Is your organization achieving a successful return on investment from its contingent workforce management program? Many companies still find themselves uncertain. In this article, we explore the 5 Essential Contingent Workforce Best Practices.
Although the contingent workforce offers numerous advantages to businesses, it can also bring about risks, hidden expenses, and other issues that may go unnoticed if not properly managed.
Therefore, a contingent workforce management program must be carefully designed, planned, and implemented to align seamlessly with your company's overall workforce goals and business objectives.
Achieving this will enable your organization to lower workforce expenses, enhance workforce quality, and boost the productivity of your internal teams.
What is contingent workforce management?
The contingent workforce is comprised of non-permanent workers that are commonly referred to as independent contractors, freelancers, gig workers, consultants, contract workers and temporary workers (temps). Contingent workers are typically sourced through a staffing agency, although in some cases may be sourced through a direct sourcing program.
While these workers bring a range of benefits to a business, from improved business agility to lower costs, they also bring risk, such as misclassification and rogue spend, when not managed correctly.
That’s why contingent workforce management programs are essential. Contingent workforce management is a strategic program that is designed, planned and implemented to improve the ROI of your contingent workforce and mitigate risk.
When done correctly, contingent workforce management will lead to:
- Reduced workforce spend
- Better staffing agency decisions
- Improved workforce quality
- Proper classification of non-employee workers
- An optimized contingent workforce
With that in mind, here are five contingent workforce management best practices your organization should follow to optimize ROI.
Contingent workforce management best practices
- Implement a vendor management system
- Align all of your departments
- Keep up to date with the latest managerial approaches
- Make sure all processes are centralized
- Don’t treat contingent workers like employees
1- Implement a vendor management system: The first step of implementing an effective contingent workforce management program should be to ensure you have a vendor management system in place. A vendor management system, also known as a VMS or VMS software, will centralize and automate all of the processes around managing your contingent workers and staffing agencies in one place.
By acting as a centralized database for your contingent workforce program, VMS software will give your business unique insights and reporting capabilities that show you how your program is performing and where you can make improvements that save you money and improve workforce quality.
Read our eBook by clicking the image below, to find out everything you need to know about choosing the right vendor management system for your company’s requirements.
2 - Align all your departments: To avoid rogue spend and inconsistent hiring processes that result in a lack of visibility into your program, it’s important that contingent workforce management is a cross-functional strategy that spreads across all departments in charge of hiring - whether that be HR, procurement or department managers.
By breaking down the silos between your teams and implementing a business-wide strategy, your organization will gain complete visibility into your contingent workforce so you know exactly how much you are spending and where.
3 - Keep up to date with the latest managerial approaches: HR trends are always changing. To ensure that you are onboarding contingent workers and managing them correctly while they work with your organization, it’s important that you stay up to date with the latest HR and management practices.
For example, contingent workers used to be seen as nothing more than ‘temps’ that came into a business, completed a job, and then left. But the contingent workforce has moved on from that, and many successful companies are focusing their efforts on becoming an employer of choice for the contingent workforce.
4 - Make sure all processes are centralized: Most businesses don’t have a contingent workforce management program, especially those with smaller contingent workforce spend. The problem is, this leads to fragmented and inconsistent processes across the organization when it comes to sourcing contingent workers and paying staffing agencies.
By implementing, and mandating, business-wide processes and procedures, you’ll ensure that all hiring managers are paying standardized rates, using the right staffing agencies and working towards the common goal of achieving your company’s workforce objectives.
5 - Classify your Contingent workers as "Contingent": When it comes to contingent workers, the onus is on your business to ensure that they are managed according to their “contingent” status and not in the same manner as traditional employees. Treating them like employees falls under misclassification, and can result in hefty fines and lawsuits for your business.
It’s important that your organization is able to demonstrate that each worker is a contingent worker, and not an employee. This means that the contingent worker isn't on the company payroll, is only hired for a defined period of time or for a specific project and does not receive the same benefits that traditional employees are entitled to, such as vacation time, sick pay or bonuses. These are just a few examples of the criteria used by the IRS or CRA to assess if a worker is deemed an employee. Consult local tax experts or CWF consultants to help you define your contingent workers status.
Check out our Contingent Workforce Management Guide
Interested in learning more about Vendor Management Systems?
Whether you are looking for a new VMS Solution, or just getting started, we are here to help. See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour. Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights) or Book a Personal Demo Today!
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