Last financial year I saved my then-employer in excess of half a million dollars through adopting a Contingent Workforce Model. Unfortunately, I still failed.
Around January 2015 a perfect storm was brewing. The mining industry was on a downturn, our wage rates were set high in a declining wage market, staff turnover remained high, we employed a majority permanent full time workforce and the business was looking to reduce cost. The perfect opportunity to introduce a contingent workforce model.
I had already been trialling this model with good success in another department for about a year and I had gained an advocate within operational management ranks. The data would help build my business case along with a very conservative cost to hire figure.
The presentation to the Executive went well. The model was endorsed to go live July 2015. How would we save?
- Access substantially lower market rates/wages (25%+)
- Reduce direct costs associated with medicals ($550pp) and safety equipment ($250pp)
- Reduce redundancy/termination costs
- Reduce workers compensation costs
- Reduce time to hire
- Lowered resource team costs
It all seems good there but where’d all go wrong?Setting up a Contingent Workforce Model can be challenging. @stanrolfe shares some lessons. Click To Tweet
The first problem we encountered was that the wage model used was for a 10-hour day, not a 12-hour day with which we operate. The agency providing the model was aware of this, however still costed at 10 hours. This was not identified until we went to tender after the contingent model was endorsed by our executive team. I raised this immediately. We would still see savings, but not to the same scale.
Always check your numbers with a third party.
We approached a handful of labour hire companies both National and Local. We opted for local based on meeting a number of criteria and the success they had building a contingent workforce for one of the other departments.
We went live in August 2015, one month later than expected. Some of our processes and workflows needed fine tuning between each party and we needed to roll out the model to our remote sites where this was going to impact the most. Many a phone call, email and occasional site visit was made by myself, and our partner.
September 2015. Recruitment freeze for approximately one month due to changing market conditions.
November 2015. Remuneration and bonuses were adjusted to meet market conditions. Additional savings lost. At around this time, an operational meeting took place at which our partner attended. Feedback was generally quite positive around the model and its benefits.
Market conditions are unpredictable. They need to be factored in to your risks.
January/February 2016. Negative feedback begins to filter through. Certain roles such as those very difficult to identify and retain polarise the issues with the model. Some challenges arise within the partnership which are resolved. Feedback was conflicting.
Data, data, data. Whilst its great you the employer can gather feedback its vitally important that your partners are doing the same. Without the data, your arguments are mute.
From this point on operations begin to pull back on the model. Bit by bit we begin to recruit direct.
You can’t change some peoples attitudes to labour hire contractors. These people can unravel the best laid plans, or even half baked plans..@stanrolfe shares some lessons he learnt from implementing a Contingent Workforce Model. Click To Tweet
As the financial year has just closed out, I’m pretty happy with how much we have saved the business by using this model, but I’m disappointed that the longer term objectives have not been met.
Looking back I could have implemented the model much better than I did. I’ve learnt a lot through this experience and if you would like to hear about this in more detail, than make sure you attend Contingent Workforce Conference 2016 in Sydney next week!
Join Stan, along with other leading Contingent Workforce experts including Alan Wilkerson, Matthew Dickason and Antonia Mochan, to learn more at the Contingent Workforce Conference 2016. Limited tickets left. See full agenda and purchase tickets here.
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