Procurement and HR – Getting the Balance Right

It’s a critical partnership – Procurement and HR. And given the rapid rise of non-permanent workers in Australia, organisations are seeking the optimal way to procure, manage and engage their contractors.

According to the 2018 Deloitte Global Human Capital Trends, respondents indicated a 36% increase in contingent workers over the past five years. This workforce is made up of essential roles, such as engineers, IT specialists and other highly-skilled professionals.

Because of the strategic importance of this workforce, many organisations are realigning their hiring practices and developing a holistic talent strategy for contractors.

Sourcing contingent workers is often a tug of war between two distinct groups within an organisation: procurement and human resources. We’ll break down the needs of these two groups below – and show you why it’s so important to bring them together and have them working towards the same goal.

Procurement and contingent workers

Procurement has traditionally been a tool used by talent acquisition specialists. They are heavily concerned with attaining contractors at the best possible value-for-money, and as such are involved with negotiating rates and executing contracts.

Companies value the role procurement plays with finding and achieving cost saving opportunities. However, they are typically ill-equipped for delivering on the quality, reliability and productivity of a contingent workforce quality. With the increased need for an on-demand talent, procurement often don’t assess the best fit for an organisation.

HR and contingent workers

HR has always been an integral part of hiring contingent workers. Rather than through the lens of an expense, like procurement, HR sees contingent workers as a talent opportunity.

They focus on the skillset that a worker brings to the business, they consider diversity, they ensure a high quality of work is being achieved and they create a competitive value proposition to attract the best talent.

When working to their fullest potential, HR is involved with developing a broader non-permanent worker strategy that goes beyond hiring individuals.

The need for integration

Both procurement and HR bring distinct advantages to an organisation in the context of engaging and managing non-permanent workers. On one hand, businesses need to lower costs wherever they can, and on the other, it’s essential to have a quality contingent workforce in place.

Organisations are in danger when these two parts of the business are kept at arm’s length, or lack integration. A poorly defined workforce strategy, where procurement and HR aren’t incorporated, leads to missed opportunities for landing the best talent and a most often, a mismanaged contingent workforce.

Organisations must first develop a strategy – starting with the purpose for hiring them in the first place, what skillsets they need and the ultimate goal or vision.

An aligned procurement and HR function can deliver organisations:

  • Better data and reporting to achieve visibility of the workforce and make informed business decisions
  • A flexible and more responsive contingent worker hiring model, which is across the varying needs of the business.
  • Maximising the performance of contingent workers, while minimising the overall spend.

Without procurement and HR working towards the same goal, there is a substantial risk in failing to achieve the organisation’s business objectives.

Bringing procurement and HR together with a third party

It’s easy enough to understand the need for organisations to align internally, but how do you accomplish this?

Many organisations in recent times are employing the skills and expertise of Managed Service Providers (MSPs). We’ve talked extensively about MSPs in previous blog posts, but essentially MSPs assist with managing recruitment suppliers and providing the best talent. Some MSPs, such as CXC Global, also provide contingent workforce management, and ensure the effective onboarding, offboarding, payroll and risk mitigation of the program.

It’s this expertise that allows the development of an effective talent strategy, in partnership with organisations. By centralising supplier engagement and the management of workers, organisations can better align their strategy towards a common goal. According to the Human Capital Institute, employers found that moving to this centralised model, and employing contingent workforce management, has reduced costs by up to 12%. Additionally, employers were finding improved time savings, reporting and compliance.

Regardless of how you engage with the contingent workforce, make sure you recognise the strengths and weaknesses of procurement and HR. Acknowledge that you must have both to ensure your contingent talent gives you a competitive advantage.