One of the most common challenges HR and procurement professionals face when evaluating a managed contingent labor program is articulating its benefits to various internal stakeholders.
There certainly is an opportunity for much broader adoption of such programs. Research shows that less than half of enterprises today turn to managed service providers (MSP) to manage their contingent labor programs. At the same time, the need for a managed contingent labor program has never been greater. Conservative projections place the contingent workforce at nearly 20 percent of the total U.S. working population, and it forecasted to grow to 30 percent or more in the next few years. (Global Human Capital Trends 2015: Leading in the New World of Work, “Deloitte University Press, 2015.)
In working with hundreds of enterprises over the years, PRO Unlimited has found there are some important ingredients that contingent labor program managers - typically HR or procurement - should include in their business case for a managed program.
1. Voice of critical internal stakeholders.
A contingent labor program manager needs to understand the business requirements and goals of key stakeholders before assembling all of the elements for a business case. Stakeholders represent diverse business interests and may include legal, finance, HR, as well as the line organization engaging the contingent workers. Incorporating the voice of these constituents enables program managers to gain insights into what is most important to the business, while building support among groups that play a pivotal role in the success or failure of the program.
2. Supplier feedback and insights.
Many suppliers are willing to absorb smaller markups in exchange for the opportunity to grow their business - both with existing clients and via new ones. These suppliers can offer thoughts and insights on current strengths and weaknesses of the supplier network and areas of potential risk.
3. Business outcomes.
The return on investment (ROI) a company receives from a managed program needs to be clearly understood as well as articulated. A thorough assessment of the enterprise's contingent labor programs, which may be scattered across multiple silos, suppliers, and geographies, is an important starting point. Based on nearly 25 years of experience, PRO Unlimited finds that organizations should heed four or five considerations when evaluating third-party consulting firms. Here, the PRO Unlimited white paper Optimizing Your Contingent Labor Program: Key Considerations When Seeking External Advice offers additional details and suggestions on evaluating third-party consultants.
Ultimately, contingent labor program owners need to pinpoint business outcome areas. These normally break across four categories: a) cost savings, b) risk management, c) better talent quality, and d) enterprise-wide transparency. Organizations should prioritize these and know what quantified results can be achieved in each category through the implementation of a managed program. This is where a third-party consulting resource can provide assistance.
4. MSP that fits the business.
The MSP needs to be flexible in accommodating different business objectives and organizational cultures. A challenge nearly every contingent labor program manager faces is concern - or even pushback - from departments and business owners regarding greater "headquarters" oversight of their internal arrangements. They often are worried they will lose independence and the supplier relationships they have developed. To mitigate these concerns, you should look for an MSP with a flexible engagement model that accommodates and addresses these types of concerns, enabling departments and individual managers to define their success and then execute accordingly.
It is also critical to ensure that the MSP you select can scale to meet the hiring enterprise's business requirements and growth. The following are a few areas for consideration:
First, global reach is a must for most enterprises. Ensure the MSP has global reach that allows for coverage of locations and departments outside of the United States. Second, SOW spend and utilization is becoming an area organizations want to include in overall governance of a managed contingent labor program. Finally, a managed program needs to include multiple sourcing channels - including staffing suppliers, SOW providers, and self-sourcing. PRO Unlimited and our clients have found that a vendor-neutral approach to sourcing talent and projects delivers lower costs and better talent quality. For more information on our purely vendor-neutral approach, download our Infographic Vendor-Neutral Supplier Management: Key Takeaways.
The benefits of a managed contingent labor program are quite compelling. Cost savings can quickly tally into the millions of dollars while the ability to source top, high-quality talent and projects at competitive rates is a competitive advantage for many companies. Indeed, organizations without a managed program place themselves at a strategic disadvantage. This is why is it critically important that contingent labor program managers build a solid business case for a managed program when soliciting and securing buy-in from key internal stakeholders.