There has never been a better time to review and perfect the way you use Contingent labour in your organisation.
Contingent labour is here to stay and its numbers are on the rise with Statement of Work (SOW) being the fastest growing channel to bring in temporary talent. However, as I wrote in my previous blog on this topic, it’s time to ask if Statement of Work is more problem than solution.
Hiring organisation getting shortchanged?
There is no doubt that bringing in quality talent to work on a specific project and then exiting them when that project is complete, is the agilest and cost-effective way to secure highly skilled people. Besides, many of the best and brightest prefer to work under Contingent arrangements anyway. But companies need to do more to ensure they are actually getting the premium Contingent talent to go with the premium rate they are paying under SOW arrangements.
I have noticed that in most cases, a time and material SOW does not reflect the contracted responsibilities listed in the master agreement between an organisation and its service provider, and this leaves the door wide open to accountability issues. When the SOW and master agreement do not align, the organisation could potentially be shortchanged as they are not guaranteed of securing Contingent talent with the right IP and expertise needed to get the job done within the specified deadlines.
Quality control processes not well-defined
Then there’s the issue of the people who are tasked to carry out the interviews and conduct reference checks for Contingent labour. Busy hiring managers usually depend on the Contingent labour suppliers and trust them to identify the required people for work. However, is the supplier carrying out the right checks and balances to ensure the quality of the individual? Most reputable recruitment agencies will do this thoroughly but in a body shopping situation, it’s not always as prevalent.
Also, Contingent employees working under SOW arrangements are not typically being supervised by the hiring manager, as permanent staff and recruitment agency temporary workers/contractors are. That means most SOW Contingent workers are usually operating under no supervision or control. Employer organisations need to carefully define supervision responsibilities of the SOW employee and determine how to measure their quality of output in SOW agreements.
If SOW resources are being engaged via a traditional consulting firm, then that firm should be responsible for the quality of service provided and the resulting outcomes including cost overruns due to lack of skill, churn and or missed deadlines.
Yet in many instances, this isn’t the case. A time and material SOW commits a firm to supply certain individuals at a daily rate, with some suppliers able to absolve themselves of nearly all the risks related to those contingent workers’ performances.
SOW improvements and alternatives
So if your current SOW arrangements are not the answer, what is?
The most obvious solution is to increase your permanent headcount, rather than the number of SOW employees, but such a simple sounding solution can be very complicated. It’s also at odds with the trend of modern workforce engagement.
Our advice is to improve SOW arrangements and explore alternatives by:
- Investing time in creating a true SOW with milestones and deliverables rather than only time and materials definitions;
- Having a controlled panel of relevant recruitment agencies that provide the same resources at a far lower margin in the form of a temporary worker or contractor;
- Negotiating an agreement with your service provider where SOW resources that are simply contractors are charged at a lower rate than those who are their permanent staff or “on the bench”;
- Engaging an experienced Managed Service Provider (MSP) to manage your active Contingent Workforce program.
Many savvy CFOs and CPOs are starting to raise questions about the inflating costs of their Contingent headcount and looking at ways to streamline the hiring processes. Are you doing the same?
Look out for my next blog in which I’ll explain in depth the features and benefits of engaging an MSP.
This article is sponsored by Hays.
Join Shane at the Contingent Workforce Conference in Sydney on 27 & 28 September 2016 as we workshop how Talent & Procurement Leaders can prepare for the ‘The Rise of the Gig Workforce’. See the full agenda and register here.
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