As changes to the world of work happen at an ever-increasing pace, companies in Europe are looking at how best to manage their talent pools while getting the job done effectively. At the same time, talent is demanding flexibility leading to an increased focus on engaging contingent labor. But before companies can act on making decisions on their total labor pool — temporary and permanent — and staying compliant in the process, they need better visibility into their workforce, says Manuel Roger, Beeline’s managing director, Europe. He outlines the benefits of the vendor management system (VMS) and discusses why Europe is later than the US in implementing this contingent workforce solution. Not only is the VMS the key to changing customer behavior and driving companies toward a total talent management strategy, it also keeps companies honest while giving them a competitive edge in this uncertain labor market.
What are the biggest benefits companies get from implementing vendor management system technology to source and manage contingent labor?
The first benefit is that companies can review their business processes and then they can automate, streamline and make them more reliable.
The second benefit is compliance — internally, this means the ability to enforce a number of business policies, such as not allowing contingent labor to be used in IT or a particular business unit, or that only approved suppliers are allowed. And obviously, there is external compliance. Contingent labor, despite often being managed by procurement, is not just a category of spend; it’s not just a commodity like pens and paper. There are a lot of complex HR regulations and government-imposed compliance rules, which vary by location. VMS technology enables you to enforce compliance to make sure that the people within your program — who are not HR or compliance specialists — remain compliant.
Third, you get visibility, because when all the activity is managed through the system, every step in the process is recorded in the database. So a wealth of data is available and you can slice and dice the information any way you like.
With those three benefits — streamlining business processes, ensuring compliance and having visibility — you can deliver better quality in your program because now you know what you’re doing, who is doing what and where, so you can look at optimization, ensuring you use the right suppliers for the right business needs that will give you quality and quicker access to talent, better talent, just-in-time talent.
And through all those things, you should achieve cost savings. You can negotiate a better price. You can remove unnecessary costs, whether through monetary savings or soft savings — saving time for users, delivering a better user experience to your engagement managers so they can be more productive.
What would you say are the two most important reasons clients should consider getting a VMS?
One is visibility. A lot of businesses are flying blind. When we speak with them, we ask, “Why do you have contingent labor? What kinds of contingent labor do you have? For which roles are you using contingent labor?” Without a VMS, they lack the visibility to answer these questions and flying blind is pretty dangerous.
The second reason is compliance, because the risk around contingent labor is very big in terms of image and reputation as well as financial risk. The UK’s IR35 Regulation or the Netherlands’ WBA, for example, present a major risk for businesses, who could be fined astronomical amounts that are very disproportionate to the savings generated by using contingent labor.
What are the primary risks European companies face if they do not implement VMS?
I would say the biggest risk is falling behind your competition. If you don’t know who’s doing what for your business, and where, how do you drive your business forward? We see a lot of businesses moving forward by implementing a VMS. And those that don’t use any such tools, how can they be proactive? How can they control cost? How can they manage their total talent — permanent and contingent — holistically and understand what’s going on?
But if your competition is using tools like a VMS, they have better, quicker, nicer, cheaper access to talent, giving them a competitive edge.
Then there’s the compliance risk that I spoke of before. Again, the potential damage to your image, the damage to your business — and the cost of it — is huge.
And there is flexibility. Companies need more flexibility and workers want to be more flexible as well. How do you make sure you align those two needs? Excel or procure-to-pay programs and systems will not give you the transparency, the visibility, the flexibility, and the agility you need in terms of human capital management.
Can you share examples of benefits received by Beeline clients either from implementing a VMS for the first time or by expanding its VMS to include new countries or labor categories?
I’ve got three examples. One is a global bank with more than 60,000 employees in more than 20 countries. Before they implemented Beeline, they had a team member who spent two weeks per month reconciling the invoicing to make sure that what they ordered aligned with the time sheets, that the time sheets were signed, and the invoicing was accurate — and fixing all those problems. Two weeks of every month. But with Beeline, that process takes 15 minutes per month.
That’s a very clear example of streamlining your processes, automating them via a VMS.
Another example is a client in Switzerland whose objective was to rationalize their supplier base. They had three or four core global suppliers that were supplying the contingent labor, and then there was the tail spend divided between tens or even hundreds of suppliers.
And the company could not get a grip on that tail spend. Before having a VMS, each business owner would call their suppliers to order contingent labor. After two years of using Beeline, they saw a drastic shift in usage of their supplier population, with significant increase in the use of core global suppliers and a reduction in non-core organizations and overall spend. With their policy embedded into the technology, they could drive the behavior of their users.
My last example is much more recent. During the pandemic, a global oil and gas company suddenly needed to cut costs drastically. Before considering cutting their permanent workers, they needed to understand all their labor costs. Obviously, they wanted to analyze their contingent labor, so the benefit of getting reports from the VMS and being able to slice and dice the data at the touch of a button helped them react quickly and manage the crisis efficiently. The VMS was instrumental in this — not only could they analyze the data and make decisions, but they could manage the impact of their decisions on their valuable employee population as well.
The European staffing market is larger than that of the Americas, yet the penetration of VMS in the former is much less than in the Americas, with 28% of spend versus 66% of spend. Why have European companies been slower to adopt nonemployee workforce management automation technology than those in the US?
The European market may be larger than the US, but in reality, it is a collection of more than 20 much smaller markets. It is very fragmented. Regulation is very specific, very stringent in each and every European country. A global program in Europe is much more complicated and much more time-consuming and needs much more executive sponsorship than we see in the US, where, yes, there are some differences from state to state, but all in all, it’s pretty similar across the US.
We need to go back to contingent staffing and the notion of staffing as a service. Employment law in Europe is very specific. We don’t have at-will employment in Europe, when it’s pretty normal in the US. The unions in Europe are very protective, which is what we are used to in Europe. Collective labor agreements are complex. So, companies don’t necessarily identify contingent labor spend or see that the available pool of resources can be managed through a variety of tools.
We are still in a place where procurement tends to see contingent labor as just another commodity that needs to be managed, and HR, which has not always realized that contingent labor is a strategic asset and something they need to manage from a strategic perspective. In HR, in particular, there is also a perceived risk of misclassification. They don’t want to put their hands on contingent labor because of the risk of misclassification and putting the spotlight on certain practices. That probably speaks more about continental Europe than the UK.
Non-employee labor is different from employees because of the regulations in many countries. These create barriers to companies increasing the use of VMS. That said, in the past two to three years, we have seen a boom in VMS adoption here in Europe. Beeline’s growth in Europe is very impressive, and speaks to the fact that the market is starting to realize they need to invest in this area. And we are seeing HR and procurement working together to realize the benefits we spoke about earlier: total talent management, process efficiency, cost control and compliance.
When you reflect on 2020 and envision the future of work, what changes do you anticipate in the European market as we move toward recovery?
I think there are two movements in parallel. First, we’re all working remotely, and we see each other very little. We need to have access from outside the company to the company’s assets. Say, for example, I’m an engagement manager working from my home, and I need to connect into the back office to access critical, sensitive information. And I also need the agility to hire people without meeting them. That’s one element where we see a greater need for flexibility and agility. We see with our clients every day that they want more flexibility, more agility and the ability to react more quickly. So, businesses have to organize to support that.
The other element is that, on March 10, who would have said the world would change the way it did within a week? The pace of business has massively increased. Businesses suddenly needed to be ultra-super agile, to have exceptional flexibility. And, by the way, if I were a contractor, who would have said on March 10 that I would be working remotely and that I would not see my colleagues anymore for the next few months? Still, as an individual, as a worker, I also need to be very agile, very flexible.
So that is the evolution that I see. And that will stay.
This flexibility isn’t just tied to the pandemic, though. We’ve seen over the last year or more that workers of the younger generations want cool, sexy projects. They want short-term assignments. They want to learn. They want to be excited about what they do. They don’t want a long-term career with slow progression over time. The workers want more flexibility. So, what I’m seeing in 2021 and later is a massive increase of flexibility, which will drive us to engage more contingent labor.
We will see a population shift from certain countries to other countries as companies assess a number of those jobs that are currently done remotely. If they can be done remotely, maybe they can be outsourced offshore. And that’s where we’re already engaged with our clients in the market.
The VMS is a system in place that will keep companies honest.
It is interesting to see the tensions between companies and workers in certain segments of the population wanting more flexibility, more agility in their projects, and country regulators wanting more rules and controls to make sure that taxes are collected. There is a disconnect between what the law is doing every day and what businesses and workers are looking for in terms of engaging together. And that is where the VMS can really help the three parties: helping companies to manage their labor with more flexibility, helping workers to find great assignments and great jobs, and obviously, helping regulators by making sure that everything is done in a compliant way.
To find out how Beeline Europe can help bring your contingent workforce program into compliance and give your organization a competitive edge, contact Rasmus Buchholz at Rasmus.Buchholz@beeline.com.