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Workforce Shifts
In recent years, organizations have seen a
shift in the make-up of their total
workforce as the traditional reliance on
full-time employees has evolved into
organizations leveraging a combination of
permanent, temporary, and project-based
resources. This trend toward a hybrid
employment model will only continue to grow,
with contract labor expected to rise to as
much as 30-50 percent of the entire U.S.
workforce in 2010, according to law firm
Littler Mendelson. While these types of
non-permanent resources may have been used
to some degree in the past, they now play a
more strategic role, with skill sets that
are frequently of a higher level and more
professional than before, and that are often
outside the organization’s core competency.
These workers are more integral to the
company than before, and must now be viewed
as part of the overall workforce portfolio.
Recent economic conditions
have played a significant factor in this
changing workforce. As a result of the
recession, nearly 14.9 million Americans are
unemployed today, and several million more
are under-employed. While the outlook for
recovery is positive, it will also be slow,
with companies re-structuring their approach
to maximizing resources and looking to the
scalability inherent in the use of
non-permanent labor. At the same time, those
who are unemployed seek to re-enter the
workforce in a manner that will provide them
with flexibility, having learned that
full-time status and service tenures do not
protect against layoffs. In addition, many
Baby Boomers who were expected to retire are
now pursuing temporary positions to fill the
gaps in their retirement funds. Finally,
those in the millennium generation are
attracted to flexible work situations where
they can balance their personal and
professional lives and be more selective
about their work. Add these elements to the
fact that those who remained employed
through the recession will most likely start
to explore other employment options, and it
is clear that organizations will see great
changes in the faces and lifecycle of their
workforce.
Integrated Resource
Fulfillment
With these economic and demographic trends
at play, the challenge remains for companies
to fully and accurately evaluate their
current base of resources in order to
determine the optimal mix to help achieve
ongoing business goals. The ideal strategy
for companies should be to follow an
integrated resource fulfillment approach. In
doing this, the entire range of resources is
viewed in a holistic manner, which allows
for scalability as business needs fluctuate
and the use of various types of resources
based on who can best perform the necessary
work. A simple way to start on this path is
by considering questions such as the
following:
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How do you currently
track contingent labor? Through accounts
payable? Manually?
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What departments, other
than human resources, are involved in
sourcing non-permanent resources?
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Do you know if you are
securing the best rates possible?
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How does your
organization track costs related to
statement-of-work (SOW) and other
project- related services? Is there any
accountability regarding the associated
deliverables?
-
Are there standardized
processes and parameters in place to
control and track all categories of
labor?
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Do you have an effective
administrative method to enforce
penalties for delivery failure (missed
service level agreements, late
deliverables, etc.)?
By assessing these questions
and taking steps to address areas for
improvement, organizations will be able to
more knowledgably answer the following
questions in a manner that supports their
overall bottom line:
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What is the proper mix
of contract to full-time hires for our
company?
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When should we outsource
versus hire internally?
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When it is best for us
to hire contractors versus engage a
turnkey project/solution provider?
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What are the
fully-loaded costs associated with
contract labor? Project services? How do
those compare to the cost of a full-time
resource?
How it Works
The initial phase toward resource
optimization focuses on increasing
visibility into the current workforce spend.
By identifying the breakdown of labor spend
and particular issues that need to be
addressed (such as maverick spend by hiring
managers or inconsistent labor rates), the
framework emerges for how best to improve
processes and maximize contingent labor
costs. This phase should include the
implementation of tracking tools and the
establishment of standardized and automated
processes, resulting in almost immediate
cost savings and a clearer sense of what
types of labor are most cost-effective for
the organization.
Moving beyond this
evaluation and introduction of initial
systems for labor management improvement,
the next step is to create tighter approval
flows and control around the use of various
labor types. With different departments
sourcing contingent labor and project-based
resources, there needs to be a
centralization whereby all labor spend is
approved through the same channel and
procured through the same processes. The
goal is to ensure that each labor request is
approved as appropriate and that the only
workers hired are from authorized vendors at
pre-determined rates. Other guidelines
related to areas such as compliance and
performance management are also established
to provide greater control. With these
improvements, organizations see even greater
cost savings, improved efficiencies as a
result of clear-cut procedures, and the
ability to start using tracked data to
analyze labor spend in a more strategic
manner.
The final phase is the
achievement of optimal workforce procedures
through the use of company intelligence to
make the very best decisions regarding what
types of labor best support the business.
The sourcing process is continually being
improved to maximize spend and efficiencies.
This results in a more proactive approach to
the workforce, where needs are identified
and anticipated so they can be fulfilled by
the most appropriate resource – be it
full-time, temporary or project-based. The
performance of vendors and contractors is
also improved as tighter performance
management ensures that work is completed
satisfactorily and at agreed-to prices. This
state of total workforce visibility,
management, and optimization enterprise-wide
and across all labor categories achieves
integrated resource fulfillment.
Conclusion
Current economic conditions, employment
trends, and other demographic factors are
colliding to present a prime opportunity for
organizations to fully evaluate their
overall workforce and steer their current
labor fulfillment practices toward a more
integrated approach that will provide
greater efficiencies, improved results from
both permanent and temporary resources, and
significant cost savings.
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