It’s hard to understate the importance of the nontraditional worker in today’s labor force.
According to the most recent statistics from the U.S. Bureau of Labor Statistics, 21.5 million workers in America are employed on a contingent basis or under “alternative employment arrangements.” That is, other than full-time direct hire.
Using a broader definition, Staffing Industry Analysts put the U.S. figure at 48 million, or 31% of the US workforce.
Regardless of how one interprets the data, it’s evident that the contingent workforce is a major economic force. It’s also a massive budget line item, topping $864 billion in spend in 2017. And at the individual business level, contractors, seasonal workers, temps, and other contingent workers are absolutely critical to business success.
Contingent workers span all major industries—manufacturing, retail, healthcare, hospitality, just to name a few. And you can find them at all organizational levels, from individual contributors up through top management.
According to Deloitte’s 2018 Human Capital Trends report, by 2020, companies anticipate even greater use of contractors, freelancers, and gig workers. Even so, the vast majority of companies surveyed by Deloitte—some 84%—lack established policies and practices to manage a blended workforce.
Most companies draw a distinct line between these workers based on their employment status, splitting the responsibility between Human Resources and Procurement and effectively managing their full-time and contingent workforces as if they were separate entities.
Spoiler alert: They’re not.
Like their direct-hire colleagues, contingent workers bring critical skills and diverse perspectives that contribute to production and innovation. They participate in and co-create your company culture—by collaborating and upholding company values like trust, accountability, and integrity. And perhaps most importantly, they represent your brand to customers, clients, partners, and vendors.
By managing them separately, companies miss huge opportunities to compound positive impacts and mitigate risks associated with talent management regardless of worker status.
So how can companies integrate and unify talent management?
Here are a few tips to help align the teams, processes, and HCM systems that manage direct hire and contingent labor so you can adopt a more holistic approach to managing talent.
5 Tips to Help HR and Procurement Teams Get Aligned
1. Embrace a Shared Goal
As already mentioned, in most organizations the responsibility for full-time talent falls to HR and the contingent workforce is managed by Procurement. They use different systems, follow different processes, and frame their goals in very different ways.
Typically, HR tracks success based on metrics like employee engagement, quality, and retention. In contrast, KPIs for procurement typically focus on metrics like cost, efficiency, and risk.
Their goal, however, is actually quite similar: Filling critical skill gaps with high-quality workers at a reasonable price. They also want people who fit the culture, and they want to onboard them effectively to drive workforce productivity—while maintaining compliance with employment laws and internal processes.
Both HR and procurement are under pressure to work smart and deliver results fast. By embracing the fact that they share a common goal, both teams will be better able to see where their processes intersect.
You may also like: 8 Ways to Measure and Control Your Contingent Labor Program Costs
2. Focus on Hiring Managers
For both HR and procurement, the mythical creature known as a Happy Hiring Manager holds the key to success.
Regardless of the employment status of the prospective worker, a manager’s responsibilities are essentially the same, including things like
- Providing qualifications and selection criteria
- Reviewing and interviewing candidates
- Making the final selection decision
- Leading onboarding for new team members
- Assigning tasks and projects
- Tracking performance and giving feedback.
Regardless of employment type, workers are in constant contact with their hiring manager. So it only makes sense for HR and Procurement to
- Define effective ways to capture information about hiring managers’ needs
- Integrate and streamline processes to meet those needs
- Unify success metrics under common (or at least comparable) KPIs
- Integrate systems where possible to minimize the burden on hiring managers.
By aligning under a holistic approach to talent acquisition and talent management, HR and Procurement teams can streamline processes, fill open positions faster, elevate candidate quality, and improve retention of permanent and contingent workers.
3. Integrate Compliance Processes to Mitigate Risk
Another critical component of managing workers that HR and Procurement share is compliance and risk.
Both departments share the responsibility for ensuring that all workers are correctly classified as either employees or nonemployees. And both teams must ensure that every person engaged to work for the organization is legally allowed to work, properly documented in a system of record, and aware of applicable policies and procedures.
Given the similarities, it only makes sense to align, combine, and automate critical compliance processes such as
- Background checks
- Drug screening
- EEO reporting
- IRS schedules
- Professional certifications
- Access badges and IDs
- Safety and security training.
Most organizations rely on multiple systems to manage these critical compliance functions. For employees, data is housed within an HRIS and recruiting compliance is managed within an applicant tracking system (ATS). For nonemployees, compliance and data are often managed within a vendor management system (VMS).
Some companies have yet to automate recordkeeping or processes for their contingent workforce, and instead use spreadsheets and manual systems that put sensitive and business critical data at significant risk.
As you move toward a total talent ecosystem approach, look for opportunities to optimize risk mitigation by unifying your workforce data and talent processes into a single platform.
4. Integrate Talent Analytics for Total Workforce Visibility and Planning
Imagine your org chart.
Now imagine covering up 30% of it.
It’s not hard to see the potential pitfalls of using limited data to inform talent decisions of any kind. Clearly, the validity and success of your workforce plan hinges on having full visibility across your entire workforce—salaried, hourly, and contingent.
By investing in a system such as PeopleFluent’s Talent Mapping software and integrating HRIS and VMS technologies, organizations can consolidate talent data from HR and Procurement to gain comprehensive business intelligence and analytics across all labor types.
Total workforce visibility means managers and executives can see roles and responsibilities, costs, diversity, and productivity across the entire organization and by project, team, department, and location. It means they can identify top performers to fast-track into more senior roles.
Bottom line: It means leaders can make truly informed decisions that will drive profitability.
5. Consolidate Talent Management Vendors
Sometimes a unified approach to managing talent means outsourcing that function, wholly or in part.
When looking for vendors who can tackle one or more aspects of your strategic workforce management needs, look for partners who understand the value of a total talent approach.
The ideal vendor will be able to
- Support your total talent needs—permanent and contingent—including statements-of-work
- Demonstrate a focus on high-quality candidates
- Offer competitive rates
- Incorporate tools that streamline processes for hiring managers and candidates alike.
Based on experience delivering contingent workforce management services for a wide range of clients, consolidating vendors makes it easier and faster to identify talent gaps, fill open requisitions, and reduce costs.
The Power of Alignment
Aligning HR and Procurement teams takes collaboration and creative thinking. But regardless of the size of your organization, the benefits are worth it.
By streamlining processes and consolidating workforce data, your organization can control costs, mitigate risk, and deliver full visibility for smart workforce planning.
And that ultimately translates into greater workforce productivity.
Meet the Expert
Marc Husain – Managing Director
Marc Husain has more than 20 years of experience in vendor management, recruitment management, and talent management systems—with a focus on the nonemployee labor market. He served in a variety of sales, client relations, and leadership roles with VectorVMS predecessor companies, including PeopleFluent, Peopleclick, and itiliti. Marc leads all aspects of the VectorVMS business, ensuring close collaboration with clients and partners. He has established and maintained workforce solutions programs at multiple Global 1000 companies. Marc draws on this experience to help VectorVMS clients and partners to address challenges facing procurement and HR teams. He provides practical insights and expert advice on vendor management systems, contingent workforce management solutions, and total talent ecosystems. Connect with him on LinkedIn.