There are many ways in which an organization encounters risk, and engaging a flexible workforce can be one of them. The benefits of utilizing temporary labor, independent contractors and other project-based workers can be extensive, but only if compliance concerns are accounted for and addressed. To determine how best to establish a flexible workforce program, companies should carefully examine four main areas: your risk profile, supplier strategy, worker on- and off-boarding considerations, and worker classification.
Establishing an Overarching Risk Profile
It’s important to understand the “risk aversion personality” of your organization. In general, does your company err on the side of caution? Oftentimes the industry itself dictates this, as government, healthcare and financial institutions can have extensive regulations to which companies must adhere. Location also plays a part, since different parts of world are more regulated by state and country laws than others.
Various groups within the organization need to be involved in any security aspects of non-employee access. These can include those responsible for building, systems and Intellectual Property access. When developing a strategy for engagement, these departments should be involved and their concerns should be taken into account throughout the process. This is also an appropriate time to consider those circumstances where the business need may outweigh the risk.
With this information, your company can build appropriate checkpoints into the program based on company compliance requirements. These checkpoints can be incorporated into your supplier strategy, worker on- and off-boarding and worker classification processes for an even more cohesive process.
Developing a Supplier Strategy that Reduces Risk and Maximizes Performance
A comprehensive supplier strategy starts at the beginning. Instituting a formal supplier vetting process can mitigate a myriad of compliance concerns. Financial viability is one example, and oftentimes organizations perform extra screening for those suppliers with less than 10 employees to eliminate concern in this regard. Another reason to vet suppliers is to ensure they hold all the necessary certifications and liability insurances. Most companies have a supplier onboarding kit to determine these things in advance and establish consistent payment terms.
While it’s necessary in some situations, for example, a hard-to-source position, it’s important to establish a formal sub-contracting process embedded within your Vendor Management System (VMS). For those companies that allow this, it’s important to establish how compliance concerns will be addressed, and by whom.
In addition to the vetting process, annual supplier reviews can ensure they are meeting expectations. Standard supplier scorecards will allow companies to take an objective look at performance. Reviews are also an opportunity to ensure suppliers still hold valid credentials where necessary (those in the medical or IT industry need particular certifications, for example).
For those utilizing a VMS, organizations should periodically review ongoing performance metrics captured by the system. More important is to ensure someone is responsible for and will take action on these results.
Improving Program Efficiency and Worker Productivity
Thorough, carefully constructed on- and off-boarding processes are critical when dealing with a large flexible workforce. A major component of the onboarding process is performing background checks. Organizations should pre-determine the scope of the background check to ensure the right areas are being validated based on job, responsibility, regional considerations and more. Companies in certain industries also require additional areas be investigated, such as background checks for financial institutions. A secondary review process for “gray” results should also be established in advance for those companies that take this a step further.
As for the suppliers’ role in this process, companies should establish clear rules and accountabilities. If your suppliers are responsible for performing worker background checks, it would be beneficial to tie this process to your VMS whenever possible. A VMS can house background check results for each worker, enabling an audit trail. In addition, background check completion can be an onboarding item that must be checked off in the VMS.
Ensuring Correct Classification of Workers to Mitigate Misclassification Risks
It’s no secret that misclassification can be an incredibly costly business mistake. Thankfully, technology can play a very active role in helping to classify workers correctly. Hiring managers can take advantage of embedded decision support tools within the VMS to decide if a position should be filled by a contingent worker, independent contractor or some other project-based worker. These decision forms can be incorporated into your company’s resource request process, requiring the hiring manager to answer a series of questions that later serves as an audit trail.
For additional security, organizations can choose to integrate their VMS to an independent contractor validation solution for an extra layer of protection. Your chosen Independent Contractor Engagement Specialist (ICES) will review the responses of each decision form and recommend a particular type of worker.
All of these are ways in which companies can mitigate some common compliance concerns. But keep in mind that your organization’s approach to combat risk is dependent on your specific business needs. Having a clear idea of your risk aversion personality, defining a formal supplier strategy, mapping out on- and off-boarding processes and having a way to classify workers will help you put in place necessary safeguards related to your flexible workforce management.