Implementing Vendor Management Solutions and Management Strategies. for Optimal Contingent Staffing

Transcription

1 Implementing Vendor Management Solutions and Management Strategies for Optimal Contingent Staffing

2 Executive Summary As organizations take advantage of the flexibility of contingent labor programs, the category is increasingly coming under the jurisdiction of procurement departments imbued with strategic influence within their organizations. Whether co-managed with an external partner or internal department, or fully under the jurisdiction of either procurement or HR, contingent staffing is a process that has been around for multiple years and is increasingly being improved through the application of technology. As vendor management systems (VMS) continue to improve, a greater degree of visibility is being afforded to the procurement organization. As in other managed spending categories, keeping track of expenditure and managing suppliers is a critical aspect of optimizing value. Contingent labor presents another factor that must be controlled for: the quality of the contingent employees being hired. The ideal VMS will combine tools that simplify or eliminate tactical processes while heightening the ability for a department to focus on strategy. The number of third parties being relied on to manage contingent labor sourcing has slightly decreased since 2015, another indicator that as vendor management programs mature within organizations, so does the ability to create a catalog of reliable contingent talent, or tap into one through their VMS. With a growing, pre-vetted network of talent at their fingertips, businesses can begin to reduce the turnaround time for filling the talent needs of their organizations. Contents Executive Summary... 2 Key Findings... 3 Additional Contributors... 3 Research Findings Assessing the level of staffing and efficacy within procurement groups...4 Profiling contingent labor programs by age, size, and distribution... 5 Responsibility for contingent labor strategies and program management... 7 Improving the efficacy of contingent labor programs with stronger VMS solutions...8 Key Recommendations...12 Appendix...13 About

3 Key Findings Having made progress towards a more strategic role, procurement is now invigorated with more influence and staffing power with which to manage organizational spend, often while collaborating with other departments. With procurement departments reporting a higher number of employees and steady progress towards their strategic transformations, they are in a stronger position than ever before to manage the contingent labor category, often with the assistance of HR. Enabled by stronger VMS tools, a larger share of procurement and HR groups are sourcing their own talent as opposed to relying on third-parties. With a need for fresh talent who can be sourced to fill needs as they arise, new VMS tools that roll utility and visibility into a single package are allowing teams to take a more direct approach to their contingent labor sourcing. The overall quality of contingent employees is good, although for many it can still take a large chunk of time to source talent as needs arise. While the quality of contingent labor being sourced is high in most cases, the turnaround time associated with hiring can vary. Year over year, the sourcing process has gotten faster, however in order to build more flexibility into contingent programs, it s an area that can continue to be improved. Additional Contributors Select contributors participated in interviews during the research phase of this paper, and their insight has been included to add depth to the data and analysis in the following sections. These thought leaders come from a variety of backgrounds, listed below. Wendy Chase, Sourcing Manager, McKesson Corporation Michelle Cox, Sr. Manager External Staffing and Vendor Relations- HR, U.S. Cellular Colleen Tiner, SVP Strategy, Beeline 3

4 Research Analysis Assessing the level of staffing and efficacy within procurement groups How many employees make up your procurement team? % % 8% 28% Over 35 38% The number of employees on a procurement team will vary, with the most common size having grown to include over 35 members, experiencing a 12% year-over year growth from The number of staff that a team requires will vary, but generally the number will grow in concert with the size of the business, the jurisdiction of the procurement department, and the extent to which strategic transformations have already taken place. Do you feel your team is properly staffed to do its job effectively? 58% Yes 29% No 13% Not Sure The majority of these teams are operating effectively, although a significant 29% of respondents feel that they require additional staff, still a 10% decrease from It s typical for procurement leadership to begin feeling a resource crunch as they make gains in conveying their value to key business stakeholders, and assuming a more strategic role within the business. Unless tactical processes are reduced by the introduction of new technology, they will need more staff dedicated to the management of these processes. I m in HR, and I lead our contingent staffing programs. I m responsible for creating our strategy and the team that I have reporting to me and I are also responsible for overseeing how it gets implemented operationally and for supporting both our hiring leaders and suppliers. We have a partnership with our procurement team, with a dedicated resource within our procurement team who supports us, and they view us as an internal client. We set the strategy, and they partner with us to execute on that strategy. In most businesses it seems that either procurement or HR owns contingent staffing, and there s not necessarily a partnership between the two of them. You can think about it being almost like a ball game. You have a procurement team specifically on offense; they are the ones that are trying to set everything up to be successful and ensure that they have the right contracts in place, the right suppliers and our contract terms are being met, and so on. The HR side of the house is on the defense; making sure that everything is staying in line supporting our suppliers, supporting our contractors and ensuring the program runs smoothly. In my opinion, you need both sides to be successful; not one or the other. They each play a key role in the success of a program. - Michelle Cox, Sr. Manager External Staffing and Vendor Relations- HR, U.S. Cellular 4

5 How is your company s procurement transformation from tactical to strategic? Complete 7% Ahead of schedule Right on schedule 7% 52% Behind schedule Don t know 6% 28% For the majority of teams a strategic realignment is currently underway, and is moving along right on schedule. A further 28% of procurement groups are falling behind their anticipated pace, with tactical work that would otherwise be outsourced or delegated down a chain of command occupying an overly large share of their time. Significantly, only a combined 14% of respondents are either ahead of schedule or have completed their tactical transformations, highlighting the significant shift in resource allocation that needs to occur in order for procurement leaders to fully focus on strategy. Profiling contingent labor programs by age, size, and distribution What is your annual contingent workforce spend? <20M 33% 20-50M 20% 50M-100M 13% 100M-300M 25% >300M 9% The use of contingent labor can build flexibility into a business model, as well as remove tactical or non core processes from the plates of strategically focused employees. While 33% of respondents spend less that $20 million on contingent labor, 25% are spending between $100 million and $300 million, with a further 9% who are now spending over $300 million. As the investments that businesses make in their contingent labor forces increase, they can make significant gains in agility, though the importance of a strong vendor management system also increases. 5

6 In which regions is your contingent workforce program deployed? The majority of respondents are deploying their contingent labor programs in North America, with a small amount of representation for globally deployed contingent groups. 91% North America 2% Latin America 2% EMEA 5% APAC At this point, the majority of contingent staffing programs I ve seen are at least several years old. I would say there is now a definitive competency in managing contingent staffing programs where five to seven years ago, it was really a specialty competency which required a lot of outsourcing. Now that there is an educational component and a certification process around the category, it has elevated the role of contingent workforce management and created a discipline that has a sanctioned set of job titles associated with it. In the past, contingent staffing programs were heavily focused on staff augmentation programs. Now, it has expanded to over-arching services procurement, so the engagement of major consulting and overall process outsourcing has moved under contingent workforce programs as well as other classifications of the extended workforce. That has been a significant shift over the past three to five years. Now we see that our clients are looking for visibility into the entire workforce that makes up an organization, including consultants and executives on retainer. They are looking to pull all of that into one place to be globally managed. - Colleen Tiner, SVP Strategy, Beeline In many cases, the use of contingent labor to supplement full time talent is not new, rather a tool that has been relied on for multiple years. Though 20% of respondents have had their contingent programs in place for less than one year, 36% have incorporated contingent labor into their workforces between one to five years ago, and 17% have had their programs in place for at least five years, up to ten. Lastly, 27% of respondents have had contingent labor programs in place for over ten years. How long have you been formally operating a contingent workforce program? 20% <1 year 36% 1-5 years 17% 5-10 years 27% 10+ years McKesson s contingent workforce is managed by Procurement. All program managers are stakeholders, and are invested in our ability to create quality outcomes. We have HR support in the form of assistance in enforcing policy and governing the program, which is supported by a mandate. It took a long time to establish our mandate, making the case that adopting centralized controls was the best strategy for the company, and demonstrating that value to our stakeholders. Now all contractors go through Beeline which puts controls in place. All contracts are accessed through Beeline, and as part of the process of winning over stakeholders, if a hiring manager was not using a supplier in Beeline it was used as a learning experience. We actively educated them on why they needed to use the tool, showing them the value behind our approach. - Wendy Chase, Sourcing Manager, McKesson Corporation 6

7 Responsibility for contingent labor strategies and program management Is your company s contingent/outsourced labor handled by procurement, or through another department(s)? 55% Handled by procurement There is roughly an even split between contingent labor programs that are managed by HR versus those managed by procurement. Currently, the split slightly favors procurement, with 55% of respondents representing organizations with procurement-led contingent labor programs. As contingent labor programs expand, and become more costly, it can make sense from a management perspective to leverage procurement s abilities to control expenditures and build opportunities for greater value. 45% Handled by HR In my experience, procurement teams that are focused on the overall workforce are also close partners with HR. Procurement can demonstrate greater value and gain more influence within their business by focusing on total workforce optimization. We define this as a combination of modeling, predicting, sourcing and managing the ideal mix of employees and extended workers in order to achieve a total desired work outcome. What that means is movement away from a procurement HR split, towards an outcome first approach to your workforce. Then, based on outcomes, you can evaluate labor options and determine the most efficient labor model for better quality, better speed and better cost control. The workforce is not just employees and extended workers, it s a combination of skills and where these skills are located for strategic reasons, whether it s cost, talent, how long certain resources are engaged and why, etc. This is often influenced by legislation, social costs, employee engagement, and other factors. Workforce optimization is an area where procurement can take a leading role. Generally, there is an experienced value optimization group within procurement, and the workforce area is in need of their skills and their talents. - Colleen Tiner, SVP Strategy, Beeline Half of respondents will utilize a combination of internal management and managed service providers to manage their contingent workforce program, while 30% will rely entirely on their internal Vendor Management Office. Another 20% don t currently have a formal contingent labor program in place. Who currently manages your contingent workforce program? 30% Vendor Management Office (internally managed) 50% Combination of managed service provider and internal management 20% Do not have a contingent workforce program in place 7

8 What percentage of your non-employee workforce do you find from a third-party? 12% Over 80% 6% 70%-80% 10% 60%-70% 18% 50%-60% 54% Less than 50% The amount of contingent labor sourced by third parties will naturally vary depending on the requirements of the business being supported, as well as the ability of procurement or HR to tap in to networks that would allow them to self-source. For 54% of respondents, less than half of their contingent labor needs are being sourced through third-parties, with their internal leadership managing the sourcing process directly, an increase of 4% over By contrast, 12% of respondents rely almost entirely on third-party providers for their contingent labor needs, with another 16% falling between 80% and 60%. Improving the efficacy of contingent labor programs with stronger VMS solutions Part of the benefit of contingent labor programs is the ability to provide talent to meet requirements on a flexible basis, however, effectiveness in this capacity is often reliant on the speed with which needs can be filled. For 30% of respondents, this process takes less than two weeks, a relatively rapid turnaround that takes full advantage of the flexibility of contingent staffing as well as over double the share of respondents with that capability in For 45%, the single largest share of respondents, the contingent talent sourcing process takes between two weeks and 30 days. For 17% of respondents, the talent sourcing process will last between 30 and 60 days, a significantly longer turnaround that can begin to impede productivity. While only 8% of respondents will take over 60 days to manage the sourcing of their contingent talent, that represents a significant lead time separating a business need from being filled. On average, how long does it take you to source a resource for contingent labor assignments? 30% Less than two weeks 45% Two weeks to 30 days 17% days 8% Over 60 days 8

9 On a scale of 1-5, how would you rate the quality of talent coming from your suppliers? 1% 1 Poor 14% 2 Satisfactory 34% 3 Fair 45% 4 Good 6% 5 Excellent Ultimately, the success of a contingent labor program will hinge on the quality of the talent being sourced. Fortunately, in the majority of cases contingent staffing talent is at or above a baseline level of effectiveness. With 34% of respondents rating the quality of the contingent hires they get through their partners as fair, 45% reporting they are good, and 6% going so far as to call the average quality of their contingent staff excellent, sourced talent tends to be adept at getting the job done. By contrast, 14% of respondents feel that the quality of their contingent staff is merely satisfactory, though only 1% have rated their contingent talent as poor. Talent is only as good as the supplier that is recruiting. We switch out suppliers periodically so they don t get stale with a thirdparty. We generally get really good quality because we are using quality suppliers, and as the saying goes, you get what you pay for. I have done a lot of work in the last year in light industrial. One of the strategies we ve employed is allowing temp workers to make the same pay rate as full time employees, so that we don t have as much turnover. Light industrial is a competitive space, and I think you will find that it s one of the more challenging areas to compete for talent in, so this setup allows us to effectively source highquality talent on a reliable basis. - Wendy Chase, Sourcing Manager, McKesson Corporation Identify any of the following features that are important features you require in a VMS solution. (Choose all that apply) Reporting & Analytics 87% Benchmarking Invoicing 70% 75% Configurability 54% Mobile Access 39% Other 6% 9

10 What utilities are essential to the efficacy of a VMS solution? The most popular single response is reporting and analytics, which 87% of respondents rely on in order to manage spending associated with their contingent programs. Similarly, 75% stated that the ability to benchmark was important to them, giving business insights on the growth of contingent labor programs as well as providing another method for tracking value. Invoicing is a tool that 70% of respondents feel is important, simplifying the tactical workload around compensating contingent employees. Configurability is a concern for just over half of respondents (54%), while 39% now also prioritize mobile access. The ability to remotely access a VMS system can greatly add to the flexibility with which it can be managed, and give back even more time to strategic planning as opposed to tactical execution. While many organizations might still have an MSP, in the future I anticipate that once organizations have established programs, they will begin to shift to bringing things in-house, as they have a foundation already set up. MSPs are going to have to get really good at providing and proving their value to the organization, otherwise it makes sense for an organization to bring things in-house much like we did. More and more organizations are introducing applications to begin supporting the ability to self source and go after your own talent, versus having to rely on a supplier to go out there and do that. There are a couple of different aspects you can look at from self sourcing and improve on as part of the shift towards total talent management. You already have the skills and expertise from a recruiting standpoint, so it involves building the ability to look at your total talent holistically versus looking at it from a contractor perspective, and technology is beginning to support that ability more and more. - Michelle Cox, Sr. Manager External Staffing and Vendor Relations- HR, U.S. Cellular In the past, fully outsourcing supplier management would have been viewed as best practice. Now, I advocate the adoption of more of a hybrid model. This means bringing customer service work back in-house, having an MSP that is the interface and relationship holder, as well as the contract holder. This benefits the corporation by creating more benchmarking ability, and more ownership in program. Hybrid models are what more mature programs are going into, where the MSP works with headcount, hiring managers and tools, while the company has the relationship with the agencies to manage and negotiate. - Wendy Chase, Sourcing Manager, McKesson Corporation Identify labor categories/skill areas in your organization with the need for contingent labor management through a VMS? (Check all that apply) Information technology 75% Office/Clerical 67% Finance & Accounting 61% Industrial 37% Engineering & Design 32% Clinical/Scientific 11% Healthcare 6% Other professional 32% 10

11 A VMS tool centralizes critical supplier information, and in the case of a labor category where there may be a large and growing number of contingent employees and suppliers needing to be managed, it provides several benefits. Among them is visibility, as well as the ability to leverage payment information and benchmarking abilities so that the most advantageous deals can be pursued. One of the most prominent of these categories is information technology; where multiple vendors are often relied on to provide the various necessary functions that a business requires. Clerical and general office work is also a significant area being outsourced. Similarly, finance and accounting are categories where there is a pressing need to track through consolidating systems in the event they are being managed by third-parties. What these three categories have in common is a tactical nature not generally related to the core competencies of a business. The use of contingent labor to manage them is a way for businesses to regain time that can be applied towards the pursuit of their core objectives. In this light, the VMS system can be seen as a core factor in maintaining control over these business operations while minimizing time and capital expenditure. Rounding out the areas that a VMS should cover are more specialized skill areas: industrial, engineering and design, clinical and scientific, and healthcare management. Depending on the business, these non-core, yet essential supporting functions can be more effectively managed through an up to date, high performing VMS system. Technology is not going anywhere, but the definition of a vendor management system being simply a vendor management system is going away, and most providers are exploring the evolution of what additional value they can bring customers. The direction we are going, based on what we see the market, is based on three things: process, talent, and data. Around process automation, we are creating efficiency and transparency in ability to engage with an extended workforce. On the talent side, we re going deeper, connecting process automation to talent directly. We have built our own talent platform where we re engaging with talent directly, pre-screening proactively, and creating a community that is connected to the overall network of talent platforms and marketplaces while pulling information into the enterprise space. This allows more direct engagement, bringing talent to enterprise companies quickly, while saving significant cost. Finally, data is a huge aspect of how we are helping clients create their total workforce. They are now able to look at the overall workforce, merging full time and extended workforce data. This opens the door to labor modeling and labor forecasting in streamlined way. I think the most forward thinking procurement and HR programs are going to push for this total picture where they can do real labor modeling based on the entire population of talent that it takes to run their business. - Colleen Tiner, SVP Strategy, Beeline 11

12 Key Recommendations Develop and maintain the means to accurately assess the quality of talent within your contingent labor program, and then engage top performers with retention efforts. Contingent staffing programs are reporting a generally high level of talent, but amongst these hires, the top level should be actively classified within a VMS. Ultimately, a contingent network can retain the flexible qualities that make it attractive while earmarking top performers for quality outcomes. Adopt VMS solutions that can balance visibility and benchmarking capabilities with tactical, time saving features such as invoicing. The VMS is a critical component of an effective contingent labor program. In order to maximize the value being given back to the business, a VMS solution should have capabilities that combine elimination of tactical processes with the visibility and value management attributes that support a more strategic role for the procurement department. Accelerate the timeframe within which contingent labor can be sourced to fill business needs, adding even greater flexibility to your programs. When a hiring need is left unfilled, the time it takes to find a qualified resource should be kept to a minimum. Efforts to identify top performers and adopt solutions with heightened workforce visibility are one side of the coin. On the other, is a need to identify reliable sources of new contingent talent that can be tapped as soon as a need arises. 12

13 Appendix The results analyzed in this report were gathered from responses to an on-site benchmarking survey delivered at Contingent Staffing 2016, and prepared by report author Andrew Greissman. 83 executives responded to the survey. Interviews with sources were conducted after survey data was compiled, and centered on discussion of benchmark results. 13

14 About Headquartered in Jacksonville, Florida, Beeline is a market leader in software solutions for sourcing and managing the extended workforce. Beeline offers intelligent workforce solutions including a Vendor Management System (VMS) and a Freelancer Management System (FMS) that helps procurement, sourcing, and human resources professionals optimize costs, reduce risks, and add value to their contingent labor programs. Beeline is proud to be an awardwinning organization and prides itself on business intelligence, superior technology, a global network of localized knowledge, and service-driven colleagues dedicated to their clients success. Beeline is an essential business partner for today s leading enterprises. To learn more, visit beeline.com The Contingent Staffing Congress brings together top procurement and talent management experts to share best practices in sourcing, procurement and total talent management. Attendees network and learn from industry experts who detail through case studies and interactive presentations, on how organizations can innovate and transform their procurement program to deliver maximum value to their organization while still keeping quality high and mitigating risk. The nation s top executives offer insights and solutions for the most pressing challenges facing procurement from overcoming resistance to change with internal stakeholders, to consolidating suppliers, taking supplier relationships to the next level to onboarding new temporary workers and measuring their performance. WBR Digital connects solution providers to their target audiences with year-round online branding and engagement lead generation campaigns. We are a team of content specialists, marketers, and advisors with a passion for powerful marketing. We believe in demand generation with a creative twist. We believe in the power of content to engage audiences. And we believe in campaigns that deliver results. 14