You’d be hard pressed today to find many companies that don't make at least
some use of contract talent, whether that means temporary workers, freelancers
or consultants. Estimates place these workers at somewhere between 20 and 30
percent of the entire U.S. workforce, and some projections suggest that it could
reach nearly half in the coming decades.
But if everyone agrees that contract labor is a useful tool in the modern
economy, the concept of how to manage it is far less decided.
The two approaches have been known for years: on the one side is procurement,
often tasked with digging up needed talent while they put together all the other
resources for a project; on the other side is human resources, which has a
natural stake in sourcing, hiring and managing any new workers.
There have been plenty of attempts to streamline and improve the contract
labor process, but they can often fall clearly within one camp or the other,
with all the biases that come along with that. The Human Capital Institute, at
the behest of Allegis Group Services, tried to get around this pit trap,
investigating the issue from both sides to see how each group perceives the
issue, and how they see each other.
You can download this research here.
HCI surveyed several hundred HR and procurement representatives, along with a
handful of people who fell into other categories, from companies around the
world in dozens of different industries. What they found was a surprising level
What's a Contract Worth?
Interestingly enough, while HR and procurement might have very different
mission statements, they see eye to eye on the value of contract talent.
Far and away, the two most important benefits of contract workers were
flexibility to respond to changing strategies and the ability to shift around
the workforce without major fixed costs.
"We use [contract talent] in the factory to allow for the flexing schedule
and business needs. We can cut back or add quickly without layoffs or big hiring
events," said Laura Rhoad, the HR director at Shaw Development. "In engineering,
we can use it for a specific project and then be done. It’s cheaper than hiring
The big disagreement? HR tended to put more emphasis on worker skills - easy
access to skilled workers for specific projects or short-term and infrequent
tasks - as well as some specific skills that are harder to find through normal
Everyone Has Their Own Problems, But Some More Than Others
If the value of contract talent was easy enough to agree on, the big
management challenges were a bit more contentious.
There were a few points of agreement - managing vendors, poor visibility,
rising costs and declining quality were all fairly common ground. But several
key issues showed up for both groups.
HR only had one real bone to pick - 40 percent of HR representatives said
companies aren't using their contract talent effectively or efficiently,
compared to only 28 percent of procurement.
Considering strategic use of contract talent is often a central
responsibility of procurement, it's not surprising they felt differently. But
it's worth noting that the people responsible for corporate hiring were worried
that a major part of the talent pool was being wasted.
On the other hand, procurement had a laundry list of complaints about how the
process was handled, most of which highlighted how inefficient the process
itself has become. To an extent, that's a response to the changing role of
contract labor in the workforce.
"Before, using contingent labor was reactive. Companies needed these workers
to handle a spike in demand or seasonal needs," explained Dave Barthel,
executive director of
capital solutions at Allegis Group Services. "Today contingent labor has
As the need for contract workers, and their importance, grows procurement
departments are finding that too many positions have poorly defined
requirements. That probably plays a role in their other big complaint - that
these workers take too long to onboard and train, wasting time and money.
Whose Job Is It Anyway?
But the big question everyone really wants answered is, if there's so much
conflict as things stand, what can we do about it? Who would be best suited to
manage all of these challenges?
The answer you get depends on who you talk to. If you ask HR, they'll say HR.
If you ask procurement, they'll say … not procurement, but also not HR.
As much as procurement worries that contract labor is operating
inefficiently, they don't seem to see themselves as the best solution. Instead,
the largest part of that group suggested that the process would be best handled
by department managers, since these people at least should know what they
If procurement is hesitant about HR's ability to handle the task, however, HR
has plenty of confidence in themselves. Nearly 70 percent of HR respondents
suggested they were best suited to managing contract labor, pointing to their
extensive experience with sourcing and workforce management.
Those two don't agree, but who does the data say should take charge? At least
in this case, there actually seems to be a fairly clear answer - everyone.
While both HR and procurement have valid concerns about each other, the
survey shows that companies reported substantially higher satisfaction with
their contract worker process if there was collaboration between these two
And, realistically, everyone already knows that. Both HR and procurement
listed increased collaboration as one of the top ways that the process can be
improved - on both sides of the table.
Of course, there's more to creating an effective contract labor system than
agreeing to collaborate and splitting up responsibilities. But deciding first
and foremost that the responsibility needs to be shared seems to be a vital
first step in managing this increasingly important part of the workforce.