Category: Contingent Workforce Management

With the growth of the gig economy, MSP programs are uniquely positioned to take on a more strategic role within an organization to drive cost-effective talent solutions that take advantage of all worker types, and that effectively leverage emerging talent pools.

To keep up with the changing talent landscape, MSP programs must continue to evolve to meet new challenges and align with new expectations. In first-generation MSPs, providers typically focus on change management, cost savings, increased efficiencies and reduced risk. Once baselines are established, needs evolve. In this article, we discuss the top four MSP trends impacting contingent labor programs.

Alternate Sourcing

In a mature MSP program, an organization often needs multiple ways to more efficiently source talent. This is especially important in a labor market with high competition for talent. To accomplish this, MSPs must explore talent sources outside of traditional staffing providers. This also makes talent pools more flexible and fluid than relying on staffing companies.

One option for alternate sourcing is to better leverage existing talent pools. Many organizations have silver medalists, or candidates who were in the final running for a permanent position. Those candidates can become valuable temporary workers if they are engaged and encouraged to apply for temp or contract work. Additionally, retirees and workers who previously worked in temporary roles may also want to return for other temporary projects or assignments.

Organizations can also look at expanding talent channels and broadening the types of talent that can be brought into the MSP network. The options will vary depending on the company and the type of work. For other positions, workers who struggle in traditional roles could excel in the right temporary role, including those on the autism spectrum.

MSPs can also incorporate direct sourcing through an online staffing portal. Mobile apps like JobStack by PeopleReady and other freelance marketplaces are growing more popular in the gig economy, and some organizations have their own solutions. Direct sourcing can quickly fill staffing gaps as one piece of an MSP program.

As a part of an alternative sourcing strategy, organizations should also look into pipelining opportunities, where high-quality temporary workers could eventually transition to full-time employment. This can be a part of a broader total workforce solution in addition to an MSP program. Pipelining opportunities will make temporary positions more appealing for certain workers, especially silver medalists and workers who have previously worked in a temporary position for the organization. Pipelining also means that the best workers are rewarded and can continue contributing to the organization.

Enhanced Analytics and Technology

Keeping up with technology advancements is a critical part of MSP programs. However, cutting-edge technology solutions can have an even greater impact on the MSP solution.

Predictive analytics is a valuable tool for MSPs. It uses data to find patterns and then uses those models to attempt to predict the future. Predictive analytics can’t tell you what will happen, but it shows what is likely to happen based on past trends. Incorporating predictive analytics and other forms of data analytics into an MSP program can help organizations better understand the full picture of their contingent workforce and predict future needs.

MSPs should also evaluate the technology used by their staffing suppliers. As part of its solutions, PeopleScout offers Affinix^TM, a proprietary, mobile-first, cloud-based platform that creates a consumer-like candidate experience and streamlines the sourcing process. Individual staffing providers offer a wide variety of technology solutions, and MSPs should evaluate each provider’s technology when selecting vendors. For instance, if a staffing provider uses predictive analytics in their hiring process, they are better able to predict the success of a worker, and that insight can be passed along to the MSP and the company seeking contingent workers to help guide workforce planning.

Total Workforce

There is a growing demand to bring together MSP and RPO services for a holistic approach to sourcing strategies. Total Workforce Solutions cover the full spectrum of talent; including employees, independent contractors, temporary workers, part-time workers, seasonal workers, SOW, outsourced services and freelancers. These solutions allow organizations to think about talent as a whole, by incorporating both full-time and contingent workers into their total workforce mix.

Total Workforce Solutions may also enable organizations to address relevant questions around the contingent and full-time employee mix, the real cost of different worker types and what worker types will best maximize productivity and cost-effectiveness. Visibility into the total workforce will help talent leaders understand how to integrate contingent and full-time employees to increase productivity and lower costs. A Total Workforce Solution can also include talent pipelining, which would provide a path for the best contingent workers to move into full-time positions.

Total Workforce Solutions drive financial advantages like cost savings from better workforce utilization, improved demand management and lower service and vendor management costs than in a previously decentralized program. Strategic benefits include more access to global expertise, cross-trained and fully integrated implementation teams, and insights and advice across the entire talent spectrum. Through a Total Workforce Solution, the provider can become more advisory and collaborative, using technology solutions like predictive analytics to better plan for future needs.

SOW and Independent Contractor Management

As MSPs programs mature, there remains an opportunity for further consolidation, cost savings and risk mitigation through MSP programs. Incorporating statement of work (SOW) workers and independent contractors into an MSP program will ensure that those workers are better managed, and an MSP’s compliance expertise reduces the risk to the organization. A broad solution that takes advantage of a large variety of worker types will ensure that an organization has the best mix of talent to meet business goals, manage risk control costs.

What’s next?

Organizations should engage an MSP provider to see how these MSP trends can fit into their talent strategies and provide a competitive advantage.

A Managed Service Provider (MSP) takes on primary responsibility for managing the entire lifecycle of an organization’s contingent workforce program. The MSP is the central point of contact for hiring managers and staffing agency suppliers. The typical responsibilities of an MSP include overall program management, standardizing processes, regulatory compliance, reporting and tracking, supplier selection and management, order distribution, and consolidated billing across program suppliers.

A successful MSP program is designed and implemented to drive ongoing cost savings, scale based on hiring volume, locations and skills, configure and manage VMS technology to provide reporting and visibility, and create separation between the supplier management and operations teams.

When an organization chooses to engage with an MSP to manage their contingent workforce, many factors may come into play. Here are some of the key drivers for working with an MSP provider.

1. Cost

MSPs help control and reduce costs associated with the contingent workforce through leveraging spend across the supplier network, creating bill rate and markup reductions and discounts, identifying and controlling rouge spend and enhancing visibility into wage rates and market analysis.

Cost concerns may include:

• Markup inconsistencies across the supplier network
• Staffing volume not being leveraged
• Higher than market rates
• Wage rate variation across the supplier network
• Lack of usage controls
• Administrative costs

Visibility is the key to managing contingent workforce and supplier spend. MSPs can leverage VMS technology and workforce productivity metrics as well as informed analysis and standardized processes to keep costs under control. Expertise in approval hierarchies, budget limit management and overtime reduction provides additional cost control, and detailed analytics identify off-program spend and workforce inefficiencies that present ongoing opportunities for enhancing performance.

2. Compliance

Many companies choose to work with an MSP because they have concerns about risk or recent legal issues related to compliance.

Those concerns may include:

• Preferred suppliers not being used
• Lack of compliance with corporate policies
• Inconsistent on and offboarding procedures
• Safety and security policies not being enforced
• Standard accounting practices are followed inconsistently

MSPs should work closely with each client to build a customized governance model based on the client’s operation that links visibility (in the form of detailed metrics) to compliance performance. This governance model provides the framework for assessing supplier compliance. Regular compliance reviews of timekeeping, invoice accuracy, wage and hour law compliance and more ensure adherence to compliance standards. Clients value and trust MSPs to protect them from compliance issues that can impact their bottom lines and brands.

3. Risk

Risk protection is another key driver behind the adoption of an MSP program.

Risk factors can include:

• Inconsistent contract terms
• Inadequate indemnification
• Employment eligibility risk
• Misclassification risk
• Inconsistent safety policies
• Excessive OSHA incidents

MSPs are responsible for managing and mitigating risk for organizations from both the supplier and worker perspective. MSPs manage risk on the supplier side by ensuring suppliers have the proper insurance and indemnification, monitoring performance and overseeing timekeeping and invoice accuracy. MSPs also mitigate risk related to workers themselves through conducting drug testing, background screening and skills assessments and determining worker eligibility.

A proven, multi-platform risk mitigation strategy should include every aspect of the supplier and contingent labor management process. Comprehensive pre-screening and onboarding best practices are designed to drive compliance and mitigate co-employment risk and include drug testing, worker eligibility, skills assessments, wage rate, bill rate and performance ratings. Enterprise-wide independent contractor (1099) risk assessments enable clients to understand their exposure and provide strategies for independent contractor replacement or migration to W-2 status as necessary.

4. Supplier Management

One of the most challenging parts of managing a contingent workforce in-house is supplier management.

Some of the key supplier management concerns include:

• Supply base not optimized
• Lack of quantitative performance metrics
• Performance targets not being met
• Diversity goals not being achieved

Effective supplier partnerships require a consultative partnered approach and shared best practices across the network. An MSP can support supplier growth by communicating changing business conditions and notifying suppliers of forecasted labor demands. Many organizations have a strong focus on diversity initiatives, and the supplier base should be informed of those goals so they can respond accordingly. MSPs also handle the contract and compliance management across the supplier network, to ensure organizations are protected from compliance and risk issues.

MSP programs use a variety of different ways to build a high performing supplier network for clients. MSPs measure performance through monthly supplier scorecards, schedule performance-based meetings as needed and use RFPs to drive competitive pricing.

MSPs can evaluate suppliers on items such as reconciliation, audit scores and performance against their Service Level Agreements (SLAs). Develop action plans and coach suppliers on ways to improve service and compliance to help suppliers maintain first-tier vendor status while delivering improved ROI to clients.

Survey vendors on how the program could work better for them and what they need to improve performance. MSPs provide access to robust reporting that covers open and closed requisitions, fill rate, time to fill, missing timecards, invoice status and other data that allows vendors to manage their businesses for improved profitability. By sharing these data, the evaluation process is transparent, fostering good working relationships and ensuring that all stakeholders are working towards a client’s business objectives.

5. Process

Companies with low levels of visibility into spend and reporting benefit significantly from working with an MSP.

Critical needs related to process include:

• Lack of clarity
• Process inefficiencies
• Lack of controls
• High degree of administrative burden
• Inadequate reporting and analysis
• Insufficient hiring manager satisfaction and program adoption

Keeping the “big picture” in mind, post-implementation is essential to generating consistent program enrichment and improvement. Establishing strong governance helps create and maintain an MSP program that is responsive to emerging needs, expansions, growth and change. This is especially true for programs that span a wide range of contingent and outsourced services across multiple countries.

Governance is separate from day-to-day management – a solid governance strategy sets expectations for the MSP program, defining authority and creating the means to verify overall performance with the necessary controls, tools, competencies and communication. Think of governance as management of the program management.

Designing and implementing a comprehensive governance model that defines key factors to drive continuous improvement includes:

• Governance responsibility within the client organization
• Program management, including program mandate, management of the VMS, vendor sourcing and contract management
• Client governance structure and relationship with the MSP

Once a governance plan is in place, the client can formally evaluate an MSP’s performance to ensure that the program adapts and evolves to meet changing best practices and business objectives.

Benefits of Engaging a Managed Service Provider

Immediate ROI: An MSP delivers early ROI by driving down bill rate and markups. As the solution matures and the client service team gains greater insight into daily operations, savings are realized in a more integrated manner.

Continuous Improvement: A program manager creates process improvements in onboarding, safety, time capture and other areas that save money.

Performance Metrics: MSPs baseline performance metrics, track improvements and quantify business issues, such as the cost of turnover and the lost productivity that follows.

Reduced Turnover: Cutting turnover yields tangible savings, which is just one way that detailed analytics and metrics drive ROI and optimal performance throughout the life of the MSP program.

Management of all Contingent Categories: MSP solutions support temporary, temp-to-hire, direct hire, independent contractor (1099) administration and statement of work (SOW) engagements. They also provide learning and development functions and other sophisticated services across all skill categories and geographies.

Competitive Advantage: MSPs not only manage staffing suppliers and services spend, but also manage the workforce to streamline operations to scale and match business cycles and offer clients a competitive advantage.

Evaluating your contingent workforce program against these five drivers will help you determine if engaging with an MSP is right for you.

In early September, PeopleScout took part in the 2017 CWS Summit North America in Dallas. We were proud to be an optimum sponsor of the event, and we want to thank everyone who joined us there and extend our gratitude to SIA and the many knowledgeable speakers and contributors who made the event a success. The summit gave us a valuable opportunity share ideas, gain insights and enjoy a great opportunity to network. For those who weren’t able to make it, we want to share an overview of some of the trends we discussed.

PeopleScout at CWS

At the PeopleScout booth at CWS, we offered gourmet coffees to keep people energized for the two days of discussions and presentations. We also shared information and helpful resources, like our recent white paper on Total Workforce Solutions. For many companies with a contingent workforce, continued strategic focus means MSPs must go beyond business as usual. It is no longer just enough to attract contingent workers; companies must be able to integrate them into their total talent workforce planning strategically. You can read more in our white paper, Total Workforce Solutions: Optimize Talent Acquisition by Blending RPO and MSP.

Total Workforce Solutions

There is a growing global demand to bring together MSP and RPO services as well as a broader integration and analysis of the entire workforce, including an organization’s full-time workforce. Total Workforce Solutions cover the full spectrum of talent; including employees, independent contractors, temporary workers, part-time workers, seasonal workers, SOW, outsourced services and freelancers. These solutions allow organizations to think about talent as a whole, by incorporating both full-time and contingent workers into their total workforce mix.

At CWS, presenters showed that the number of employers having trouble filling jobs globally has increased steadily over the past seven years. These new competitive pressures combined with the changing world of work has organizations looking for new solutions. Presenters demonstrated Total Workforce Solutions as a strategy for combating uncertainty. A total workforce strategy that looks at both employees and contingent labor can help employers plan for and adapt to the changing world.

Managing Uncertainty

“Workforce Solutions for Uncertain Times” was a keynote session at CWS, but discussion of uncertainty spread throughout the event. Presenters talked about the transforming workforce. As baby boomers retire and millennials enter the workforce, the generational change is creating a new world of work. Many young workers don’t want to work in the same way as their parents and grandparents. Companies have restructured offices, embraced the gig economy and welcomed virtual employees to meet the changing expectations of workers. With another emerging labor segment, Generation Z, starting to graduate high school, more change is likely on the way. As the skills gap widens and the talent market tightens, organizations will have to adapt to these new ideas and expectations to attract and retain the best workers.

As the recent hurricanes in Texas, Florida and the Caribbean and earthquakes in Mexico and Japan remind us, natural disasters can create another type of uncertainty for organizations to manage. Scientists say storms across the globe are getting worse, which means organizations need to be even more prepared for when, not if, they will be impacted. Presenters at CWS stressed the importance of creating a plan for a situation where your workforce is unavailable due to disaster and deciding who will implement that plan.

New Technologies

Technology is transforming the entire talent industry, and several speakers at CWS discussed different technologies and the impact they’re already having. AI, machine learning and deep learning are already impacting the types of candidates that organizations look for. Companies are spending less money on labor and more money on capital investments. However, workers with the skills to operate and maintain the technology investments are in high demand. AI can also work for the talent acquisition industry, matching the best people with the right work and saving time for HR professionals.

New technologies can also disrupt industries. Uber and Lyft disrupted taxis. In the future, driverless cars could disrupt Uber and Lyft, which is why both companies are working on self-driving technology. The same concept applies in talent acquisition. Organizations need to look at new technologies and the way they’re changing work before they’re left behind. One presenter shared that more than 60 percent of temporary staffing jobs are susceptible to replacement over the next 10 to 20 years. The growing gig economy is attracting more independent workers who are drawn to new ways of working that provide more freedom. Talent acquisition professionals will have to innovate to avoid being disrupted.

If you’re interested in learning more about technology, you can check out our blog posts on AI and machine learning and data analytics. You can also download our ebook, Seven Tech Trends Shaping the Talent Landscape.