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Research in collaboration with

Contingent Workforce Insights 2019: Expertise in Full Force Unlock more value from your non-payroll workers

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• Gainvisibility

• Managewithrigor

• Collaborate

• Seeyourcontributioninanewlight

Table of contents

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Preface: The external workforce is essentialto thriving in the digital age

Introduction: Why it’s vital to actively manage contingent labor

Conclusion: The value of total workforce management

Four key actions to better manage contingent workers:

Here’s how to get started

About the research

Pacesetters lead the way

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The external workforce is essential to thriving in the digital ageTheworkforcehasforeverchanged.Togetworkdone,organizationsareincreasinglylookingbeyondtheiremployeepopulationsandturningtotheexternalworkforce,whichincludes:• non-payroll(i.e.,contingent)workers,suchasindependentcontractors,freelancersandtemporarystaff

• servicesproviders(companiesthatsupplyservicesdeliveredbypeople,suchasconsultingfirmsandmarketingagencies)

Theexternalworkforcegivescompaniestheagilitytheyneedtothriveinthedigitaleconomy,andprovidesaccesstosought-afterskills.

Toexploreorganizations’relianceontheexternalworkforceindepth,SAPFieldglasscollaboratedwithOxfordEconomicstosurvey1,050seniorexecutivesin24industriesacross21countries.One-thirdofsurveyrespondentsareC-suiteleaders,includingChiefProcurementOfficersandChiefHROfficers.Fromaqualitativeperspective,weconductedin-depthinterviewswithmultipleexecutivestogaintheirinsightsandreactionstothesurveyfindings.

Thisreportoutlinestheresearch’sfindingsonhoworganizationscangaincompetitiveadvantagebymoreactivelymanagingcontingentworkers.We’llalsoexaminethevitalroletheexternalworkforceplaysingettingworkdone.Tosetthescene,let’sfirsttakealookatthebroadercontextoftheexternalworkforce.

Preface

of executives strongly agree their organization

has a talent strategy that encompasses employees

and the external workforce

29%

of executives say their external workforce is

important or extremely important in meeting

business needs for specialized new IT and

digital skills

62%

Preface3

Critical to organizations’ successOurresearchrevealsthattheexternalworkforceiscriticaltoorganizations’success.Itoperatesatthecoreoftheenterprise,andalmosthalfofexecutives(48%)surveyedsaytheircompanywouldbeunabletoconductbusinessasusualwithoutanexternalworkforce.

Theexternalworkforceisalsosignificantintermsofitssheersize,makinguparound42%ofworkforcespend.Toputthatanotherway,only58%oftotalworkforcespendisonemployees.

Non-payrollworkers

Servicesproviders

42%of spend is on the external workforce

23.9%57.9%

18.2%

Employees

Fig. 1: The way work gets done

What is the split of your organizational spend across employees, non-payroll workers, and services providers?Averages shown

Manybelievetheexternalworkforcewillcontinuetogrowinthefuture,becauseoftheflexibilityitprovidesforworkersandorganizations.MartinThomas,HeadofTotalWorkforceManagementatPhilips,says:“Icanseeaworldwheretheexternalworkforcemakesupanevengreaterproportionoftheworkforce.That’safutureweanticipateforPhilips.”

Vital to achieving business goalsOurresearchrevealsthattheexternalworkforceisimportantforcompaniestomeetawiderangeofbroadbusinessgoals–fromboostingorganizationalagility(citedby63%ofrespondents)toincreasingspeedtomarket(61%).Critically,67%ofrespondentssaytheexternalworkforceisimportantinimprovingthecustomerexperience/clientsatisfaction–atopgoalatmanycompanies.Theexternalworkforceisalsoseenasvitaltoinnovation,with59%ofexecutivesstatingthattheexternalworkforcehelpsthemcompeteinadigitalworld.56%ofrespondentssaytheexternalworkforceisimportantorextremelyimportantindevelopingorimprovingproductsandservices.

Preface 4

Fig. 2: The external workforce is key to organizations’ success

How important is the external workforce in meeting the following business goals?“Important” and “Extremely important” responses

74%

67%

66%

63%

61%

61%

56%Developing or improving products and services

Increasing speed to market

Reducing risk

Increasing organizational agility

Operating at full capacity/meeting market demands

Improving the customer experience/client satisfaction

Managing costs

Thesefindingsrevealtheimportanceoftheexternalworkforcetoorganizationstoday–notjustinkeepingthelightson,butinachievingbusinessgoalstothriveinarapidlychangingworld.JPStadelmann,HeadofPurchasingfortheExternalWorkforceatSwisscom,remarks:“Forus,thevalueoftheexternalworkforcehasneverbeencost.It’sflexibility.It’sstrategic.”

““For us, the value of the external workforce has never been cost. It’s flexibility. It’s strategic.”

JP StadelmannHead of Purchasing for the External Workforce, Swisscom

Preface5

Skills shortagesManyorganizationsfaceskillsshortages–andtheshortfallsareparticularlyacuteincountrieswithlowunemployment.Asaresult,itcanbeextremelydifficultforcompaniestosourcetheskillstheyneedtothriveandseizenewopportunities.

Theexternalworkforcedeliversenormousvaluebyprovidingflexibleaccesstosought-aftercapabilities.Forexample,62%ofexecutivessaytheirexternalworkforceisimportantorextremelyimportantinmeetingbusinessneedsforspecializednewITanddigitalskillssuchasAI,machinelearning,datascience,blockchain,automation,cloud,roboticsandtheInternetofThings.Althoughthesenewertechnologiescanhelpcompaniesoutperformcompetitorsinthedigitaleconomy,only31%ofexecutivesreporttheyhaveenoughskillsintheseareasnow,andjust56%anticipatetheywillhaveenoughinthreeyears.

Otherkeyskillsthatcompanieslacknow,andinwhichtheyforeseefutureshortfalls,includedata-drivendecision-making,userexperienceanddesignthinking.Astechnologycontinuestomarchforward,accesstocutting-edgeskillssuchasextendedrealityandquantumcomputingmaybeagame-changer.

Cybersecurity

In 3 yearsToday

Design thinking

User experience

Data-driven decision-making

New productdevelopment

Business operations

Newer technologies (AI, machine learning,

blockchain, automation, cloud, robotics,

Internet of Things)

59%

76%

48%

61%

42%

57%

38%

56%

33%

50%

31%

56%

29%

58%

Fig. 3: Significant shortfalls in key skills, vital for agility and growth

To what extent does your organization have the skills it needs in the following areas now and expected in three years?“Enough skills” responses

Preface 6

The challenge and opportunity for HRDespiteitsimmensesizeandimportance,manycompaniesdonotseetheexternalworkforceasanextensionoftheirworkforce,soitremainsanunder-managedasset.Only29%ofexecutivesstronglyagreetheirorganizationhasatalentstrategythatencompassesemployeesandtheexternalworkforce.What’smore,just17%ofexecutivesstronglyagreethatwhenstartingnewprojects,theyconsideralltypesoflabor,includingemployeesandtheexternalworkforce.

LisaZak,DirectorofStrategicSourcingatMedtronic,theworld’slargestmedicaldevicecompany,sumsitupwell:“ManyC-levelexecutivesdon’thavetheexternalworkforceontheirradarbecausetheyarenotawareoftheextenttowhichitcomprisestheirtotalworkforcemixandfuelsgrowthandinnovationoftheirbusiness.”

Byactivelymanagingtheexternalworkforce,companiescanunlocktheimmensepotentialofthisvaluableresource.Aflourishingexternalworkforcebenefitsemployees,too.

7 Preface

Insummary,theexternalworkforceisavitalleverforcompaniestoachievebetterbusinessoutcomes.Organizations that do not actively manage their external workforce are leaving value on the table and exposing themselves to risk.

74%

66%

64%

55%

The external workforce improves our culture by bringing in new people with different

backgrounds and experiences

The external workforce raises the bar for our employees by bringing in new sources of

skills and talent

The external workforce connects our employees to new ideas

The external workforce challenges our employees to do their best work

Fig. 4: How the external workforce impacts employees

To what extent do you agree with the following statements about the impact of the external workforce on your organization?“Agree” and “Strongly agree” responses

Today’sworkforceiscomprisedofaninternalworkforce(employees)andanexternalworkforce(non-payrollworkersorcontingentlabor,andservicesproviders).Theexternalworkforceaccountsformorethan40%oftotalworkforcespend.Thisexternallaborpoolisvastandvaried,comprisedofmultipletypesoftalentunderanarrayofworkarrangements.

Meet the modern workforce: how work gets done

Employees

Workers who are on the company’s payroll, typically receiving traditional employment benefits.

Non-payroll workers

Also referred to as contingent labor, these individuals are engaged by an organization to do work on its behalf, but not as employees. They can be contracted via staffing agencies, through freelance marketplaces, or directly by the company.

Examples: Independent contractors, freelancers and temporary labor.

Services providers

Companies contracted to get work done, typically on a project basis, via a Statement of Work (SOW). They provide services delivered by people.

Examples: Consultancies, IT outsourcers, marketing agencies, law firms, facilities management companies, call-center operators and accounting firms.

Inte

rnal

Wor

kfor

ceEx

tern

al W

orkf

orce

8Preface

“People want to be engaged the way they want to be engaged, meaning it’s not always going to be the traditional FTE.”

Cynthia MooreSourcing Lead Consultant & Procurement Solutions, Allstate

“

““Our services providers bring thought leadership and help us push boundaries to propel the business forward.”

Sasha Samac Head of Operations, Procurement and Supply Chain, Telstra

Learn about the other half of the external workforce: services providers Thisreportfocusesonnon-payroll,orcontingentworkers–onehalfoftheexternalworkforce.However,servicesproviders–theotherhalfoftheexternalworkforce–alsodeserveattention,astheyareahugesourceofuntappedvalue.

“Servicesprovidersareespeciallyvaluableascompaniesremakethemselvesforthedigitalera.SashaSamac,HeadofOperations,ProcurementandSupplyChainatAustralia’slargesttelecommunicationscompanyTelstra,says:“Telstrahasembarkedonawide-reachingtransformationprogramtouchingallareasofthebusiness.Ourservicesprovidersplayavitalrolebyhelpinguscomeupwithnew,forward-thinkingwaystodeliverexcellentserviceandinnovativesolutionstoourbusinessandretailcustomers.Ourservicesprovidersbringthoughtleadershipandhelpuspushboundariestopropelthebusinessforward.”

Everyyear,organizationsspendbillionswithservicesproviderssuchasconsultingfirms,IToutsourcersandmarketingagencies.Althoughmanycompaniesexcelinmanagingthefinancialsideofcontractswithservicesproviders,theystopshortofmanagingthe“people”aspectsoftheseengagements–suchaswhoisdoingthework,qualityofwork,progressagainstmilestones,andaccesstosensitivedata.Thisunder-managementpreventsorganizationsfrommaximizingvaluefromtheirservicesprovidersandcreatesrisksinsecurity,complianceandmore.

Tofindoutmore,readthesisterreport,Services Procurement Insights 2019: The Big Reveal. Thereportpresentsactionsorganizationscantaketoimprovemanagementofservicesproviderstoachievebetterbusinessoutcomes,boostROIandmitigaterisk.

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10Introduction

It’s all around youIt’sclearthattheexternalworkforceplaysakeyroleincommercialsuccess.Inthisreport,wewillfocusonnon-payroll,orcontingent,labor.

Contingentlaborhasbecomeincreasinglyimportantacrossallindustriesandgeographies.It’snotjustcompaniesdrivingthisshift–it’sworkers,too.Manypeoplearechoosingtoworkmoreflexiblythanbefore.Thinkofhigh-flyingconsultantswholeavetheirfirmstopursuecontractwork,freelancejournalistsandITcontractors.Manypeoplewithindustry-specificskillsalsochoosecontractworksuchasnurses,offshoreoilandgasworkers,andinsuranceclaimshandlers.

Inaddition,manybabyboomersareoptingforcontractworkinthefinalyearsoftheircareers,beforetheymovetofullretirement.HarvardBusinessReviewfoundthatamongthoseage55andolderwhoacceptedearlyretirementoffers,one-thirdhavegonebacktowork–butworkingretireesaremorelikelytobeworkingpart-timeorbeself-employedthantheirnot-yet-retiredcounterparts.i

Peopleenjoygreaterfreedomandchoiceascontingentworkersthantheywouldhaveasemployees.AsCynthiaMoore,SourcingLeadConsultant&ProcurementSolutionsatAllstate,observes,“Peoplewanttobeengagedthewaytheywanttobeengaged,meaningit’snotalwaysgoingtobethetraditionalFTE.”Thereareoftenfinancialbenefits,too.Forexample,manypeoplewithspecialistexpertisefindthatcontractworkcanbefarmorelucrativethanpermanentjobs.

A powerful (work)forceWehavealreadynotedthattheexternalworkforcemakesup42%oftotalworkforcespend.Contingentlaborisjustoverhalfofthat,representingnearly25%oftotalworkforcespend.

Inmanycases,contingentworkersworkattheheartoftheenterprise,accessingtheirclients’facilities,systemsandsensitivedata.Somehavecustomer-facingroles.It’scrucialthatorganizationscantrustthesecontingentworkerstoperformwell–andtrustthemwithinternalconfidentialinformation.

Despite the high stakes, many organizations lack insight into contingent workers and do not manage them effectively.Under-managementpreventsorganizationsfromunlockingthefullpotentialoftheircontingentworkers,andexposesthemtorisksinsecurity,complianceandmore.

Ourresearchexplorestheopportunitiesandrisksaroundcontingentlabor.Basedonouranalysisoftheresearchdata,weidentifiedfourkeyactionsorganizationsshouldtaketoimprovemanagementofcontingentlabor.Theseactionsempowerorganizationstoachievestrongerbusinessoutcomes,maximizevaluefromcontingentworkersandreducerisk.

Why it’s vital to actively manage contingent labor

Introduction

Introduction11

See your contribution in a new lightContingentworkerssupplymuch-neededskillsandhelporganizationsachieveabroadrangeofbusinessgoals.Companiesshouldencourageemployeestohelpnon-payrollworkersmeettheirsetgoalsandobjectives.Thatway,everyoneworkscloselytogethertoimproveoverallteamperformance.

Thefollowingpageswillexplaintheseactionsandrelatedfindingsinmoredetail.

Gain visibilityEffectivemanagementrequiresclearvisibility,yetlessthanhalfofresearchparticipantsarehighlyinformedaboutthebasicsoftheirnon-payrollworkers,suchascontractterms(47%),whoisdoingtheworkandwheretheyarelocated(both39%).Evenfewerarehighlyinformedaboutthequalityofwork(31%)andindividualperformance(16%)oftheirnon-payrollworkers.

Manage with rigorTogainmorevaluefromcontingentworkers,organizationsmustapplythesamedisciplinetomanagingthemastheydotheiremployees.Thatmeansmonitoringtheirqualityofwork,certificationsandtraining,accesstosystemsanddata,andmore.Lackofmanagementrigorexposescompaniestorisk.Forexample,manyrespondentsexperienceissueswithnon-payrollworkerssometimes,frequentlyorinnearlyeveryengagement,suchasdigitalsecuritybreaches(47%),complianceissues(40%)andmisclassifiedworkers(36%).

CollaborateOrganizationsmustfosterclosecross-functionalcollaborationtoachieveaclosedloop,wherebyoperationaldatafromlinesofbusinessisfedbacktoProcurementandHRtoinformsourcing.Thereisroomforimprovementinthisarea,asonly18%ofexecutivessaytheirorganizationhashighlyeffectivecross-functionalcollaborationinmanagingtheperformanceofitsnon-payrollworkers.

Actively manage your contingent workers to unlock more valueFour key actions

Gainvisibility

Manage with rigor

See your contribution in a new light

Collaborate

12Gain visibility

Gain visibility

Youcan’tmanagewhatyoucan’tsee.Unfortunately,manyorganizationsfallintothistrapwhenitcomestotheirnon-payrollworkers,despitetheroletheyplayingettingworkdone.Our research shows that senior executives across industries and around the world have limited visibility into their contingent workers.

Lessthanhalfofresearchparticipantsarehighlyinformedaboutthebasicsoftheirnon-payrollworkerssuchascontractterms(47%),whoisdoingthework(39%),wheretheyarelocated(39%),andresponsibilities(34%).Thesearestraightforwardmatters,andthelackofinsightisconcerning.

31% 29%

47%Contract terms

Who is doing the work

Where they are located

Access to facilities

Responsibilities (what they are doing)

Progress against milestones and/or deliverables

Access to systems and confidential company information

Compliance with required licenses and certifications (e.g., health, life & safety)

39%

39%

38%

37%

34%

33%

23%

Fig. 5: Challenges with visibility

How informed are you personally about the following details of your non-payroll workers?“Highly informed” responses

Fig. 6: Visibility into quality of work and individual performance is particularly low

of executives are highly informed about the quality of work of their non-payroll workers

are highly informed about individual performance of their non-payroll workers31% 16%

of executives are highly informed about the quality of work of their non-payroll workers

are highly informed about individual performance of their non-payroll workers31% 16%

Quality of workEvenfewerrespondentshaveinsightintohowthoseengagementsactuallygo.Only31%ofexecutivesarehighlyinformedabouttheirnon-payrollworkers’qualityofwork,andjust16%arehighlyinformedaboutindividualperformance.With such limited insight into quality of work, it’s difficult for executives to manage non-payroll workers effectively and have confidence in value delivered.

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““Many C-level executives don’t have the external workforce on their radar because they are not aware of the extent to which it comprises their total workforce mix and fuels growth and innovation of their business.”

Lisa Zak Director of Strategic Sourcing, Medtronic

14Manage with rigor

Manage with rigor

Many organizations do not manage contingent workers with the same discipline they use to manage their employees.Withcontingentworkerscomprisingasignificantproportionofanorganization’sworkforce,that’salotofresourcesthataren’tbeingmanagedwell.

Not only can under-management result in unsatisfactory outcomes, it exposes companies to substantial risk.Inmanycases,contingentworkersaccesssensitiveinformationincludingcustomerinformation,internalsystemsandfacilities.Ahands-offmanagementstylecreatesrisksofphysicalanddigitalsecuritybreaches.Ourresearchindicatesthatincidentsarewidespread.Forexample,47%ofrespondentsreportthattheyexperiencedigitalsecuritybreacheswithnon-payrollworkerssometimes,frequentlyorinnearlyeveryengagement.Thisisconcerning.

Organizationsareultimatelyresponsibleforthecontingentworkerstheyengage.Thatincludes,forexample,ensuringthatworkershavetheappropriatecertificationsandtrainingtocompletetaskssafely.Companiescanfacesignificantfinancialpenaltiesfornon-compliance,andinsomeindustries,lifeandhealthcanbeputatrisk.Organizationshaveampleroomtoimproveinthisarea,since40%ofexecutivessaytheyexperiencecomplianceissueswithnon-payrollworkerssometimes,frequentlyorinnearlyeveryengagement.

Anothercrucialaspectofcomplianceisensuringthatpeoplearecorrectlyclassifiedaseitheremployeesorcontingentworkers.Manyorganizationsstrugglewiththis,as36%ofexecutivessaytheyexperiencemisclassificationofnon-payrollworkerssometimes,frequentlyorinnearlyeveryengagement.Severalcountriesareintroducingnewregulationsinthisarea,makingitevenmoreimportanttocategorizeworkersaccurately.Further,lawsuitsinvolvingworkermisclassificationattractsignificantpresscoverageandcausesignificantreputationaldamagetocompanies.Organizations must act fast to mitigate these risks.

of respondents report that they experience

digital security breaches with non-payroll workers sometimes, frequently

or in nearly every engagement

31%47%

of executives say they experience

misclassification of non-payroll workers

sometimes, frequently or in nearly every

engagement

31%36%

15 Manage with rigor

Fig. 7: Executives report frequent issues with managing contingent workers

Spotlight on quality issuesQualityisanothersignificantchallenge,as39%ofrespondentsexperiencequalityissuesregardingresourcesand/orprojectssometimes,frequentlyorinnearlyeveryengagement.Thiscanpreventorganizationsfromachievingtheirstrategicgoals.

Clearly,companieswouldbenefitfromstrongermanagementofnon-payrollworkers.By applying more management rigor, they can achieve better results and reduce risk.

How often does your organization experience the following with regard to its non-payroll workers?

Digital security breaches (e.g., confidential data or information)

Need to use multiple systems to manage (source, manage, pay)

Unauthorized spend without approval of Procurement

Compliance issues (e.g., certifications,workers exceeding tenure)

Quality issues regarding resources and/or projects

Overcharges and duplicate payments

Misclassified workers

Late project delivery, missed milestones, or incomplete work

Rates that deviate from an agreed-to rate card or master services agreement

47%

46%

41%

40%

39%

37%

37%

36%

36%22% 9% 5%

20% 11% 6%

20% 10% 7%

16% 15% 7%

19% 13% 8%

20% 16% 5%

23% 17% 6%

22% 16% 9%

15% 13% 8%

Nearly every engagementFrequentlySometimes

of executives say they experience quality issues regarding resources and/

or projects sometimes, frequently or in nearly

every engagement

31%39%

Fig. 8: Harnessing technology to effectively manage contingent workers

Which of the following does your technology enable you to do, to help you manage non-payroll workers?Select all that apply

The role of technologyMostorganizationsuseHRsolutionstomanagetheiremployees,andmanyhavevendormanagementsystems(VMS)tohelpthemmanagecontingentworkers.However,inmanycases,organizationsdonottakefulladvantageoftheirVMSfunctionality,ordonotrollthesolutionsoutacrosstheentireenterprise.Thatcouldexplainwhy30%ofexecutivesinoursurveycitedlackofadequatetechnologytomanageexternallaborasverychallengingorextremelychallenging.

LimitedVMSfunctionalityandcoveragemakeithardfororganizationstomanagecontingentworkerseffectivelyatanoperationallevel.Onlyaboutone-thirdofexecutivessaytheirtechnologyhelpsthemeffectivelysourcetalentfromdigitalplatforms,ensurethatratesnegotiatedwithsuppliersareadheredto,andre-engagesuccessfulindividuals.AllofthisandmuchmoreispossiblewithasophisticatedVMS.

Ensure that ratesnegotiated with

suppliers areadhered to

Provide automatedbenchmarks to

real-time marketrates and availability

in various geographies, to help with

decision-making

Guide users topreferred suppliersand considerationsbased on internal

policies (e.g.,tenure limits)

Re-engage asuccessful individual

(e.g., a high performer who has finished one

project but has not yet hit their tenure limit)

Effectively sourcetalent from digital

platforms (e.g.,freelance

marketplaces)

Ensure that only peoplewho need to access

facilities and/or systems are badged or have

network access; and access is automatically

turned off at the end of an assignment

37%37%34% 33% 32%

25%

ErikaThier,CategoryManagementforExternalWorkforceManagementatNovartis,says:“It’smucheasiertoeffectivelymanagecontingentlaborifyouhaveeverythinginonesystem,rightdowntothecontractsignatures.Therighttechnologymakesthisprocessmucheasierandmoreconvenientforthebusiness.”

Manage with rigor 16

17 Collaborate

Collaborate

There’snosetstandardregardingwhichgrouphasprimaryresponsibilityforcontingentworkerswithinanorganization.TheresponsibilitycansitwithHR,Procurement,Operations,linesofbusiness,oradedicatedcentralizedgrouporfunction.

Fig. 9: Responsibility for contingent workers can sit with different functions

Which group has primary responsibility for non-payroll workers at your organization?

27%

Lines of business

Operations Procurement HR A dedicated, centralized

group

26%

19%17%

10%

Yetownershipisn’tthetopissue.Infact,effective management of contingent workers depends on close cross-functional collaboration between the relevant stakeholders.

LinesofbusinessandOperationsshouldfeedoperationaldata–forexample,oncontingentworkers’qualityofwork–backtoHRtoinformfuturesourcingdecisionsandwhetherornottore-engageaparticularworker.Procurementcolleaguesshouldalsobeinformed,becausetheynegotiatelargecontractswithstaffingagencies.Insightintocontingentworkers’qualityofworkhelpsProcurementensurethecompanyhastherightprovidersonitspreferredsupplierlist.Thisclosedloopfeedbackprocessisessentialtoinformfuturedecisions.

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Fig. 10: The need for closer cross-function collaboration

How effective is cross-functional collaboration (between Procurement, HR, IT and lines of business) on the following, with regard to your non-payroll workers?

Manyorganizationsstillhavealongwaytogobeforetheyactivateaclosedloopprocess.Just18%ofexecutivessaytheirorganizationhashighlyeffectivecross-functionalcollaboration(betweenProcurement,HR,ITandlinesofbusiness)inmanagingtheperformanceofitsnon-payrollworkers.

Performance management 50% 18%

Workforce planning

Spend management

Governance

Sourcing

79%

68%

68%

65%

58%38% 20%

46% 19%

40% 28%

34% 45%

Highly effectiveEffective

This gap in communication has consequences.IfHRandProcurementdon’treceivefeedbackfromlinesofbusinessandOperations,theycannotmakeinformeddecisionsaboutwhichcontingentworkerstore-engage–orwhichtonotre-engage.Poorcommunicationcouldexplainwhyjust10%ofexecutivessaytheirorganizationmanagesre-engagementofnon-payrollworkersverywellafterapositiveexperience.Figure10revealssignificantroomforimprovementincross-functionalcollaborationacrosstheboard.

DavidSwift,HeadofGlobalCorporateProcurementatNovartis,explainswhycloserteamworkbetweenallpartsofthebusinessiskeytomanagingnon-payrollworkerseffectively:“Tosourceandmanagecontingentworkerswell,youneedinputfrommultipleteams.HRhelpsyougetthebesttalent,ProcurementorFinanceassessesvalueformoney,facilitiesmanagementhandlesbuildingaccess,ITmanagessystemanddataaccess,andlegalprotectsthecompany’sintellectualproperty.”

Collaborate

of executives say that cross-function

collaboration is highly effective when it comes to sourcing non-payroll workers

31%20%

19

Contingentworkersprovidevitalskillstothebusiness,performcrucialworkacrosstheorganization,andaccountfornearlyone-fourthoftotalworkforcespend.RonTate,DirectorofSourcingManagementatAllstate,highlightshownon-payrollworkershelpthecompanyrespondrapidlytonewdevelopments:“Ifanaturaldisasteroccurs,thenumberofinsuranceclaimssoarsovernight.Ourcontingentworkforcehelpsusadjustourstaffinglevelsquicklyandflexibly,sothatweprovideexcellentsupportforcustomersintheirhourofneed.”

Despite their importance, contingent workers are frequently under-managed – preventing organizations from reaping the maximum value of this powerful resource. Thereisclearroomforimprovement,asjust42%ofexecutivessaythatmorethan90%ofnon-payrollworkersmeettheirstatedgoalsandobjectives.

See your contributionin a new light

of executives say that more than 90% of

non-payroll workers meet their stated goals

and objectives

42%

See your contribution in a new light

“If a natural disaster occurs, the number of insurance claims soars overnight. Our contingent workforce helps us adjust our staffing levels quickly and flexibly, so that we provide excellent support for customers in their hour of need.”

Ron TateDirector of Sourcing Management, Allstate

“

% o

f res

pond

ents

Less than 60% 61-70% 71-80% 81-90% 91-100%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%7%

11%

18%

22%

42%

% of non-payroll workers

Fig. 11: Room for improvement in helping contingent workers meet their stated goals and objectives

Approximately what percentage of non-payroll workers at your organization meet their stated goals and objectives?

Everyone who works with non-payroll workers can help them meet their set goals and objectives. It’simportanttocreateanenvironmentinwhichemployeeswhoworkalongsidecontingentworkersareencouragedtotakemoreownershipfortheirsuccess.Thiswillnotonlyhelpnon-payrollworkersmeettheirgoals–itwillalsocontributemoretotheoverallperformanceoftheteam.

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Around11%oforganizationsthatrespondedtooursurveyoutshinetherest.These“Pacesetters”havemuchmorerigorousapproachestomanagingandextractingvaluefromtheirexternalworkforce–includingcontingentworkers.

Pacesettersstandoutinthreeimportantways:• visibilityoftheexternalworkforce• effectivemanagementoftheexternalworkforce• competitivenessinadigitalworld

Let’sexplorehowPacesetterscomparetotherest.

Pacesetters excel in visibility Pacesettershavesuperiorvisibilityoftheircontingentworkerscomparedtootherrespondents,particularlywithregardtoworkers’facilitiesaccess,responsibilitiesandqualityofwork.

Pacesetters lead the way

Fig. 12: Pacesetters have superior visibility

OthersPacesetters

Contract terms

Access to facilities

Quality of work

Responsibilities (whatthey are doing)

Compliance with requiredlicenses and certifications

Who is doing the work

Access to systems andconfidential company

information

67%44%

66%34%

61%31%

59%27%

56%36%

41%32%

32%40%

How informed are you personally about the following details of your non-payroll workers?

“Highly informed” responses

Pacesetters lead the way21

Pacesetters manage with rigorPacesettersmanagecontingentworkerswithmorerigor.Thathelpsthemtomostlyavoidcommonproblemssuchascomplianceissuesandratesthatdeviatefromagreed-toratecardsormasterservicesagreements.However,Pacesettersstillhaveroomtoimprove,astheyremainsusceptibletodigitalsecuritybreaches.

Pacesetters rise above the silosPacesettersexhibitbettercross-functionalcollaborationintheirmanagementofcontingentworkers.

Fig. 13: Pacesetters experience fewer issues with contingent workers

Fig. 14: Pacesetters exhibit stronger collaboration

OthersPacesetters

Digital security breaches(e.g., confidential

data or information)

Overcharges andduplicate payments

Compliance issues (e.g., certifications, workers

exceeding tenure)

Unauthorized spend withoutapproval of Procurement

Rates that deviate from an agreed-to rate card

or master services agreement

34%48%

7%41%

6%46%

4%45%

1%42%

OthersPacesettersWorkforceplanning

Sourcing Governance Spendmanagement

Performancemanagement

96%

77%88%

54%

83%

63%76%

66%76%

66%

How often does your organization experience the following with regard to its non-payroll workers?

“Sometimes,” “Frequently,” and “Nearly every engagement” responses

How effective is cross-functional collaboration (between Procurement, HR, IT and lines of business) with regard to your non-payroll workers?

“Effective” and “Highly effective” responses

22Pacesetters lead the way

Pacesetters realize better performance from their contingent workersPacesettersreportsubstantiallybetterperformanceregardingtheirnon-payrollworkers.Theyaremorethantwiceaslikelytosaythat90+%oftheirnon-payrollworkersmeetstatedgoalsandobjectives(88%Pacesettersvs.37%ofotherrespondents).

Fig. 15: Pacesetters’ contingent workers are more likely to meet stated goals and objectives

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% o

f res

pond

ents

70% or less

20% 19%24%

37%

88%

8%2%2%

71-80% 81-90% 91-100%

% of non-payroll workers

OthersPacesetters

Approximately what percentage of non-payroll workers at your organization meet their stated goals and objectives?

23

Conclusion

ThePacesettersteachusthatorganizationsmustviewandmanagenon-payrollworkersasanextensionoftheirworkforce.Yetmanyorganizationshavedifferentfunctionsmanagingemployees,contingentworkersandservicesprovidersindependently,eachusingtheirownsolutions.Toovercomethis,companiesmustbreakdowntheseorganizationalandtechnologysilosandembracetotalworkforcemanagement.Organizations should holistically view and manage their entire workforce – including employees, contingent workers and services providers.

Totalworkforcemanagementenablesorganizationstocreateholistictalentstrategiesthattrulysupporttheirbusinesspriorities.MartinThomas,HeadofTotalWorkforceManagementatPhilips,outlineswhattotalworkforcemanagementlookslikeathiscompany:“Wealwaysstartbylookingatthebusinessneed,thenwetalkwiththerelevantstakeholderstodecidethebestapproachtofulfillthatneedtogetworkdone.Itmightbehiringanemployee,bringinginacontractororengagingaservicesprovider.Toguidedecision-making,wegivethebusinessrichinsightintotheavailabilityofthedesiredskillorcapabilityandthecostofacquiringthatskillviadifferentchannels.Forexample,wehavehelpedthecompanydecidewherebesttosetupglobalservicesoroperations.Ultimately,wehelpthebusinessgettherightskillintherightplacethroughtherightchannelattherightcost.”

Toachievetotalworkforcemanagement,organizationsshouldconsidercreatingapositionforaseniorpersontooverseetheexternalworkforce.31%ofexecutivessaytheirorganizationhasanexecutivesponsorwhoreportstotheC-suiteregardingthestrategyandoperationsoftheirexternalworkforce.Othercompaniesshouldfollowtheirlead.

Anotherrecommendationisthatorganizationsusetechnologytoguideuserstothepropersourcingchannelfortheirneed,includingemployees,non-payrollworkersandservicesproviders.Only16%ofexecutivesinoursurveystronglyagreedtheirtechnologywasabletodothat.

AkeylessonfromthePacesettersistheimportanceofgreatervisibilityinhelpingexecutivesrealizebetterbusinessoutcomesfromtheircontingentworkersandmitigaterisk.Visibilityisvitaltoeffectivemanagement.

Further,theresultsfromthePacesettersshowthatmanagingcontingentworkerswithrigorpaysoff.Pacesettersreportfewermanagementchallengesandincidentsaswellasbetterperformancefromtheirnon-payrollworkers.

BecomingaPacesetterinvolvesachangemanagementjourneyandestablishmentofanexternalworkforcemanagementprogramwithstronggovernanceandexecutivesponsorship.Technologyisakeypartofthesolution,butit’snotasilverbullet.Byreplacingad-hocapproachestomanagingcontingentworkerswiththerigorusedtomanageemployees,organizationscanreapfargreaterrewardsfromtheseengagements.Given the potential value to be gained by better managing contingent workers, we believe the topic should be on the C-suite agenda.

The value of total workforce management

Conclusion

24

Here’s how to get started

Gain visibilityofyournon-payrollworkerstodrivebetterbusinessoutcomesandmitigaterisk.

Manage your contingent workers with the same rigoryouuseinmanagingyouremployees.

Improve cross-functional collaborationbetweenProcurement,HR,IT,Operationsandthelinesofbusinessinmanagingnon-payrollworkers.

Ensure your leadership has visibilityintothescope,impactandspendoncontingentworkers.

Get the support you needtomanagenon-payrollworkerseffectively,includingpurpose-builttechnology,executivesponsorshipandaprogramwithstronggovernance.

To capture more value from your contingent workers, follow these steps:

Conclusion25

“We always start by looking at the business need, then we talk with the relevant stakeholders to decide the best approach to fulfill that need to get work done. It might be hiring an employee, bringing in a contractor or engaging a services provider.”Martin ThomasHead of Total Workforce Management, Philips

“

SAPFieldglasscollaboratedwithOxfordEconomicstofieldandanalyzeresponsesfromasurveyof1,050seniorexecutivesabouttheiruseandmanagementoftheexternalworkforce.

OxfordEconomicsalsoconductedqualitativeinterviewswithexecutivesinthefield:

• The Allstate Corporation:CynthiaMoore,SourcingLeadConsultant&ProcurementSolutions,andRonTate,DirectorofSourcingManagement

• Medtronic:LisaZak,DirectorofStrategicSourcing• Novartis International:DavidSwift,HeadofGlobal

CorporateProcurement,andErikaThier,CategoryManagementforExternalWorkforceManagement

• Royal Philips:MartinThomas,HeadofTotalWorkforceManagement

• Swisscom:JPStadelmann,HeadofPurchasingfortheExternalWorkforce

• Telstra Corporation:SashaSamac,HeadofOperations,ProcurementandSupplyChain

Geographical reachRespondentscomefrom21countriesinfiveregions:• Asia Pacific:Australia,Japan• Europe:Belgium,Denmark,Finland,France,

Germany,Italy,Luxembourg,Netherlands,Norway,Spain,Sweden,UnitedKingdom

• Middle East:Israel,SaudiArabia,UnitedArabEmirates

• Latin America: Brazil,Mexico• North America:Canada,UnitedStates

Industry reachRespondentsrepresentabroadrangeofB2BandB2Csectors:aerospaceanddefense,automotivesuppliers,automotivemanufacturers,banking,capitalmarkets,chemicals,construction&engineering,consumergoods,healthcare,hightech,industrialmanufacturing,insurance,lifesciences,logistics,media&entertainment,oil&gasdownstream,oil&gasupstream,professionalservices,publicservice,rail,retail,telecom,travel&transportation,andutilities&waste.

Company sizeArangeofcompanysizesarerepresentedinthesurvey(figuresindicateannualrevenue):• 10%$500m−$1bn• 35%$1bn−$5bn• 40%$5bn−$20bn• 15%over$20bn

Wescreenedoutrespondentswithfewerthan500employeesorfewerthan500non-payrollworkers.

Executive profile Respondentsare:• 33%C-levels• 34%DirectreportstotheC-level• 33%Directors

Functionsrepresentedare:• 50%Procurement• 25%HR• 15%IT• 5%Finance• 5%Operations

About the research

SAPFieldglass,alongstandingleaderinexternaltalentmanagementandservicesprocurement,isusedbyorganizationsaroundtheworldtofind,engageandmanagealltypesofflexibleresources.Ourcloud-based,openplatformhasbeendeployedinmorethan180countriesandhelpscompaniestransformhowworkgetsdone,increaseoperationalagilityandacceleratebusinessoutcomesinthedigitaleconomy.BackedbytheresourcesofSAP,ourcustomersbenefitfromaroadmapdrivenbyacontinuousinvestmentininnovation.

About SAP Fieldglass

About the research 26

Our multi-year investigation of the evolving workforce kicked off with last year’s report, External Workforce Insights 2018: The Forces Reshaping How Work Gets Done. The report identified four key themes:• The multi-channel workforce is on the rise:

Organizations are using a broad and growing range of channels to engage the external workforce.

• It’s about the core: The external workforce is essential to core operations.

• Cost is not the whole story: Cost is no longer the primary driver for using an external workforce.

• Visibility is everything: Visibility is key to managing the external workforce effectively and maximizing its value.

Continuing the story: An ongoing research program

27

www.fieldglass.com

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