Is your contingent workforce program becoming obsolete?

Posted by Brian Proctor, Kathryn Charlton, Dana Flynn-Rea and Dave Yerks on October 4, 2017.

Your organization, like most of those we see, is probably already incorporating contingent workers in your talent mix, and likely seeing year-over-year increases in the number of contingent workers in your workforce. In Deloitte’s 2016 Global Human Capital Trends report, 51 percent of global executives surveyed said they plan to increase or significantly increase the use of contingent workers in the next three to five years, with only 16 percent expecting a decrease.1 But, even if you think your contingent workforce program has been up and running efficiently, it’s important to revisit it regularly. The contingent market is evolving rapidly, and keeping your program on autopilot could risk it falling far behind.

Many organizations believe their contingent workforce programs are running effectively; however, our analysis shows that even organizations that have invested in this space often still fail to meet the minimum criteria for a long-term successful program, including the following:

  • Contingent workforce costs are controlled and are not “hidden” in account codes that are untracked.
  • Foundational compliance programs are in place and are effectively managing risk—joint employment risk is managed through strong manager education programs, policies, and processes.
  • Contingent workforce metrics are being captured and reported.
  • Vendor Management System (VMS) technology has automated much of the contingent workforce source-to-pay process.
  • You know who your contingent workers are and how many have access to your sites or systems, and you have a standard taxonomy to define and describe the contingent workers.
  • Traditional sourcing avenues are under control, and managers appear to be sourcing talent appropriately from approved vendors.

Organizations that have invested in their contingent workforce programs should constantly monitor their programs and watch for warning signs of diminishing returns. In addition to the traditional concerns around cost, quality, and speed, disruptive market influences are rapidly influencing the contingent workforce market, sources of talent have broadened and evolved in recent years, and new technologies are delivering contingent workforce talent in ways not thought possible in prior years. However, many organizations are unclear about how to determine if their programs are effective.

At Deloitte, we assess status across a number of dimensions including process, technology, vendor management, policy, compliance, and talent management. Periodic health checks are valuable to evaluate how your program is responding to market disruptions. If you see any of the following warning signs, your program could be in trouble:

  • Pockets of risk exist, such as contingent worker roles intermingled with employee roles, raising concerns of co-employment (two or more employers having responsibility for the same contingent worker at the same time).
  • You rely on certain sourcing channels exclusively, and you’re not taking advantage of changes in the talent market.
  • Your organization doesn’t capture the important skills and competency levels of employees and contingent workers, limiting your ability to make sound decisions regarding the contingent workforce and FTE (full-time equivalent) ratio appropriate for your business.
  • You’re tracking contingent worker metrics, but haven’t gotten as far as total talent management—considering contingent workers in overall strategic workforce planning.
  • Contingent workers are used for urgencies and specific needs, but aren’t seen as an ongoing piece of the organization’s talent strategy.

In the evolving market, sources are readily available to not only feed talent needs but also provide end-to-end servicing of contingent workers, from recruiting and onboarding to payment. And, of course, services are increasingly becoming mobile, giving workers easy, on-demand access from their device of choice. This entire sourcing arena is ripe with potential—in our 2017 Global Human Capital Trends survey this year, more than half of surveyed global business leaders (53 percent) report weak capabilities in relation to gig and talent economy resources, and only 8 percent rate their companies’ ability to manage crowdsourcing as excellent.2

All of these factors, coupled with an evolving regulatory environment governing employment matters (scheduling, overtime, health care, benefits portability)—as well as more sweeping societal and economic shifts involving demographics, multiple generations in the workforce, and changing attitudes and expectations about work and working—underscore the importance of progressive, and even aggressive, contingent workforce management.

If you see value in recharging your program, potentially making it more strategically relevant and even creating a competitive advantage, consider evaluating your program with a critical eye:

  1. Consider how well the program is meeting customer needs.
    Focusing on the employee experience is a Top 10 2017 Global Human Capital Trend, and that experience extends to contingent workers as well. What are the “moments that matter” for the customers of your contingent workforce program—hiring managers as well as the contingent workers themselves? Are there processes in place to support those moments and provide for a positive experience?
  2. Evaluate the role of contingent workers within the total workforce.
    In terms of performance and productivity, are you getting satisfactory returns for your investment in contingent workers? Is the way you’ve traditionally used contingent workers adequate to support the business strategy going forward?
  3. Consider the source.
    Evaluate staffing models, current sources for contingent workers, and the merits of diversifying to include other types of sources and technology into the mix. Perhaps it makes sense to establish your organization’s own “window” into the contingent workforce. At Deloitte, for example, we’ve created Deloitte Open Talent—an online community/portal to match independent workers with project opportunities within our firm—to give us greater insight into our contingent talent population and add consistency and clarity to our contingent management processes.

We’ll be sharing other examples of how companies are managing and deploying contingent workers as we explore each of these topics in upcoming posts. Even if contingents make up only a small part of your total workforce today, that may not be the case in the future, whether by choice or by necessity. How well you manage total talent resources, both on and off the balance sheet, is not only a question of competitive advantage but also, increasingly, a matter of survival.

Brian Proctor is a director in the Human Capital–Workforce Strategies and Insights practice at Deloitte Consulting LLP and is the US leader for its Global Payroll practice.
Kathryn Charlton is a leader in Deloitte Consulting LLP’s Human Capital–Workforce Strategies and Insights practice, helping companies on their journey to total talent management by optimizing their contingent workforce population through strategy, process, and technology design.
Dana Flynn-Rea is a manager in the Human Capital–HR Strategy and Employee Experience practice at Deloitte Consulting LLP, leading HR organizations through transformative initiatives focusing on HR service delivery and total talent management optimization.
Dave Yerks is a specialist master in the Human Capital–Workforce Strategies and Insights practice at Deloitte Consulting LLP, specializing in in all aspects of contingent workforce practices.

1Jeff Schwartz, et. al., The gig economy: Distraction or disruption?, The new organization: Different by design, 2016 Global Human Capital Trends, Deloitte University Press, February 29, 2016.
2Michael Stephan, et. al., Talent acquisition: Enter the cognitive recruiter, Rewriting the rules for the digital age: 2017 Global Human Capital Trends, Deloitte University Press, February 28, 2017.

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