Solving the invisible contingent workforce problem that’s standing right in front of you
CFOs, imagine you’re in your next board meeting and you’re asked the question “How much have we spent on the contingent workforce this financial year?”.
How would you feel facing this question head on?
Are you confident because you’ve already got figures to hand?
Are you relaxed because they’re reliably only ever the click of a button away, or taken aback because you don’t know and typically haven’t needed to know?
Do you feel daunted by the task of retrieving the data and uncertain about the validity of what you might find?
If you don’t know the answer upfront, you might glance towards your CHRO, hoping to catch their eye in a pleading call for back-up. Chances are they can’t save you though.
Talent’s Head of Enterprise Solutions, Cameron Robinson delves into this scenario and shares his top tips on what you can do to get ahead:
What’s the problem?
For all of the rigour and governance that goes into tracking and managing the costs of permanent workforces to meet financial goals and satisfy shareholders – like reviewing compensation, policing salary bandings, implementing hiring freezes, right-sizing the workforce – there is regularly a huge irony with how the contingent workforce is managed.
Your contingent workforce is often literally right in front of you. Temporary workers, independent contractors and external consultants, make up more than 20% of the average organisation’s workforce, according to Staffing Industry Analysts. They’re probably working in project teams you’re a part of. Or almost certainly providing critical expertise and filling skills gaps on high profile, transformative projects you’re aware of.
You could be missing out on millions
Yet, even though contingent workforce costs are estimated to be as high as 42% of an organisation’s total workforce expenditure, as revealed in an SAP and Oxford Economics survey of 1,000 executives, some CFOs allow the true cost of this critical asset to remain largely invisible, and therefore uncontrolled.
Delegating budgeting responsibility – and the authority to spend – to hiring managers, individual P&L owners and project leads may seemingly create operational efficiency through autonomy. But without centralised governance and control in place, the ‘if-you’ve-got-budget-you-can-spend-it’ approach it is fraught with the danger of becoming a multi-million-dollar missed opportunity.
There’s a solution
The good news is that answering the question of “How much have we spent on the contingent workforce this financial year?” can genuinely be the click of a button away. In fact, even easier than that, it could be waiting in your inbox, in an automated, freshly prepared report the morning of each board meeting if you wanted it to be.
You could even compare this financial year to last. Or forecast how much you might spend next financial year too.
This isn’t too good to be true. It’s part and parcel of a Talent managed service program (MSP) – a program built specifically for you to centrally manage and report on all aspects of how, who, what, why, when and where you’re spending money on your contingent workforce. The MSP brings the cost benefit of price negotiation at scale and subsequent centralised financial compliance in line with the contingent workforce margins you should be paying. Think of it as an embedded squad of experts who are an extension of Finance, Procurement, HR and Talent Acquisition all rolled into one.
Why should you consider an MSP? Hint: there are a wealth of benefits
If you’re reading this and hoping you don’t get a left-field contingent workforce question at the next board meeting, then get in touch with our contingent workforce management experts to learn more.
Controlling spend first starts with capturing it. Let us help you uncover and shine a spotlight on your (soon-to-be former) invisible contingent workforce spend and start capitalising on the huge opportunity right in front of you.