Managing Your Contingent Workforce · Contingent Workforce Management (OCWM) and issued RFPs for...

Managing Your Contingent Workforce

OCTOBER 2005 CONTINGENT WORKFORCE STRATEGIES 15

There didn’t used to be such a thing as workforcemanagement. A company had employees, theirsupervisors managed them, and strategic planning

had to do with revenue generation and market positioning.But times truly have changed. And if the question

today is how companies can be both efficient and effective,how they can maximize their competitiveness while mini-mizing costs, a CWTMO is one important answer.

So what’s a CWTMO? Together, these three stories onthe theme of managing your contingent workforce providethe answer.

In “Chipping Away with Contingent Staffing,” whichbegins on the following page, we explore the strategicvalue of a contingent workforce, or CW, to FreescaleSemiconductor, a chip fabricator spun off from Motorola.Chip manufacturing is fast-paced and cyclical, and any-thing but a lithe, rapid-response approach to workforcedeployment and management will get in the way.

In “The Power of One,” which begins on page 22, we

profile a contingent workforce talent manager, or CWTM.Cynthia Goss came to TransUnion LLC with 25 years ofexperience in supplying contingent labor. Goss says shesaw an opportunity to reengineer the credit reporter’s com-plex and often confused vendor/client relationships bybuilding a centralized procurement program.

Finally, in “A Not So Modest Proposal,” on page 28,we tie it all together with Sean Rehder’s proposal that com-panies create a contingent workforce talent managementoffice, or CWTMO. As Rehder writes, creating aCWTMO that reports directly to the executive level willprovide ownership and accountability throughout the con-tingent workforce cycle. The first companies to implementthis strategic management tool, he observes, stand to gainsignificant advantages over their competitors.

How you manage your strategic assets is a key marketdifferentiator. Since times continue to change, considerwhether your management structure and processes shouldas well. Read on!

Until mid-2004, Freescale Semi-

conductor, Inc., a publicly held

company based in Austin, Texas,

was the semiconductor division

of Motorola, Inc. Being spun off

recently redefined the company, which already

had begun to redefine the way it managed contin-

gent workers.

In both incarnations, the group’s business is to provide sili-con chips used by the automotive, IT, networking and wirelesscommunications industries. That job gets done using a variety ofcontingent staff, including highly skilled semiconductor anddesign engineers, layout and mask designers, hardware expertsand circuit board and chip designers.

Technology companies such as Motorola have beenamong the first to see the use of contingent workers as a wayto manage staffing in a strategic manner. But strategic usedoesn’t necessarily translate into strategic management. Due

16 CONTINGENT WORKFORCE STRATEGIES OCTOBER 2005

MANAGING YOUR CONTINGENT WORKFORCE

ChippingAway withContingentStaffing

ChippingAway withContingentStaffingBy Kate Gerwig

A semiconductor

company works

to stay ahead

of changing

work trends

A semiconductor

company works

to stay ahead

of changing

work trends

Kate Gerwig is a writer and editor in McLean, Va.


in large measure to the nature of the work, which is fastpaced, cyclical and distributed globally, no one at the com-pany knew until relatively recently how many contractworkers the division had at any given time or how muchthey were paid.

How were these contingent workers acquired? With nomanagement-dictated governing processes in place, hiring man-agers simply procured a purchase order, agreed with the staffingsupplier on a fee, and the contingent position was set. Therewere no cost controls, no centralized acquisition processes andno systems involving the human resources department.

RATIONALIZING THE PROCESSTo remedy the situation, Motorola established an Office ofContingent Workforce Management (OCWM) and issued RFPsfor two U.S. contingent staff management providers — one forprofessional engineers and one for general-purpose staffing.

The rethinking process for its contingent staffing strategyinvolved more than those RFPs, though. It meant creating a listof hiring procedures and processes similar to what the HRdepartment had for full-time staffers. It meant finding agenciesthat could provide the appropriate talent or finding the talentitself. It included negotiating contracts with staffing agencies tohire the talent quickly and at approved rates. It meant taking onvendor management — overseeing agency billing and monitor-ing performance of both contingent staff and the suppliers.Finally, it meant developing rules and processes to implement thetransition to a new way of hiring temporary staffers.

In 1999 Motorola hired its first (and only) permanent con-tingent staffing manager. Randy Floyd was well-versed in ITstaffing, having come from a large staffing agency. He saw eye-to-eye with management on the need to centralize contingentstaffing processes.

“The staffing structure of the American workplace isessentially stuck in the 1930s and ’40s,” Floyd says, when themass-production model required many workers with basicskills who might expect to stay in one company their entirecareers. These days, he notes, “Workers are going to be muchmore transient.”

Floyd also understands the differences in hiring profession-als and less skilled labor. He likens it to the difference betweenprocuring diamonds and eggs. “You don’t pay attention to therelative value of the diamonds or the eggs,” he says. “What’simportant is that the scrutiny you apply to a diamond is a verydetailed assessment, and you need to have certain processes inplace. When you’re buying dozens of eggs, you’re checking forhigh-level things, like whether there are any cracks.”

As a department of one, Floyd needed a contingentstaffing provider that was flexible and easy to work with. “Irecognized quickly that the semiconductor market was veryfragmented in terms of staffing; there were literally hundredsof suppliers of varying sizes that we needed to align with to getwhat we needed,” he recalls. After a lengthy process, Motorolaawarded the contract for professional contingent staffing to

TAC Worldwide Companies of Dedham, Mass. At that time,TAC specialized in finding professional IT contingent staff.

TAC’s challenge was to get up to speed on the engineeringand semiconductor markets, find staffing agencies that it coulddraw on for Motorola’s needs and quickly negotiate agreementswith those agencies — some of them highly specialized two- orthree-person companies.

Floyd’s need went beyond finding good professional staffquickly. He had to make sure that the new processes wouldprovide hiring managers with a consistent and easy way to req-uisition staff (such as identifying needed capabilities, budgets,job locations and start and stop dates) and to handle billingand payment. After that he had to persuade the managers tofollow the new processes.

CULTURE CHANGESelling the centralized contingent staffing plan internallyrequired nothing less than changing the company’s culture, per-suading hiring managers accustomed to independence that acentralized contingent staffing process could work better. “Thatdoesn’t happen overnight, and there was more than a little resist-ance,” Floyd remembers.

To minimize resentment, he began with education.“Nobody is going to change unless they perceive that you can dothings better than they have been doing it in the past,” he says.

Floyd worked to show hiring managers that it would bemore efficient to make one phone call to TAC to discuss theirstaffing needs than to field dozens of calls to and from exter-nal suppliers. “In all honesty,” he admits, “it took two to

Freescale's Office

of Contingent

Workforce Management

took charge of

rethinking its

contingent staffing

strategy.


three years for the contingentstaffing arrangement with TAC tobecome part of the common cor-porate lexicon.”

Like most changes, it has beenevolutionary. “It was like pushingthe rock up the mountain for thelongest time, and then we got on thedownhill slide,” Floyd says.

Some benefits were obvious from the beginning. In 2000,the first year of working with TAC, the company reduced staffsupplier markup by 10 to 20 percent, saving about $1.5 million.Beyond cost, the program has been able to deliver contingentstaffers with the right skill sets, as well as understanding andresponding to the changing nature of the semiconductor marketand the range of salaries different skill sets require.

“For a semiconductor company, that’s huge,” Floyd says,“because we need to have great talent now, not two weeksfrom now.”

FINDING QUALITY QUICKLYAfter winning the Motorola RFP, TAC had multiple chal-lenges that included controlling costs, finding out who wasworking there and how much they were paid. Beyond the

basics,TAC had to get new contractors in the door quickly,identify the niche suppliers in particular regions, make surethat contingent staffers were paid promptly and that Freescalewas billed correctly, and begin centralizing procurement. TACalso supported Floyd’s effort to help the hiring managersunderstand what rates the various professional contingentworkers should be earning.

Then came finding them and getting them on-board to fitthe client’s needs. Bringing in a full-time staffer can take 40 to 60days, which doesn’t work on a quick turn-around project.Therefore, TAC had to build relationships with enough engi-neering staffing companies to assure that it can get candidates infor interviews in three to seven days.

The issue was complicated by the fact that semiconduc-tor engineers are not as transient a group as defense staffers,for example. “They tend to be deeply rooted in particulargeographies where they work,” says Cathy Clauss, vice pres-ident of national accounts for TAC. So moving potential tal-ent to a new location where it’s needed can be difficult. Inresponse, TAC spends time developing local as well asnational connections.

The worst thing a staffing management company can dois to take it for granted that everything is working correctlywith its customers, Clauss says. “The semiconductor businessis fast-moving and changing, and if we’re not doing that, too,then something’s missing.”

TAC’s client services organization provides customer andcontractor feedback on a quarterly basis. In addition, each timea new contingent staffer comes in, TAC asks the manager forfeedback on the experience within a month. To tabulate itsresults, TAC uses Zoomerang, a Web-based survey and analysistool from MarketTools, Inc.

Alison Boyd is TAC's on-site contingent

workforce manager at Freescale

Semiconductor, where she assists Randy

Floyd, program manager

of the Office of Contingent Workforce

Management.


CHIPPING AWAY WITH CONTINGENT STAFFING

Contingent staffing is

especially useful in

project-driven industries

like semiconductors

because of their cyclical

nature.


STAYING THE COURSESince being spun off into a separate company, Freescale hascontinued to make contingent staffing a strategic corporate ini-tiative. Floyd came along with it to become program managerof Freescale’s OCWM, where he continues to work with oneTAC staffer on-site, Alison Boyd, contingent workforce man-ager. As a publicly traded company with 22,000 full-timeemployees and $5.7 billion in revenue, it uses contingent work-ers amounting to 10 to 15 percent of its workforce in projectsthat last from nine months to several years. While TAC sup-plies some contingent workers through its staffing arm, it hasnegotiated agreements with 185 other staffing companies tosupport Freescale.

According to Floyd, contingent staffing is especially usefulin project-driven industries like his because of the cyclicalnature of the work. “Engineers with specific skill sets can movefrom project to project at different companies and keep grow-ing their skills. It’s the changing nature of the work,” he says.

In the semiconductor industry today, product design anddevelopment cycles are shrinking as companies confront the needto release more products each year. “We have to get our chips tomarket extremely quickly, and we need the very best people to doit,” says Floyd. “Those two things feed one another.”

“Technology and globalization are driving companies to bemore flexible and have shorter product lifecycles that can beramped up and down more quickly,” says Barry Asin, executivevice president and chief analyst of Staffing Industry Analysts,Inc., which publishes this magazine. “A contracting relationshipis not necessarily less expensive, but it’s more flexible.”

Opportunity to stay on the cutting edge is another reasoncontingent staffing is attractive to professionals in that industry,according to Clauss. “They’re not static in the work they’redoing,” she says. “If you stay in one place and do the samething for too long, you become obsolete.”

Although contingent workers complete projects for onecompany and move on to another, Freescale is careful not tolose its core knowledge workers. In Floyd’s view, key positionsin Freescale’s knowledge base should always be full-time jobs.

Most companies, including Freescale, still initiate theircontingent workforce management procedures in an effort tocontain costs. Those that push the effort further may seegreater benefits. “We’re in our sixth year, and it’s now payingbig dividends,” says Floyd.

That longevity also indicates success, in contrast to manysituations where, Floyd says, clients “change staffing compa-nies like socks.” <

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The Powerof OneThe Powerof OneBy Aaron Dalton

A contingent

workforce

management

specialist

makes a major

contribution

to her new

company

A contingent

workforce

management

specialist

makes a major

contribution

to her new

company


When Cynthia Goss joined

TransUnion LLC in April 2001, the

Chicago-based credit reporting

company had no centralized ven-

dor management program for its

contingent workforce. Each manager hired his or her own con-

tingent workers, negotiated contracts and processed invoices in

whatever manner he or she saw fit. No one was sure how many

contingent workers were on board at any given time.

TransUnion’s management knew it had a problem — thedecentralized, ad hoc procedures for hiring contingentworkers made it impossible for the company even to deter-mine how much it was spending on its contingent work-force. In January 2001, one of TransUnion’s CIOs spear-headed the decision to centralize contingent labor procure-ment, setting as a goal improving order and efficiency andreducing costs.

The result was a new contract office, and Goss wasbrought on board as the director and sole staffer. As part ofTransUnion’s Corporate Technical Services division, Gossreports to a senior director of technical services who in turnreports to a CIO. Her first charge was to analyze the company’suse of contingent workers and the second to centralize andstreamline the process of sourcing vendors, hiring contingentstaff and managing contracts.Aaron Dalton is a New York City-based freelance writer

ILLU

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OE

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To her new position, Goss brought 25 years of experienceon the supply side of the contingent labor market. She had spentthe previous six years running the Chicago office of DirectFit, astaffing company since bought by TEKsystems, Inc. There shesold the kind of contingent workforce services that she nowhelps TransUnion acquire and manage.

When she interviewed to become director of TransUnion’scontract office, Goss recalls, she wasn’t particularly looking fora career change. But she was intrigued by the challenges andopportunities that came with the job. And, she says, she saw achance to switch sides and bring order and clarity to the oftencomplex and confused vendor/client relationship — a relation-ship she often had found to be plagued by obscurity and poorcommunication.

Goss’ intimate knowledge of the supply side proved usefulwhen she set out to design a centralized contingent workforceprocurement program that the best suppliers would want to par-ticipate in. She knew from experience that when dealing withpoorly run contingent workforce sourcing programs, vendorsstew with frustration as the client resumes they send disappearinto an apparent black hole.

“You would never hear if the resume fit, or even if the jobwas still open,” Goss recalls from her time on the supply side.

Lessons LearnedGoss reports that TransUnion has saved millions of dollars bycentralizing vendor management. But she is quick to note thatthose savings have not come from trimming contingent work-force pay rates. Her own experience has taught her that clientswho try to undercut market rates set themselves up for disap-pointment. Four years before she joined TransUnion, Gossrecalls, she dealt with one company that capped its pay rate forsenior desktop programmers at $35 per hour at a time when theaverage market rate hovered at $50 per hour.

“What they were asking for in their job description did notmatch the bill rate,” she says. As a result, it was extraordinarilydifficult to find good senior talent willing to work at what werein effect junior rates. Low pay rates lead to dissatisfaction onboth sides, and that in turn results in high turnover and highercosts to the company — in training, lost time and the search forother short-term contingent staffers.

Thus, if TransUnion wanted low turnover, high perform-ance and job satisfaction, the company would have to pay mar-ket rates. Anything less would fail to motivate quality suppliersto do business with the company. Therefore Goss designed aprogram that would attract suppliers and get high-quality con-sultants at market rates — but not a penny more.

Attention BenefitWhat benefits can centralized vendor management yield?Consider this: When Goss joined TransUnion in 2001, the com-pany paid on average a bill rate — during a market downturn

— of $125 per hour for its contingent workforce of softwaretesters, quality assurance analysts, Java developers, databaseadmins and non-IT accountants and administrators. A year later,she had brought that average rate down to the market standardof $88 per hour — a reduction of nearly 30 percent.

The overpayment was rooted in a lack of strategic focus oncontingent labor in the pre-Goss era; as noted above, each man-ager negotiated contracts with his or her own preferred vendors.When Goss joined the company, she found that TransUnion’s125 to 150 contingent workers were sourced from more than100 different vendors. This arrangement not only gaveTransUnion no pricing leverage with its contingent workforcesuppliers, but some managers who liked dealing with a particu-lar supplier did not even bother trying to obtain market ratesthrough competitive bidding.

In addition to lowering TransUnion’s average contingentworker bill rate, Goss also saved her employer money by lower-ing administrative costs for vendor relations and contingentworkforce management. “First, we reduced the cost of invoiceand time-sheet errors,” says Goss. How costly are these? Sherecounts the troubles of another company that used contingentIT consultants. The company spent “more than $500,000 indouble-paid invoices, because a manager and someone elsewould each approve a payment,” Goss says. “Trying to trackthat money down can be pretty challenging.” On the flip side,with multiple-step approval processes, suppliers sometimes don’tget paid at all because invoices get lost.

Centralized vendor management also generates large sav-ings for managers who no longer have to meet with vendors ornegotiate contracts. “Instead of having 40 to 70 managers do allthat, we could just have one person — me — handle those nego-tiations so that all the managers could focus on their jobs,” saysGoss. “The managers can still make decisions on consultants,but they don’t have to do all the back-end work. That’s thebiggest piece — they can focus on the job that they were hired


THE POWER OF ONE

Goss found that 125

to 150 contingent

workers were sourced

from more than 100

different vendors.


to do. We also lowered our risk exposure by making sure we hadprocedures for formalizing contracts, bringing new contingentworkers on-board and transitioning them off projects.”

Role of the VMSGoss believes it would have been far more challenging, if notimpossible, to achieve her success without the help of a vendormanagement system (VMS). She went about choosing the soft-ware by giving an outline of her desired workflow to severalvendors and asking them to demonstrate how their systemswould match those needs. Four VMS vendors responded to herinformal RFP, but only the submission from Beeline ofJacksonville, Fla., met all of her requirements without cus-tomization. She chose the system in July 2001 and it was up andrunning, hosted by the vendor on a secure Web site, bySeptember. As fall arrived, anyone with authorization couldaccess the TransUnion VMS worldwide at any time.

“The administrative efficiencies of a centralized system arehuge,” says Goss. “Manager requests for contingent workersflow to me, flow through me for financial approval and thenflow out. I hold a centralized repository of resumes that I canforward as a group to a manager for any job. I could not dothis without my VMS.” But Goss’ core point is not about tech-nology. “You don’t necessarily have to put a computerized sys-tem in place — just having a centralized business process is amajor improvement,” she notes.

Paying Your CustomersAs typically happens with a major change in a traditional wayof doing business, Goss’ innovations met resistance from somequarters. In particular, some managers who were used tosourcing their own contingent IT staff rebelled against the ideaof surrendering any of their autonomy. “There were managerswho liked being in control and were used to dealing with theirown suppliers. They were fearful that they would not be theones making decisions about consultants,” explains Goss.“Before they understood our program, their view was theywould lose control.”

To address that, early in the process Goss met with everyhiring manager. She solicited their ideas and took down theirsuggestions about how the vendor management centraliza-tion should take place. And she reassured them that theywould continue to control the choice of the contingent ITstaff who came aboard. Her role, she announced, was totake from them only one thing: the administrative and con-tractual burden.

“I pitched what the program would do for them,” Gossnotes. She told them she would deal with the vendors andhandle all phone contacts so the managers would no longerbe bothered by cold calls. Indeed, she encouragedTransUnion managers to forward all such phone calls direct-ly to her office.

Then Goss sweetened the pot. Not only did she position herjob as making life easier for the managers, she told them thatthey would make money by cooperating with her. Contingentlabor vendors that wish to be considered as preferred suppliersmust agree to give TransUnion a certain percentage discount offtheir regular rates. Goss passes a portion of that discount to herVMS provider, Beeline, and returns the rest to the managers.

“Some managers don’t like changes, and my executivesdon’t believe in a dictatorial solution,” says Goss. “I didn’t wantto tell the managers, You will use contract management no mat-ter what! Instead, I wanted to give them added incentives. So Itold them I would take their calls from vendors, I would negoti-ate market rates, I would make sure we have a good supply ofresumes in a consistent format, and I will make sure they get apercentage discount off the billable rate.”

Goss thinks of TransUnion’s hiring managers as her cus-tomers, and paying your customers for letting you do somethingthat makes their lives easier is a good way to get fast, compre-hensive buy-in to your program. Today, Goss’ contract officehandles approximately 98 percent of TransUnion’s contracts forIT or other contingent workers. Her responsibilities today arelargely operational, but she looks forward to a day when herposition evolves into a more strategic role in planning contingentworkforce utilization as an element in improving the company’scompetitiveness and profitability.

Accomplishments and Next StepsGoss’ efforts have made a major impact at TransUnion.Contingent workforce spending amounted to $10 million to $12million when she arrived in 2001, and it has risen to $15 millionto $20 million. But that’s a good thing: With its vendor man-agement operation now centrally organized and rationalized, thecompany is able to bring aboard new contingent workers at arapid clip. Working on her own, Goss says she has overseen the


THE POWER OF ONE

The mélange of 100-plus

vendors has been trimmed

to just 15 preferred

vendors as the total

contingent workforce

approaches 200.


addition of 60 new consultants in 2004 and an equal number inthe first quarter of 2005.

Thanks to adroit use of the VMS, the number of vendorswith which the company is dealing has declined even asTransUnion adds contingent IT staff to help with a huge rewriteof its credit information database. The mélange of 100-plus ven-dors from the pre-Goss era has been trimmed to just 15 preferredvendors as the total contingent workforce approaches 200.

In addition to managing the acquisition of this growing con-tingent workforce, Goss intends to keep simplifying and stream-lining the workflow. Soon a new version of the Beeline VMS willmake it easier for TransUnion managers to enter their own data.But even as she gives the managers the convenience of self-serv-ice, Goss will ask a bit more of them: In the data entry screen ofthe new version, several additional data fields have becomemandatory, assuring she will get all the information she needs tosend detailed job descriptions to TransUnion’s suppliers.

The system upgrade also will enable Goss to send out morealerts and notifications, so that when a particular worker’s con-tract is ending, she can determine whether the manager wishesto renew it. Instead of waiting for Goss to create reports, man-agers will be able to run their own reports on the number of

contingent labor hours that they have approved to date or thetime elapsed between candidate submissions and new contin-gent hires.

While Goss currently runs vendor evaluations every quar-ter, the new version of the VMS will also give her more powerto run reviews on individual contingent workers. Indeed, ifshe chooses she can insert a step into the workflow that, forexample, would automatically prompt both Goss and theappropriate manager after an initial period has elapsed, sothey could assess whether the particular worker has metexpectations or if the vendor needs to give the worker newdirections or skill sets.

For other companies seeking contingent workforce man-agement, Goss suggests looking for someone who is, like her,from the supply side. She urges companies to seek a well-rounded individual with sales experience and an understand-ing of business psychology sufficient to help in managingdiverse constituencies.

Goss’ work for TransUnion shows how a single capableindividual, supported by top management, can make greatstrides in transforming chaos into order and bringing efficiencyand cost savings to a company’s contingent workforce usage. <


When today’s corporate executives con-

sider a contingent workforce strategy,

typically the first things they want to

know aren’t strategic at all: how many

workers they will need, exactly what they will do and

how much they will cost.

But beyond these immediate concerns loom the strategic issuesassociated with contingent workforce deployment. Before too long,those responsible for leading the company will realize that they have todo more than just track their contingent workforce and the overallspend — they also must figure out how to manage and develop it inways that will maximize its value for the organization.


A Not So ModestProposal

By Sean Rehder

A contingent

workforce thinker

suggests

organizational

change

A contingent

workforce thinker

suggests

organizational

change

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That’s not a simple matter. Implementation can spreadacross departments and involve human resources, procurement,hiring managers, legal advisors — and of course the contingentworkers and the staffing companies that supply them.

To excel in contingent workforce management, a companyneeds to develop tools, processes and best practices that both fitand augment the way it creates and sells products and services.To acquire contingent workers who have specialized technicalskills that are in great demand, it must build and maintain rela-tionships that will keep them available.

START AT THE TOPTo succeed at procuring and managing these contingent servicestakes planning and dedication. Yet for most companies, this isnot a core competency. And perhaps the most daunting chal-lenge of all is knowing where to start.

An innovative way to accomplish this task is to start at thetop: Establish a contingent workforce talent management office(CWTMO) that reports directly to the executive level.According to Gene Zaino, president and CEO of MyBizOfficein Herndon, Va., which acts as an employer for individual inde-pendent contractors and provides payroll services for companiesthat use them, such an office can become “a center of excellencethat develops core competencies rather than being splinteredthroughout the company.” Such a CWTMO would providecontingent talent acquisition, workforce and supplier manage-ment and development, and reporting metrics.

Of course, each organization is unique, and actually imple-menting a CWTMO may require structural reorganization, thehiring of key people and change-management efforts involvingcurrent staff. But in beginning to ponder whether this officemight work for your company, consider the benefits it can bring.

INITIAL RESULTSOverall, designating a CWTMO provides ownership andaccountability throughout the contingent workforce cycle. Theoffice will take responsibility for specifying job requirements,enforcing compliance by line managers and staffing vendors,on-boarding workers, processing payroll, evaluating perform-ance, off-boarding them at the end of assignments and, finally,maintaining a relationship that enables the company to bringback the contingent workers who make positive contributionsto its success.

First steps likely would include an assessment throughquestionnaires, interviews and audits to ascertain what thecompany needs to focus on to move toward its workforcegoals. Next would come a consideration of how the recom-mendations yielded by the assessment could be integrated withother company-defined processes and applications; the goal, ofcourse, would be to improve efficiency and reduce redundancy.The CWTMO could lead a program to coordinate workforceinitiatives across functional and business units. Done right, thiswould allow a company to get more value for its total spend by

centralizing functions, consolidating vendors and developingtalent.

For example, the CWTMO could identify common workroles required by multiple departments, such as business analystsor technical writers. By centralizing the process for opening arequisition, the office could identify staffing vendors that havethe best track records in providing contingent workers used suc-cessfully in the past and perhaps identify the workers themselves.Doing so could lead to the procurement of better-quality work-ers, reduce the number of suppliers and perhaps result in ratereductions.

Further along, the CWTMO could sponsor evaluations andtrends analyses of aspects of the company’s workforce needs.Creating and facilitating common processes, deliverables andterminology could lead to shorter times to hire and the main-taining of “pipelines” of talent for immediate and future hiringneeds. The existence of these pipelines would enable a companyto both staff up and staff down quickly and easily in compliancewith tax laws and company policies.

IDENTIFYING TALENTDeveloping a contingent workforce requires more than sendingout job orders to temporary agencies and then comparing theirsubmitted resumes to the company’s job requirements. Rather, itrequires scaleable and sustainable processes that can provide theright contingent workers when they are needed. Toward thisend, a CWTMO would develop what Lou Adler, a hiring con-sultant and principal of Adler Concepts in Irvine, Calif., calls “aperformance profile.” This is not a job description listing skills,duties, required experience and responsibilities. “Instead,” Adlersays, “it describes what the person taking the job needs to do tobe successful. It defines the job, not the person taking the job.”

Where a job description might ask for “a team player,” aperformance profile would say “develop and lead the new prod-uct launch team with IT and marketing.” A job descriptioncould require an MBA, while a performance profile could spec-ify someone who can “perform analysis of new product devel-

Sean Rehder is a former independent contractor compliance manager andprogram developer and the administrator of contingentworkforce.org, aWeb site devoted to the topic.

Establish a contingent

workforce talent

management office

(CWTMO) that

reports directly to the

executive level.


opment, with the goals of improved time to market anddecreased error bugs logged in QA.” The point is to switch fromfocusing on the “haves” of a job candidate to focusing on whata successful employee “does” on the job.

In this way, performance profiles enable companies to findpeople who have the abilities and the motivation to deliver theresults they require. Rather than using job orders, the CWTMOwould use performance profiles in advertising and employmentbranding. In short, the performance profile describes challengesand opportunities to excel — which is what career-minded pro-fessionals are looking for.

Another benefit of developing the profiles would be a per-formance gap analysis of internal resources, core competenciesand service capabilities. That is, the CWTMO could compareperformance profiles of management positions to the actual jobperformances of current employees in key positions. This analy-sis should enable management to evaluate personnel and deter-mine whether it is training people effectively. In addition, per-formance profiles could help identify the company’s top per-formers and determine what makes them successful. Once youhave identified what the best people do to be the best, you canuse this knowledge to refine future performance profiles to helpfind the same traits in new hires.

MANAGING SERVICE PROVIDERSStaffing companies will continue to be a primary source of con-tingent talent. A CWTMO will not replace but supplement andmanage them. Currently, many companies use a large number ofstaffing providers only because they have been unable to ration-alize their contingent workforce procurement process. TheCWTMO would review existing service relationships and thecapabilities they deliver, and then define quality benchmarks forservice providers.

Measuring vendor performance likely would lead to reduc-ing the number of suppliers and developing a preferred supplierprogram. Following on, the CWTMO would establish, negoti-ate and manage service level agreements to measure staffingeffectiveness. It could also improve efficiency by consolidatingthe invoice reconciliation and billing process.

At the same time, the CWTMO could take responsibility forestablishing a Web-based process to evaluate compliance withIRS requirements covering the classification of independent con-tractors subject to Form 1099 reporting. It would ensure thecompany satisfies government regulations bydocumenting individual projects and contrac-tors’ business structures, and also by detailingeach independent contractor’s relationshipwith the company.

Overall, the office will provide evaluationsof a range of independent contractors, retainedservices, project services and privately held ven-dor companies. This process will contribute to

development of an overall risk assessment program that will pro-vide audit support to both the procurement and legal departments.

OTHER ACTIVITIESOnce created, the CWTMO will be the clearinghouse for imple-menting business processes and identifying best practices relatedto managing the contingent workforce strategy. Here are somethose processes.

Policies are needed for how to bring contingent workers on-board in a way that makes them productive as soon as possible.On-boarding includes activities such as signing forms, assigningworkspaces, allocating equipment and issuing security badgesand IDs. It also tracks which suppliers provide which workers.The CWTMO would circulate brief surveys and/or question-naires about the on-boarding process to learn the workers’immediate impressions of the company and improve them.

A complementary process at the other end of the assignmentis off-boarding. By proactively tracking contract terminationdates, the CWTMO can provide ample opportunity, on onehand, to extend the engagement if needed before a contractexpires or, on the other, to ensure that no engagement exceedstime limits set to protect the company from having temporaryworkers reclassified as employees. At the end of the assignment,it would work with Security to ensure all company property isreclaimed prior to the contingent worker’s departure. It can alsoarrange for exit interviews or other means of transferring thecontingent worker’s knowledge to those who remain and keeprecords of each contractor’s status and performance for others inthe company to consult for future hiring purposes.

A main benefit of the CWTMO would be reporting andmetrics. Delivering workforce analytics, comprehensive reportsand general statistics to business leaders, enterprise prioritizationcommittees, finance departments and project managementorganizations can help to contain costs and improve overallworkforce planning.

CWTMO reporting would enable a company to determinewho actually makes up its contingent workforce, the pay ratesfor similar jobs across divisions and departments and the over-all spend on the contingent workforce. It also could compareactual to budgeted costs for the life of projects, which in turnwould develop a basis for better estimating on future projects.

As the growth of the contingent workforce continues to out-pace that of traditional employment, the need for companies to

manage and develop this specialized piece ofthe workforce will become abundantly clear.Product innovation, budget constraints, intel-lectual knowledge and even Sarbanes-Oxleycompliance are a few reasons why a companyshould consider creating a CWTMO. The firstcompanies to adopt and implement this kindof workforce innovation may gain significantadvantages over their competitors. <

What do you think of this idea? Is your company considering

creating a CWTMO? Should it?

Please tell us your story or thoughts.

Send e-mail to [email protected].


A NOT SO MODEST PROPOSAL

Date post:	24-Aug-2020
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