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Contingent Workforce Management
How to reimagine your contingent workforce strategy to make it future proof?
This blog is the first of a series of blogs where you will learn how to reimagine and implement your contingent workforce strategy. In this blog we will explain why now is the time to start planning ahead to become adaptable for the future. To achieve your contingent workforce strategy, this blog will also introduce five key questions that will be answered in subsequent blogs: Why, where, who, what, and how.
This blog was written by Peter Paul van Zenderen and Judith Eickhoff
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- What is Contingent Workforce Management?
- The evolution of Contingent Workforce Management
- Flexible organisations
- Reimagine your contingent workforce strategy
- Where to start?
What is Contingent Workforce Management?
Before we dive into the content, let’s first make sure we are aligned on what is meant by the term, “contingent workforce.” In general, contingent workforce refers to the workforce not on your organisation’s own direct payroll, such as contractors, independent freelancers, and gig workers. Flexible and alternative workforce are regularly-used alternatives that roughly have the same meaning and can often be used interchangeably – in our blogs we will stick to contingent workforce.
Contigent Workforce Management
Read the next blog in our series here
The evolution of Contingent Workforce Management
Contingent Workforce Management (CWM) is not a new trend on the block. In our very first HC trends report, we already explain the drivers that led to the steep rise of CWM in the decade prior to 2011. This report also stipulates that organisations need to focus on risk and liability mitigation by increasing CWM visibility and process standardisation. More recently, it has been emphasised that alternative open labour forms such as crowd and gig-workers were on the rise. To better embed these “new” workers, with different drives and needs, in the organisation’s workforce ecosystem, there is a recommendation for further extended talent management through a collective effort by HR, Procurement, and IT. In 2019, it was indicated that the contingent, or alternative, workforce “had gone mainstream.” Still, organisations were failing to fully capitalise on its potential, as most of them missed the move from transactional (“filling slots”) to strategic, and from managing to optimising and leveraging.
As the short history lesson explains, CWM is not privy to the current crisis, but rather, the importance has only increased. The relevance of CWM has been brought to light in many different ways, mainly be found in the increased flexibility organisations have to react to changing circumstances, whether through quick upscaling or downscaling. Both scenarios can be regarded CWM in action. Organisations who had a well thought-through Contingent Workforce Strategy in place benefited greatly – and we will explain why.
- Quick downscaling: Organisations who faced budgetary setbacks or had to cut down production due to COVID-19 restrictions had the opportunity to downscale quickly by terminating or letting contingent workers go. They had a clear overview of the contingent workforce employed, knew under which circumstances they were allowed to let them go and had the required processes in place to act quickly. They also understood which tasks were fulfilled by contingent workers and could decide which workers were employed to increase capacity. Additionally they were able to determine which tasks were crucial to business success and therefore should stay within the organisation, even in these turbulent times. Next to monetary benefits, letting contingent workers go also helped organisations to ensure that employees on their own payroll were kept busy to avoid pay cuts or layoffs.
- Quick upscaling: On the other hand, within areas such as healthcare, supermarkets or delivery services, it was crucial to upscale quickly to cope with rising demands. Organisations with a clearly defined contingent workforce strategy already knew which work could be taken over by contingent workers. The needed network, partnerships and vendor relations were already in place to find contingent workers. These organisations also had an understanding of contingent workers’ needs and therefore are an attractive employer with the right processes in place to quickly recruit and onboard.
Reimagine your contingent workforce strategy
In conclusion, organisations that included contingent workers in their total workforce strategy were better prepared to be adaptable in these constantly changing times. These organisations will also be better prepared moving forward, as organisations will need to be adaptable to cope with the cyclical labour swings that are to be expected. If you want to know more about how your total workforce strategy can support you in the COVID-19 crisis, please read our perspective. Now is the time to start planning ahead and reimagine your contingent workforce strategy in order to become adaptable in the future.
Where to start?
Now you might wonder: where to start when reimagining our contingent workforce strategy? In order to create a solid strategy, the first thing is to gather a multidisciplinary team with the knowledge to cover all the different aspects of CWM. We advise to have at least Procurement, Tax & Legal, HR, Business Operations and Technology representation. After your team formation, we recommend to ask the following five questions:
- WHY should we use contingent workforce? How will it support us in achieving our business strategy?
- WHERE to apply contingent workforce? Which tasks can be outsourced and where do we need to bridge capability gaps?
- WHO are we going to hire as contingent workers? Do we need them to increase capacity, or to bring certain skills and expertise we do not have?
- WHAT kind of (labour) conditions are we going to offer and what are the different legal implications of these conditions? What work environment do we need to create to enable our workers do their work, and to be an attractive and engaging employer? How to reinvent with a human focus?
- HOW will we successfully manage our contingent workforce? Which vendor relations do we need, how do we ensure we are compliant, how do we mitigate risks and what technologies can support us?
Maturity assessment: Contingent Workforce Management in your organisation
Do you want to explore the opportunities for Contingent Workforce Management in your organisation? We have developed a free of charge “CWM Quick Scan Workshop”, where you will, together with our multidisciplinary team, assess your maturity against benchmarks and identify areas where you can start your reimagination. We will compare against our best practices to give you concrete first improvement steps. Feel free to contact us directly, and in the upcoming blogs we will further elaborate on the five key questions.