|
From the 1950's to the 1980's, a "temp" was someone you called when the receptionist was sick. Today, however, it would be hard to find an American company of any size that doesn't relay on contingent workers - most often white-collar - as a significant percentage of its overall workforce.
The figures may surprise you:
- The contingent workforce now numbers about a third of all American workers.
- This group is growing five times faster than the permanent workforce.
- Many large companies are now spending upwards of $100 million a year on their non-employee workforces.
Unfortunately, however, our research reveals that many of these companies - if not most of them - have no idea how many contingent workers they actually have, nor how much money they are paying to have them. That being the case, it's hard to imagine that they have even the vaguest idea of how to track their usage going forward, especially in light of constantly changing corporate culture and team-building environments.
Now the digital revolution is effecting drastic changes in the ways in which HR procures and manages contingent workers. Indeed, many HF professionals have come to see the Internet as a potential lifesaver in these areas. And, in many cases, it certainly can be. However, there's also another side to the story. Unless you use the Internet wisely, it can end up as more of a leaky boat than a lifesaver.
In an ongoing search for more effective methods, the models for procuring and managing a continent workforce have been evolving rapidly in recent years. Here's a brief primer on how we got to where we are today, and where the Internet is taking us:
MODEL #1: EVERY MAN(AGER) FOR HIMSELF
The original model ruled from the fifties to the late-eighties, and in fact, is still being used by some companies today. In this model, hiring managers simply call a temp staffing service - often whoever happened to knock on their door last (or, in some instances, the friend of a friend, a brother-in-law, etc.). In an effort to improve this approach, some companies have attempted to provide guidelines to managers by drawing up approved vendor lists. However, the managers still have to go through the process of making the contacts directly with the staffing provider.
As the eighties turned into the nineties, many companies began to see the faults inherent in this method. The obvious drawback for large companies, in particular, is that they can end up spending hundreds of millions of dollars without any cost controls or volume discounts.
Despite this - and despite the massive growth in the temporary labor market - some large companies are still using the "Every Hiring Manager for Himself" model to source contractors or consultants who can fill critical needs on a project basis.
MODEL#2: THE FOX IN THE HENHOUSE
This situation evolved in the late-eighties and through the nineties toward a newer model, labeled by the temp staffing industry as the vendor-on-premise model. In this system, large national staffing companies serve as central clearinghouses for all temp and contractor staffing. This is certainly an improvement; there's better reporting, better controls, and volume discounts.
But there are still some very obvious flaws...the most obvious being the "fox in the hen house" situation. The staffing company is, of course, totally biased; it has a vested interest in trying to fill positions with its own people. And when it forwards and order to a competitor, the competitor is hardly likely to send back its best resumes - especially in hard-to-fill areas like IT. So the client often ends up losing out on some great talent. In addition, emerging areas such as IT suffer in other ways, because often the on-site staffing companies' forte has been low-end positions.
MODEL#3: EMERGENCE OF THE INTERNET
More recently, a new solution has evolved from the development of the Internet, which we'll call the "Exchange Model". The hiring manager places an order through an e-portal, and the software farms it out to the appropriate staffing provider, who then communicates with hiring managers in a virtual environment. This model offers a more effective way to manage your contingent workers, because it provides you with an unbiased view of the entire workforce.
The Exchange Model seems to make a lot of sense...a low-cost, seemingly limitless, and risk-free way to connect with contingent workers. It has certainly proved to be low-cost and limitless. But it's hardly risk-free.
By leaving just about everything to technology, you're eliminating the human element...and that's when the flaws in this model become obvious. Several critical factors necessary to match the right person to the right job are lost here. These "soft" factors include the importance of matching personalities and corporate cultures to achieve the right fit for a long-term assignment.
As a result, American business has learned - often, the hard way - that buying a human being is simply not the same as buying a widget.
In addition, this model is also lacking some very important safeguards for the client company. A computer cannot deal with the complex tax and employment laws regarding independent contractors, or with the co-employment issues dogging so many companies today. It can't determine whether a company's independent contractors really are independent contractors - according to IRS and DOL standards, not the company's. And it does nothing to help HR address the very specialized type of management required in dealing with these workers.
MODEL#4: THE FUTURE IS HERE
Because of these shortcomings, the Exchange Model has evolved into a hybrid solution that's now experiencing the best results in Corporate America. This new model operates on a "Bricks and Clicks" premise, utilizing Internet software in conjunction with the necessary human element. The end result is a "best of both worlds" scenario...and the entire process is managed much more effectively.
Companies that have adopted this model have reported dramatic improvements in both productively and cost-efficiencies, along with increased quality of the workers. And the last factor, in particular, is generating smiles on the faces of the hiring managers on the front line.
With this model, companies are also meeting today's critical need to stay in compliance with government regulations on issues such as co-employment and independent contractor classification. If you're not convinced of the importance of staying on top of these issues, just ask Microsoft. The company is currently involved in litigation that began with a group of former independent contractors maintaining that they had actually functioned as its employees, and, accordingly, should have been entitled to stock options. Or ask Time Warner, currently in litigation with the Department of Labor. Or ask IBM. Or a hundred other companies that thought their contractors qualified as "independent."
What's the bottom line for all of this? The revolution is here...and an efficient e-procurement strategy regarding contingent workers is a must for any company that wants to remain competitive. There's no doubt that the future is bright for better management of non-employee workers through the Internet. But make sure you don't forget about the human element. It could save you a lot of problems down the road.
Andrew Schultz, President
PrO Unlimited addresses contingent workforce management and compliance issues for companies throughout the U.S. For more information on these issues, contact PrO Unlimited at (toll-free) 877-PRO-1099, or at www.prounlimited.com.
|
