The Hidden Costs of Your Contingent Workforce

You may have taken on contingent workers in your organisation, perhaps in the hope of containing headcount, costs, and boosting output in specific departments. That’s great! But…. If you have a sizeable contingent workforce, you may not REALLY have handle on who they are, what they do, or importantly, how much they cost your organisation. And, if you’re managing and payrolling your contingent workers internally, there’s a chance you’re not REALLY operating at ultimate ROI speed….

So….here are some of the obvious, and not-so-obvious costs of your contingent workforce… plus some ideas to reap MORE from your investment in this critical workforce group.

Traditionally, supplier margin & payroll/tenure margin have been the key cost components of taking on contingent workers. So it’s here that the expectation of achieving cost savings has been most obvious. But that’s not always the case… there are many ‘hidden’ costs… below the surface.
What’s you see here… is just the tip of the iceberg…

  • Payroll/Tenure Margin
  • Supplier Margin

The true cost of your contingent workforce program is mostly impacted by factors that aren’t easily  identified and therefore aren’t commonly addressed.

The key is to pinpoint and minimise the cost of your contingent workforce program through targeted cost saving initiatives. We’ve identified a few for you, below the surface….

Invoice Errors – Think about using rate calculators across all your suppliers to establish the correct fee calculation

Contract Notice Period Management – Make sure you review and update the standard contract notice period in your Contingent Worker contracts

Work Classification – Establish policies and processes to support the engagement of non-permanent workers into the correct model i.e. Contingent Workers, State of Work, Consultants

Mandatory Leave – Make sure you set percentage targets for Contingent Workers to take ‘forced leave’ during holiday periods and public holidays

Rate Benchmarking – Benchmark external and internal rates and implement standard rate card. Set benchmarks with the relevant stakeholders involved in the recruitment process (such as Hiring Managers, Referees, Suppliers)

Asset Management – Establish quality off-boarding processes for the return of company assets (e.g. laptop, mobile phone). Also, establish escalation procedures


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