Are you effectively managing costs across your contingent workforce?
Contingent labour allows businesses to flex with market demand; scaling down their contractor headcount when projects finish or work enters a quieter period.
Many organisations neglect to assess their contingent workforce strategy for cost control. Some companies are paying inflated and inconsistent margins to recruitment agencies, while others are having failures around having their assets returned, and others aren’t tracking public holidays or overtime.
This leads to a huge loss in potential contingent worker savings across your contractors and supply chain.
Developed in partnership with our procurement and finance stakeholders, CXC have implemented cost savings programs across the workforce and recruitment supply chain resulting in annual savings of 6-14%.
CXC has developed a program of 12 cost saving initiatives, which we’ve categorised under supply chain, pay rate, workforce and process management. Using a combination of specialist expertise and process management, our program establishes benchmarks and market insights to reduce costs while ensuring your workforce and suppliers remain engaging and performing.
During implementation of our clients’ contingent workforce programs, we work with them to understand which cost savings initiatives would be suitable and mee their business requirements.
Through our workforce management programs, CXC has established benchmarks and market insights to develop cost savings programs while maintaining engagement and performance of the worker and recruitment supplier.
How CXC can help
Supply chain management
A decentralised contingent workforce program leads to cost blow outs and rogue spend. As contingent workers are engaged by numerous different agencies, your program is likely to have significant inflated costs lying beneath the surface. Our initiatives include:
- Preferred supplier margins – Fair, standardised and agreed margins and conditions for suppliers.
- Tenure management – Setting supplier margin for a specified period of time, after which their margin is reduced to sourcing only.
- Direct sourced payroll margin – Directly sourced workers are engaged on CXC fees and on costs.
Pay rate management
Many organisations do not have the same level of rigour in place around contractor pay rates as they do their permanent staff. Hiring managers occasionally circumvent staffing policies, engaging contractors on inflated rates, leading to inconsistency across the workforce. Our initiatives include:
- Rate benchmarking – Assistance with rate benchmarking, ensuring consistent rates across the workforce.
- Professional working day – Where appropriate, moving contractors from hourly rates to daily rates to improve consistency of timesheets.
- Overtime management – Monitoring and establishment of rules to prevent excessive overtime.
CXC’s bread and butter is the compliant engagement and management of contingent workforces. For our clients, not only does this ensure they are protected from reputational and legislative risks; it allows us to generate additional cost savings associated with the management of the program. Our initiatives include:
- Furlough for public holidays – Agreed furlough for workers who are not required during periods, such as holidays.
- Contract notice period management – Consistent notice periods.
- Public holiday timesheet audit – Audit of timesheets
Successful contingent workforce management relies on best practice, proven and efficient internal processes and procedures. Our initiatives include:
- Invoice error reduction – CXC is responsible for all invoicing for supplier and workers, reducing the invoicing errors of an unmanaged and decentralised program.
- Asset management – CXC ensures a streamlined process for distributing and returning assets, mitigating this risk and cost.
- Work classification – CXC establishes policies and processes to support the engagement of workers in correct engagement model, whether that’s contingent worker, statement of work (SOW) or consultant.
A large Australian multinational investment bank was facing rising contingent worker costs business-wide. Before engaging CXC, their approach to contractor workforce management was leading to inflated margins, non-compliant practices and process inefficiencies.
CXC implemented a contingent workforce management service, where CXC engaged and managed and direct contractors, in addition to agency contractors after a 12 month period. CXC has consistently managed over 300 contract workers and processed payroll of over $209M to them.
CXC’s workforce management solution has delivered enhanced compliance and governance controls, and significant cost and process efficiencies. We have achieved annual cost savings in excess of $1.5M from direct payroll and 12month tenure transition policy since program inception.
“Annual cost savings of $1.2M have been achieved as a result of CXC’s workforce/payroll and tenure management program. In addition, workforce reporting and analytics have provided us with unprecedented visibility of spend and trends, enabling for tighter cost control and strategic workforce planning.”
Recruitment Lead, Human Resources, leading financial services client