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The Contingent Workforce Dilemma

HR Times – The HR Blog

Posted by Michael Gretczko on May 13, 2011

We all know contractors, or contingent workers. We hire them into our organizations and we work beside them as a part of our team. They bring specialized skills and they perform tasks that may not be core to our business but are still needed to get the job done.

Contingent labor has become an increasingly “trendy” solution for the Talent Gap. A 2010 Deloitte survey of organizations indicates that 14 percent of U.S. employers have reported difficulty in finding appropriately skilled candidates to fill open positions. In order to address this growing gap between labor supply and demand, organizations are adopting the use of contingent workers as a critical strategy to meet their needs. This strategy translates into an increased amount of spending on contingent labor, an increasing percentage of contingent workers in the talent pool and the need for targeted strategic workforce planning with contingent workers.

Contingent worker management: The risks of not getting it right
As the use of contingent workers has increased, organizations are facing increasing and significant business, financial and public relations risks. These include:

  • Cost: Unknown, unmonitored or unrationalized labor expenses
  • Brand and Public Relations: Negative publicity from labor violations, lawsuits or misclassifications
  • Data Privacy, Fraud and Audit Risk: Compliance issues from lack of controls and protections and appropriate worker classifications
  • Management Practices: Contingent Worker Management (CWM) Behaviors / Practices

HR as a Driver for an Integrated Approach
In the face of this trend, organizations should respond with a calculated approach to contingent worker management. To get ahead of the contingent workforce dilemma, HR leadership needs to acknowledge the potential fit for HR in implementing a strategic CWM solution. While the contingent workforce is often managed by procurement as a purchased service, the use of contingent labor should also align with an organization’s broader talent and workforce planning strategy – these issues should be considered in context of the broader workforce. As such, HR is well equipped to play a leading role in partnering with the business to drive an integrated CWM approach. The ideal solution optimizes labor costs, manages dynamic market conditions and quickly fills critical workforce gaps.

Where do organizations begin?
To get started, organizations need to understand the size and cost of their contingent workforce and evaluate current processes for the lifecycle of a contingent worker in the organization. It is also important for leadership to identify and assess vendors of contingent labor, as part of the decision around which CWM solution(s) work best for the organization. In many cases, this means deciding whether outsourcing to a managed service provider makes sense. Ultimately, a compelling business case, based on a thorough talent assessment, will serve as the impetus for achieving leadership buy-in for an integrated contact worker solution.

While the strategy for CWM will undoubtedly vary across organizations, HR, as the owner of talent management and workforce planning, has a mandate to step up and help conquer the contingent worker dilemma.

Deloitte will be presenting “The Contingent Workforce Dilemma: HR Leadership in the Face of a Changing Workforce”, as part of the HRO Summit 2011, on May 24-26. For more information and/or resources on contingent workforce management, please contact Michael Gretczko at mgretczko@deloitte.com

Find more resources on HR Transformation.


Michael Gretczko is a senior manager with Deloitte Consulting LLP’s Human Capital practice. He focuses on large, complex global business HR Transformation using sourcing, SaaS/ERP/Self-Service Technologies, shared services and process reengineering.

 

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