Guide to Contingent Workforce Sourcing and Management
Do you need to reassess your current staffing methods, tools and supply-chains? Find out what you should know about cutting edge recruitment tools that will help you get the talent you need.
Updated January 2023
In This Guide
This is an abridged version of our guide. For the full version, please download the PDF by filling in your details. In this guide:
1. Finding Top Talent in 2023
We overview the current reality of the talent industry and what firms can do to steer a strategic course through the icebergs mass resignation, the rise of digital roles, and the talent shortfall time bomb of the baby boomer generation.
‣ Agile Workforce for Agile Businesses
‣ The Gig Economy
‣ The ‘Seesaw’ of Digital
‣ A New Workforce Design
‣ Future Hope, a New Way of Workforce
2. Maximizing Sourcing Channels
We outline the most popular talent sourcing channels and tools available to talent sourcing teams today.
‣ Staffing Vendors – the option of last resort
‣ Employer of Record (EoR)
‣ Recruitment Process Outsourcing (RPO)
‣ Master Vendor and MSP Oversight Options
‣ Direct Sourcing
‣ Statement of Work – a new way of hiring
Section 3 - Workforce Management
We examine how to introduce a new workforce management culture, behavior, and system in order to maximize resourcing potential.
‣ Challenging the norms
‣ Data-driven hiring
‣ Workforce management
‣ From apps to ecosystems
Our guide will help you discover how to source the talent you need by blending contingent and permanent employment.
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Section 1
Finding Top Talent in 2023
Agile business needs an agile workforce
It’s a weird world out there. Businesses are having to change faster than ever to react to changing customer needs and market opportunities. In this year alone, we’ve been introduced to an entirely new lexicon of language with terms like pandemic, social distancing, furlough and bubble becoming more frequently used than we’d all care to mention. In such a fast-moving business world, bosses know they need to think on their feet and adapt their workforce just as quickly.
The COVID-19 pandemic has led business leaders to realize that, in the business world today, greater agility–in all its facets–is not a nice-to-have but an essential for competitive survival. Chief among the inhibitors to change is the workforce. The cost of perpetual staff re-orgs does not fit easily within the flexible workforce strategy being crafted by talent leaders. The only solution to rapid demand changes for skills is an on-demand workforce. This pre-supposes that talent is available at a moments’ notice, and in a global talent market bursting at the seams, no guarantee of top talent supply is assured.
The Gig Economy is characterized by independent workers that work by their own rules, value their personal well-being and freedoms, want to work anywhere and any time they choose, etc. For businesses, thriving in this new talent environment means rethinking old ways, adopting new leadership, new methods, technologies, and principles.
A gigging economy
Many more people are looking for work as contractors, freelancers and gig workers than ever before. That’s because COVID-19 has triggered the prioritization of personal welfare over wealth. People transition to the gig workforce predominantly because they gain the freedom to be their own boss, make their own decisions, craft their own career path, mix work and home life in a way that suits them, etc. These benefits outweigh the benefit of any one income from any one employer. Normally, any decision to join the gig workforce is aided by the credentials of the individual being greatly valued by firms struggling to find workers with the right skills.
The sad fact is NO JOB is 100% safe. This lack of confidence in their employment prospects means individuals see more security in having more than one employment.
The seesaw of digital
Digital technologies have revolutionized how knowledge workers work, where they work, and how they work. We have seen a torrent of remote working communications technologies–like social media platforms, workplace automation, screen sharing, chat, messaging, web meeting and file sharing apps–denting traditional methods of communication. The world of work is now hybrid. To put this into perspective, according to the latest UK government data in 2020 62 percent of information and communications workers either mainly, recently, or occasionally worked from home. That’s 2 out of 3 workers!
Some 44 percent of workers are in jobs in which telework is feasible, so says the American Time Use Survey, sponsored by the US government (published 2020).
A new workforce design
Fail to adopt a new workforce design in the gig economy and your organization is instantly placing itself at a disadvantage, not only against close competitors, but new startups too. Transforming full-time workforce designs through re-orgs is costly and time-consuming. A gig workforce management model will include a smaller number of full-time roles that demand continuity—i.e., Those where a deep knowledge of the industry, the business, its processes, and brand principles need to be maintained—and a large number of outsourced, contracted, or task-based activities that are framed according to the current short-term goals.
Future hope - a 'new way of workforce'
For every individual forced into contract working by happenstance—perhaps they can’t find a full-time role that pays sufficiently well to support their standard of living, or life circumstances, such as the birth of a child or the need to care for an ageing parent places full-time work out of reach—there is another who chooses to be a contractor because they prefer the lifestyle.
It is possible for firms to design a workforce strategy that benefits both workers and the organization, creating a win: win for both parties.
Is a blended ONSHORE / OFFSHORE talent sourcing model right for you?
Do your talent needs require a hybrid approach? Let’s discuss what options suit your business.
Section 2
Maximizing Sourcing Channels
Staffing Vendors – increasingly, the option of last resort?
While it may be the most common approach to finding hireable talent today, asking procurement teams to hire talent through staffing vendors may not be the largest part of the future of work in the gig economy. We are seeing significant growth in Direct Sourcing (see later) and a move towards digital talent portals and ecosystems (perhaps the best-known of which is LinkedIn) that are increasingly able to fulfil hiring needs on -demand. That said, hiring talent is not generally a key skillset for organizations, therefore talent leaders can continue to benefit from partnerships with staffing and recruitment expert partners, albeit in a different guise. In this section, we examine some of the more popular mechanisms for hiring and managing talent.
Payroll Process Outsourcers (PPO)
Few companies want the hassle of running their own payroll, so finding an effective partner equipped to do it for you can make good business sense. A ‘PPO’ partner dedicates their existence to the provision of payroll provisioning for your full-time or contingent workforce. The job of the PPO is to ensure people get paid the right amount, at the right time, while observing legal compliance demands.
Employer of Record (EoR)
An Employer of Record (‘EoR’) is a partner business that facilitates a flexible workforce for your business. The core role of an EoR is to manage payroll of contingent workers (i.e., freelancers, contractors, gig workers…) you want to employ for your business. They operate processes to manage payroll and process timesheet. Mature providers will integrate their back office financial systems with yours, so there’s almost no admin overhead or employment risk.
Recruitment Process Outsourcing (RPO)
It may be that finding someone to manage hires once you’ve found them isn’t enough. Should you want a partner to support the entire recruitment lifecycle from the very beginning – and find the talent you need – then perhaps a Recruitment Processing Outsourcing (‘RPO’) partner is for you.
These are companies that manage recruitment on your behalf, either by using your systems and processes, or their own. RPOs may operate with onsite or offsite teams (or both), so you’ll need to find a provider equipped to operate on your terms.
Master Vendor and MSP oversight options
When it comes to managing the hiring of contingent workers, the Recruitment Process Outsourcing title tends to get replaced by the term Managed Services Provider (‘MSP’) to describe outsourcing organizations that offer program oversight across staffing vendor supply chains. This is where the world of talent sourcing options gets a bit burry; because when the role is to provide oversight across indirect staffing suppliers, the term Managed Services Provider is used, unless the provider is also engaged in staffing themselves. In such a case, the popular description of this kind of relationship is Master Vendor.
Ordinarily, RPO and MSP vendors don’t perform payroll or Employer of Record (EoR) services. If you’re looking for a supplier to do recruiting AND these services, then perhaps a Master Vendor relationship is what you’re after. Master Vendor arrangements come in various flavors but generally, the scope of a Master Vendor is to manage the hiring and management of your contingent workforce; probably working with tier-2 and tier-3 specialist staffing firms to fulfill end-to-end demands.
Direct Sourcing
One of the pitfalls of finding contingent hires is the overhead of weighty staffing vendor fees that represent a surcharge on hiring costs.
Most companies after a few years in business build up a good connected audience of potential workers (including alumni and people who’ve worked for or with the company), resulting in a known community of potential contract workers.
For this reason, more companies are going direct for their talent (what people are now calling Direct Sourcing). With this talent sourcing model, brands leverage their social media reach to offer temp and contract work through an online digital job board marketed through social media platforms like Facebook and LinkedIn.
Staffing Industry Analysts (SIA) suggest in their 2021 report ‘Achieving Excellence in Direct Sourcing for the Contingent Workforce’ that Direct Sourcing implementations will rise to 60% adoption within the next 2 years, owing to a potential 15% plus saving in staffing agency costs.
Statement of Work Contracts
A Statement of Work (‘SOW’) seeks to define liabilities, responsibilities, and work agreements between two parties, usually between a company and a staffing provider or individual that agrees to pay a contract worker for their efforts based on the achievement of pre-determined project outcomes. With a Statement of Work, these outcomes are formed around project way-points, sometimes called ‘Milestones.’
SOW contracts are growing in popularity because they allow hirers of indirect workforce resources to pay for results, rather than hours worked. It means that departmental managers, with work to be performed, can look to hire specific skills for each competency or activity stream of projects they need to complete.
Key attributes of a Statement of Work include:
- A description of the job to be done and of the skills and qualities needed to perform the task.
- Qualification of the waypoints against which the contracted work will be paid.
- Clarity over what qualifies the waypoint as being complete.
- Details of the resources provided, location of work and other meta-information related to the activity
• Confirmation of contract duration, payment terms.
• A summary of obligations of the contracted worker in terms of expected behaviors, hours of attendance etc.
SOW adoption is growing chiefly for two reasons; firstly, there are more jobs being outsourced to contractors than ever before, and secondly, a statement of work ensures payment on results model of resourcing is adopted.
Section 3
Workforce Management
Challenging the norms
For nearly a decade, the talent industry has been talking up the concept of Total Talent Management (‘TTM’). Total Talent Management is a human capital management strategy to satisfy enterprise workforce demands by embracing both full-time employees and gig working in its various forms. TTM envelopes both employee recruitment and contingent workforce hiring into a single people, process, systems, and data ecosystem.
The gut issue with TTM is that senior executives, HR and Procurement need to be aligned and work as one to make the best hiring and resourcing decisions. In most organizations, HR has always taken care of full-time roles and handed the contracting of Flexi-workers over to procurement. This has led to an awkward split in ownership and decision making. Consequently, flexible workers have regularly missed out on appropriate benefits, often treated as lesser workforce contributors. This is where TTM steps in. It embraces ALL the people that go to make up the workforce; factoring in the unique relationship demands of an indirect workforce, while respecting those individuals that go to make up this important long-term resource pool.
The contractual constructs found in TTM strategies include:
• Full-time Employment (FTE) Contracts.
• Contractor procurement sourced through staffing agencies.
• Outsourcing.
• Statement-of-Work project provisioning performed against agreed milestones, as stipulated in a contract.
• Micro-Task fulfilment by gig workers, normally via an online task portal.
It could be argued that Total Talent Management is more of a philosophical change than anything else, although adopting it does require a substantial redesign of the talent resourcing function. Ultimately, either HR or procurement will have to lose some control for such a strategy to come into play. Perhaps, for this reason, while the concept and practical advantages of Total Talent Management are apparent to all, levels of adoption remain poor.
Mature organizations regard contingent workers as a part of their workforce. A Forrester report, sponsored by ADP, found that sixty-five percent of highly mature employers engage contractors through a centralized HR function, rather than via the Purchasing department. By contrast, 61% of low-maturity organizations find and hire contractors through Procurement.
Data driven hiring
Data driven hiring is about harnessing market data and the latest big data analytics tools to build a forensic understanding of job market pricing, normally segmented by job category, industry classification, the level of role experience, and locality of employment.
The pure volume of market pricing data now available to market analysts is vast. There are a variety of expert analyst firms and technology platforms now supplying ‘up to the minute’ data insights on role pricing data, achieved by harvesting data from job portals, vendor management systems, and MSP program management platforms.
Combine these data sets, and talent strategists are better able to determine accurate predictions on the best possible pricing points for new roles.
Workforce management
Workforce management used to be a short-hand term to describe the management of employees on permanent contracts. In most organizations today, most internal documents will speak to employees or staff rather than give equal consideration to employed and hired workers.
In the gig working economy, workforce management is transitioning to WORK MANAGEMENT. There are, after all, many ways to get tasks completed.
Today, it doesn’t have to be a human that gets work done. Artificial Intelligence and software robots (sometimes described as Robotic Process Automation, or ‘RPA’) are two new approaches to accomplishing tasks that weren’t in the minds of managers until recently. Other examples of new ways to get jobs done include micro-task portals, like Fiverr and Upwork, and knowledge markets that exist beyond the firewall of the enterprise.
When managers need work done, the choices available today include human or machine, employee or contractor, internal or outsourced, nearshore or offshore.
From apps to ecosystems
While cloud computing has ushered in an avalanche of Software-as-a-Service (SaaS) software tools to get tasks done better, the success of ventures like Amazon, FaceBook, eBay, Google, AirBnB, Uber and LinkedIn demonstrate the game changing influence of market-place oriented platforms in the digital era.
These systems adopt more of an ecosystem approach to support communities of interest, serving not just one but all stakeholder groups. This ‘ecosystem’ approach places the needs of the community front and center. Underpinning the delivery of value to each stakeholder group is the technology platform, oriented around usability, convenience, productivity enablement, and user preference. The talent industry is not isolated from this trend. Already, we are seeing examples of some of the larger job sites attempting to become talent markets in their own right. One such example is LinkedIn’s own attempts to foster talent sourcing services on its platform.
We can expect to see more talent software companies pushing the market agenda towards platforms and ecosystems, away from SaaS tools and enterprise software applications.
McKinsey estimates that at least a dozen sectors, including B2B services, mobility, travel and hospitality, health, and housing, are reinventing themselves as vast ecosystems, networks of networks that could add up to a $60 trillion integrated network economy by 2025.