
- Unmanaged on-costs: where workers compensation, PI, PL insurances aren’t streamlined or well contained
In closing, let me tell you, I’ve had over 15 years’ experience helping organisations make their contractor workforce a huge success. Think about these Four Pillars, and get in touch with me to have a chat about how CXC Global have successfully put them into place for many Australian employers.