COVID-19 has made it embarrassingly clear that many companies have failed to put the ‘management’ in ‘contractor management’. Some didn’t know how much they were spending, what the status of people’s contracts was, which recruitment agencies they were contracted through, or even which site they were working on.
Self-managing your contractors and recruitment partners may look easy, but if you don’t understand the pitfalls and the long-term investment required, you’re setting yourself up for disaster.
There’s a reason why you take your car to the garage, your dog to the vet, and your suit to the tailor, rather than trying to fix them yourself. Expertise is worth the money. And the same goes for taking your business to an MSP service provider.
That doesn’t necessarily mean you need to give up on self-managing your contingent workforce program, but it does mean you need to understand the level of knowledge it takes to succeed, and ask yourself some strategic questions to determine whether it’s worth it. Here’s how.
Think about your contingent workforce program as it stands right now, and ask yourself these five yes/no questions: 1. Is this function central to our business? Is it something we’re expert at delivering? 2. Do we have the knowledge it takes to source, manage, and retain the necessary talent? 3. Are we prepared for a steep learning curve? Do we know how we’ll stay up to date, who’ll help us, and what technology we’ll need to succeed? 4. Can we manage this function within our existing organisation structure? Do we know who’ll be in charge of it? 5. Can we justify the extra fixed overhead cost? If you answered “No” to all these questions, it’s clear that you need to outsource your contractor management to an expert. If you answered “Yes” to all five, self-management may well be right for you, and you’ll find some useful guidance in the rest of this article. If you answered a mixture, you need to weigh the risks and rewards. Do you have the time and talent available to make it worth managing your contractors in-house, or could an expert actually provide better value? Not sure how to analyse the risks? We’ve broken that down for you below.
No Strategic Plan – What’s your reason for wanting to do this? It needs to be something more than ‘to save money’. You need a strategy based on that reason, and you need to communicate it to all stakeholders. No Governance – Does anyone on your team know how to draw up rules, policies and procedures for this? Will the senior leadership buy in? Which department will ‘own’ this?
No Experience – Has anyone on your team done anything like that before? Do they have the time and resources for intensive learning? Are you ready to provide all the training they need? You’ll need to cover supplier selection and management, contract management, legal and regulatory compliance, data analysis, and more. No VMS Technology Expertise – Do you have a VMS? Does anyone on your team know how to select and use one – or even what it stands for? (It’s ‘vendor management system’, and the vast majority of contingent workforce programs use one.) No Best Practices or Benchmarks – How will you know what the industry best practices are? Where will you get your benchmarking data? How will you find out if you’re behind or ahead of the competition? How will you know if you’re paying the going rate? A professional MSP provider will have all this information to hand. No Adequate Funding – Are you fully prepared for all the hidden costs? Have you factored in the need to pay third-party consultants to fill in gaps in your team’s knowledge? Many companies end up barely breaking even on their contractor management program because they underestimated the costs. No-Risk Management – You may know your employment law, but contractors aren’t employees. The laws are different for them, and without good legal support, you can easily find yourself in trouble. Is your HR team up to speed on this? Do you have an internal or external lawyer who can help you? No Staffing Supply Chain Management Experience – No matter how good your procurement team is, supply chain management is very different when the product is people. Again, this is an area where you need in-depth knowledge to succeed, so don’t underestimate the challenges. No Talent – You’ll need to hire talented and experienced people to make this work – but unlike a dedicated MSP service provider that runs many contingent workforce programs, you’ll just have the one. That means there’ll be no career progression for those people, so they’re likely to leave after a few years, costing you more money and hassle to replace them. Can you afford that?
As you’ve seen, this is a complicated question with no one right answer. It depends on your level of resources, experience and expertise.
Regardless of whether you decide to try self-management or leave it to the experts, you’re likely to get the best results from a ‘Talent Forward’ approach. This means that the no.1 objective of your contractor management program should be to make sure hiring managers have access to the top talent, at the right time, in the right place, and at a fair price – regardless of where your workers are sourced or how they’re classified.