How to Manage a Contingent Workforce: Contingent Workforce Management (CWM) Guide

By Grit Daily Staff Grit Daily Staff has been verified by Muck Rack's editorial team
Published on May 10, 2024

Over the past decade, businesses have dramatically increased their use of contingent workers, otherwise known as outsourced non-permanent workers. These workers are often labeled as independent contractors, freelancers, gig workers, consultants, temporary talent or remote workers, and each one of these individual labels falls under the broad umbrella of a contingent workforce.

With rising business costs, growing technological demands and pressure on organizations to fill talent gaps with a highly adaptable workforce, integrating contingent workforce solutions is an integral strategic practice and a growing need of many corporations today.

Procom, a specialized IT staffing firm, places IT candidates of all types across North America. Their recruitment solutions include contract staffing, direct hire and perm to full-time positions. In addition, they provide contingent workforce solutions, helping corporations adapt to the rapidly evolving technological landscape and its urgent demand for skills.

In addition to discussing the benefits of contingent workforce solutions, Procom has agreed to lend their insights about how to approach contingent workforce management.

Contingent workforce management is the management of independent contractors, gig workers, those engaged under a Statement of Work (SoW), contract work and temporary staff.

Contingent Workers vs. Permanent Full-Time Employees

It’s important to get worker classification correct at the outset, and to do that, you’ll need to know the difference between a contingent worker and a traditional full-time employee. A contingent worker is a highly specialized individual in their field, usually engaged when an organization has a project or role to fill that requires a niche skill or high level of expertise.

Another important point to note is that contingent workers often have more control over how and when they do their work than traditional employees. You can use the chart below to compare the differences between contingent workers and full-time employees.

Contingent Workers

  •  Not a staff member.
  • Contracted for a specific project or length of time.
  • Determines their own process, steps and tools required to complete work.
  • Performs highly specialized work, which is not the organization’s typical or primary service.
  • Negotiates their own pay.
  • Must provide his or her own equipment and incur costs of completing the work.

Full-Time Employees

  • On staff; works on an ongoing basis unless terminated.
  • Has a required work schedule and agreed upon work location.
  • Is given instructions on how to do the work, handed the processes as well as the tools that must be used.
  • Performs work that is of the organization’s primary service.
  • Paid on an hourly wage or salary governed by minimum wage and overtime laws.
  • Requires reimbursement for costs spent to complete work.
  • Must be able to perform the work on their own.

Managing a Contingent Workforce

It’s important to have a plan for managing your contingent workforce so that its full benefits can be realized. Retention plays a major role in this and should be accounted for. Remember that the contingent workforce segment of your talent pool has access to many in-demand employment opportunities, so your organization must keep them as engaged as possible.

Key Challenges in Contingent Workforce Management

There are some key issues organizations face in their approach to contingent workforce management. These include but are not limited to the following.

  • Inefficient or inconsistent process management.
  • Insufficient talent, skills or project performance quality.
  • Compliance issues such as regulatory, legal and policy.
  • Lacking cost control or incomplete cost control.
  • Lack of organizational visibility into contingent workforce engagements.

A study conducted by Oxford Economics and Fieldglass found that only 40-47 percent of business executives consider themselves “highly informed” about compliance, contingent workers’ responsibilities, tenure, quality of work, headcount and access to facilities.

Procom as a Managed Service Provider

Another crucial aspect of managing a contingent workforce is exploring the right Managed Service Providers (MSP) or MSP solutions. An MSP is an outsourced contingent workforce management solution that takes care of the entire talent lifecycle from beginning to end. From acquisition to payment, an MSP will incorporate a Vendor Management System (VMS), which we will discuss in more detail shortly, thereby providing additional visibility into the status of each contingent workforce or SOW worker in the organization.

Procom Discusses VMS Solutions

To address these challenges, Procom provides direct insights into worker data with their vendor management system (VMS), their own technology which automates and streamlines the management of non-employee talent. Not only does Procom’s VMS create a smoother process and experience for contingent workers and organizations alike, but it also reduces organizational risk in the long-term. It creates opportunity for cost savings, provides greater insights and maximizes the human capital within the organization as a whole.

This is perhaps why 80 percent of companies worldwide with 1,000 or more employees rely on a VMS for contingent workforce management.

Procom highlights the benefits of a vendor management system, which include: saving on hiring costs, increasing productivity, maintaining hiring manager satisfaction, managing organizational costs, improving relationships and measuring performance.

Performance can be broken down and measured across various categories such as the quality of vendors, the response time of vendors and their risk.

Vendor Consolidation: A Procom Success Story

One way Procom helped a retail client gain control of their contingent workforce program was with vendor consolidation. Procom’s client, a publicly traded Canadian retail company that operates in the automotive, hardware, sports, leisure and housewares sectors, was able to supercharge their contingent workforce program by making it more streamlined and efficient.

Founded in 1922, Procom’s client has over 1,700 retail locations, with financial services and e-commerce capabilities and employs over 58,000 workers with assets totaling $20.38 billion (2020).

Client Challenges with Contingent Workforce Management

Procom’s client had a historically tight and well managed list of six contingent workforce suppliers that quickly grew to include over 20 vendors. With the expanded supplier list, their client was not receiving the benefit of preferred pricing based on its volume and lacked the overall visibility and control that it once had over the program.

Deeper insights into the client’s contingent workforce management program unveiled that there were key areas of improvement.

  • The client wanted to reduce the number of vendors and the cost associated with its contingent workforce.
  • The Statement of Work (SOW) spend was full of what would otherwise be categorized as Time and Materials staffing, which would typically be sourced through the contingent supply chain.
  • Vendor consolidation presented significant risk with concerns existing over early contract termination, resulting in the loss of critical knowledge.
  • Limited visibility with SOW spend and personnel compliance with corporate security policies (background checks, system access, proprietary knowledge, etc.).
  • Our client wanted to reduce the complexity associated with managing the variety of terms and processes associated with the numerous supplier relationships which were causing confusion for its hiring managers.

The Solution

To reach these goals, Procom implemented their Contractor Payroll and Subvendor Management Programs. Their client leveraged Procom’s Subvendor Management Program solution to consolidate their vendors at no cost. Procom also redirected SOW-based agreements into proper contingent categories, which increased opportunities for Master Service Agreements (MSAs), deliverables and critical rate card data.

Procom extended their contractor rate negotiation services to negotiate clauses with active resources and made concessions based on priority resources and reasonable acceptances. In addition, they reduced their client’s vendor list in order to incentivize competitive pricing and increase rebates in exchange for an increase in potential opportunities.

Procom Contingent Workforce Solutions: Benefits at a Glance

  • Helped their client achieve over 17% savings on its contingent workforce spend.
  • Provided visibility across both the contingent workforce and Statement of Work engagements.
  • Introduced and enforced SOW audit controls.
  • Served as Subject Matter Experts through the RFP process.
  • Client implements better management of their true OPEX and CAPEX spend.
  • Educated our client on the Canadian labor market, trends and various government regulations in regards to Contingent Workers.

Technology Solutions for Contingent Workforce Management

Technology Solution

Key Features

Benefits

Applicant Tracking Systems (ATS)

  • Candidate sourcing and screening.
  • Interview scheduling.
  • Applicant tracking.
  • Streamlined recruitment process.
  • Time and resource savings.
  • Efficient management of contingent worker applications.

Vendor Management Systems (VMS)

  • Requisition management.
  • Vendor selection and onboarding.
  • Compliance and risk management.
  • Centralized vendor management.
  • Cost optimization.
  • Improved compliance and risk mitigation.

Workforce Analytics

  • Data collection and analysis.
  • Performance and productivity metrics.
  • Compliance tracking.
  • Data-driven decision-making.
  • Optimal resource allocation.
  • Continuous performance improvement.

Organizations should carefully assess their specific needs and choose the technology solutions that align with their goals and objectives for their contingent workforce management program. By leveraging technology and partners like Procom, organizations can effectively manage their contingent workforce and unlock the full potential of flexible staffing solutions.

Contingent workforce solutions are reliable methods of meeting urgent and highly specialized project-based demands, meanwhile contingent workforce management is a vital aspect of optimizing the entire process and lending added visibility into temporary workers. By implementing best practices, organizations can optimize their workforce and drive overall success. From understanding the role of a contingent workforce to leveraging technology solutions and working with partners to consolidate processes, organizations can achieve excellence in managing contingent workers..

In order to enhance the efficiency and effectiveness of your contingent workforce management, partnering with a trusted provider like Procom can make all the difference. With Procom’s expertise and commitment to delivering top-notch solutions, you can simplify contingent workforce management with confidence and focus on achieving your business goals.

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By Grit Daily Staff Grit Daily Staff has been verified by Muck Rack's editorial team

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