6 Risks You Should Know to Make Better Workforce Management Decisions


So much of the success or failure of a modern workforce management program rests on an organization’s relative ability to avoid risks (or to minimize the impact of unavoidable risks). However, it can be difficult to be prepared if one is not fully aware of the variety of risk factors that exist.. For this reason, we at the nextSource blog thought it would be valuable to offer a brief primer on the predominant risks facing workforce management offices and examples of how each risk may manifest itself.  Knowing what to expect makes planning far more effective.  It is also essential to understand what to expect so that compliance policies and processes can be properly developed.  So, here’s what to expect!

Capacity Risk

Refering to the availability and variety of talent and dependent on whether a program is utilizing a preferred vendor or a vendor neutral strategy for sourcing, flucutations in the services supply chain can wreak havoc. Simply ask any hiring manager in any industry today about their challenges in securing specialized IT talent.  With demand for these skills at all time highs, it is difficult to find consistent pools of talent from which to source with any degree of dependability.  Being prepared for changes in capacity – having diversified sourcing channels for example – means having a plan for overcoming capacity crunches. 

Lead time variability is also something that can be planned for with respect to capacity.  While a hiring manager cannot affect the broader market trends and how capacity is impacted, they can structure their tenure and other business rules to engage sourcing with greater lead times.  In so doing, they can avoid other potential losses caused by having too many open positions.

Quality Risk

Quality risks mostly stem from improper or incomplete compliance processes and practices.  If specifications are not clearly enunciated on a per-position basis, the door is varying levels quality of candidates being on-boarded.  If job titles and descriptions are well-conceived, documented and enforced, the chances are much higher that opens positions will be filled with only high-quality contractors.

Financial Risk

Again, we see the correlation between risk mitigation and solid compliance practices.  Having processes in place to vet and certify vendors for vendor liquidity (and other measures of their financial viability) ensures a workforce management program will be prepared should anything catastrophic happen to any of their vendors. Financial risk is also heightened when an organization fails to have processes in place to verify vendor insurance requirements and other regulatory compliance issues. Don’t let a vendor’s shortcomings translate into penalties for your organization.

For those operating in foreign markets, there is greater financial risk in shifting exchange rates.  As currencies rise and fall, the effect on pay rates can become a significant liability.  Planning for strategic entry into low-cost markets is important, but strategically planning retreats from newly expensive markets is equally as important.

Catastrophic Risk

All successful businesses have a disaster plan and a closely correlated business continuity plan.  These plans, (frequently ignored due to a perceived low-probability of occurrence) ensure minimal disruption in the event of natural disasters, war, terrorism and all the nasty scenarios that seem to be occurring with greater frequency lately.  Planning for catastrophic risk can include such things as ensuring offsite failovers/backups are used for all technology systems like VMS tools. It can also include building extra capacity into relationships with vendors in disparate locations so that if one region is impacted and disabled, activity can be ramped up in an un-affected region to maintain business continuity.

Contractual Risk

Having a replicable policy for contract language when negotiating with suppliers is a best practice.  Failure to have a consistent policy regarding contracts can hamper visibility and opens the door to potentially costly litigation.

Market Risk

There is always inherent risk in losing top talent to competitors who may be tapped into the same suppliers or talent pools as your organization.  To combat losing to a competitor, especially in highly trafficked skill areas, it is critical for an organization to have either a well-diversified sourcing strategy or, to earn and protect favored client status with a supplier(s). This can be achieved in a number of ways, but that will have to be a discussion in a later post.

For now, take the opportunity to perform a risk assessment of your workforce management program and determine where improvements can be made.  You’ll be glad you did when risk rears its head.

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