There are four fundamental key performance indicators that need to be measured in any contingent workforce management program: quality, efficiency, cost and risk. In this blog we’re going to look at one of them, cost, and five ways you can control it within your program.
The importance of cost within contingent workforce staffing is typically defined by which department is managing that program.
While procurement professionals are more likely to put cost savings and cost avoidance as their key priorities when managing a contingent workforce, HR teams are more likely to put an emphasis on quality.
The reality is, these two departments need to meet somewhere in the middle. Accessing high-quality talent is crucial to overall business success, while cost saving initiatives impact program ROI, and that has a direct impact on business profitability.
With that in mind, in this blog we take a look at several ways in which your business can control the costs associated with your contingent workforce management program, without affecting the quality of talent.
There are many factors that can lead to high spend within a contingent workforce management program, with a lack of program visibility, rogue spend and poor management of staffing agencies being some of the leading contributors.
These challenges are all related to one thing, however, and that’s a lack of control over program costs. The use of a vendor management system will change that. A VMS allows businesses to centralize their contingent workforce program across their entire organization, giving them complete control and visibility into what money is being spent and where.
Visibility into contingent workforce spend is key to understanding where you are spending money within your program and whether it is helping you to achieve the workforce objectives that you laid out.
Start by defining your overall contingent workforce budget, and then track program spend to gain insight into where you are spending money. Not only does this give you a deeper level of control over program spend, it also gives you unique insights into contingent workforce spend that will help you to make changes that improve the performance of your program in the future.
There’s no doubt about it, managing staffing agencies is a time-consuming and complex process. To ensure the staffing vendors you work with are helping your organization to meet its contingent workforce goals, you need to put processes in place that analyze the performance of those staffing agencies.
Evaluating metrics such as time-to-fill, turnover and time-to-submit will give you a good idea of how your staffing agencies are performing. If they aren’t up to scratch then it’s likely that your business is wasting money and you can find better ROI elsewhere.
A common challenge for many contingent workforce management programs is the creation of a company-wide strategy that all hiring managers follow. Without this, hiring managers engage staffing agencies on their own terms and pay their own rates.
This leads to a complete lack of visibility into how much your business is paying for contingent workers, with rogue spend running rampant through your program. To address this, it’s important to standardize vendor rates within your program.
By establishing a stand markup that hiring managers can pay staffing agencies, businesses are able to ensure that they aren’t overpaying for talent. This is an important step in driving overall contingent workforce program costs down.
Contingent workforce management is a highly-specialized management process that relies on category experience and expertise. While your HR or procurement team are knowledgeable when it comes to procuring resources or managing talent, it’s unlikely they have expertise when it comes to managing a contingent workforce and the processes associated with it.
That’s why many businesses outsource their contingent workforce management program, or at least parts of it, to an outsourced specialist.
At Contrax we have a range of solutions, such as our Managed Services Provider program, Vendor Management System consultancy or MSP Lite program, to help businesses reduce costs and improve talent in their contingent workforce program.
Interested in learning more? Book a meeting with our team today.
