As I talk to buyers and suppliers alike about workforce solutions and challenges across the globe, it is interesting to note the challenges that program managers are wrestling with are relatively consistent across geographies and maturities. One issue that most often comes to mind is the need of human resources to truly understand the value of contingent work and by extension the value of a total talent management (TTM) strategy.
Staffing Industry Analysts has believed for some time that the highest evolution of the program is a total talent approach. And in my conversations it seems that this is consistent all over the world. But where to begin? The ecosystem is not quite ready to start delving into thinking about TTM strategies yet as there are several barriers to broad adoption. But in the meantime it’s important to address the strategic importance of the contingent workforce. Just as critical is getting HR to understand it.
It’s no secret that the workforce is changing; improving technology, legislative/regulatory challenges, program management maturities and changing workforce demographics are rapidly evolving the way people choose to work. The successful organizations of the future will recognize that they need to provide as many avenues to engagement as possible. This means that in addition to full-time or part-time employment models, companies will need to consider the multitude of models such as offshore or nearshore, temporary resource or varied worker classifications like independent contractor, consultants or freelancers. This should be obvious even to the most narrow-minded HR professional, but program managers often still struggle to get attention.
In order to build a business case that HR managers pay attention to, it’s important to focus on four main elements: tenure, talent, risk and cost. These form the building blocks of an HR business case. I’ll addressed each briefly.
Tenure. How long have your contingent resources been on-site and how does that compare with the average tenure of a company employee? A recent study conducted by Brightfield Strategies on its TDX application found some contingent tenures as long as 23 years! While obviously, this is an outlier, you may find that your contingent tenures may rival that of your full-time employees in some categories.
Talent. What type of talent makes up your contingent workforce? How skilled are the contingents that you take advantage of and how do you measure their talent and performance relative to your full-time hires? By comparing and demonstrating that your contingent workers are more than just order takers or factory workers you should get some additional attention when discussing potential strategic competitive advantages that can be gained by leveraging these workers.
Risk. To what extent are proprietary technologies or services being managed by contingent resources? Recently, I participated in a discussion where the speaker was describing this exact challenge. After some digging, the organization in question found one of its most popular technologies was entirely created by contingent resources and only that contingent worker understood the way the software and hardware work together. This created a significant risk to the operation that was quickly remedied by bringing those requisite resources in-house and capturing that knowledge in a formal way.
Cost. How much are you paying for your resources relative to your full-time hires, and is there an opportunity to optimize? There are multiple examples of how cost can become an HR consideration, the most obvious of which is the relative cost of the contingent resource person to an FTE. A recent study conducted by a CWS Council member identified the terminal value to optimal hiring modes. Using a complicated algorithm composed of multiple criteria, this analysis identified tremendous savings against a small population, creating a business case for a more robust to TTM strategy. Another less-obvious opportunity is to simply examine how much you are paying for your contingent resources versus your perm. You will find very quickly that the common misperception of the low-cost temp is just that: a misperception. In some industries we see CW resources costing more than $1 million a year.
While in no way is this an exhaustive list of value levers that can be brought to bear and the long term TTM debate has yet to be settled, there is tremendous value in looking at CW resources as strategic vs simply transactional solutions.
HR just needs to come on board.