The Other Risks Associated with your Contingent Workforce


Here at the nextSource blog, we spend a lot of digital ink warning of the consequences of disregarding compliance risk. Compliance with the new ACA guidelines, compliance with independent contractor classification and other compliance issues are important to observe. But, we mustn’t focus on compliance to the abstraction of other risks lurking in your workforce management plans. This post will examine clear and present risks that aren’t under the umbrella of “compliance risk.”

If you’re solely focused on worker classification and administration risks, you’re not paying enough attention to other things such as effective use of the contractor resources you bring to work. This puts your productivity at risk and also endangers other strategic goals. For example, failing to ensure visibility across the entire contingent workforce population and their adherence to your program guidelines can lead to the failure of said workers to adequately achieve the goals they were intended to meet. Ensuring SOW workers are performing project-based work and not functionary work, like that of outsourced workers such as janitorial staff or food service workers, is just one example. Keep your eye on the proverbial ball or your efforts may not hit their strategic marks.

To guard against any threats to effective and efficient use of resources, a savvy manager should review the supply base and frequently askquestions like, “Are all locations and job categories being supported effectively?” If they’re not, the risk averse manager looks at the embedded base of suppliers and seeks their assistance in coverage of new locations or categories.

Another good risk mitigation strategy involves conducting an RFP to identify additional coverage. This helps get at whether the suppliers are providing quality talent and whether or not they’re able to identify hard to find “purple squirrels” when required? To minimize risks, a good manager will ask these questions and highlight/intensify their relationships with suppliers who succeed at serving challenging positions.

Here’s another non-compliance-based risk assessment question: “Is your contingent workforce conducting knowledge sharing with your internal resources?” This is a subject we recently explained in detail in a recent post here. Related to the knowledge sharing risk, mitigation strategy is the question, “Do you have business contingency plans in place; including those specific to your contingent workforce? If not, cover the bases by converting workers in critical roles to ensure knowledge and training is not lost.

Beyond risks to functional capability and supply chain, there are also significant risks to an organization’s strategic goals in their respective markets. Promotion of your organization’s brand in the market place is something upon which a proper workforce management has a definitive impact. Are the suppliers of your talent representing your organization’s core values? Are the managers who conduct interviews creating an inviting environment? These things, when left unmanaged, could have a negative impact on your brand and reputation. Ensure managers are trained in interviewing techniques and give appropriate cues to candidates who they are interested in. Make sure your onboarding process is smooth, efficient and worker-friendly. Be sure there is an orientation for the workers provided by the the MSP or the staffing supplier.

Some risks are simple bottom line risks like overpayment via uncompetitive bill/pay rates. Ensure access to top talent in the competitive market place by being able to pay market rates and take care to avoid overemphasis on cost savings. Doing so risks eliminating access to top talent that will then wind up working for your competitors. Another way to risk bottom line savings is through ineffective control over timelines. Are positions failing to be filled in a timely manner? Examine cycle times and identify root causes of lag in the process.

Lastly, avoid opportunity risk by focusing on tech-enabled visibility. A modern program should be utilizing a VMS technology to provide visibility to the workforce. These tools enable the systematic review of data to ensure you are obtaining what is required to align to strategic goals. Contemporary tools have come a long way and even enable complete visibility into the SOW portion of your contingent workforce. Oftentimes, SOW or outsourced workers are not included. If tackling SOW is not within your plans for 2016 or 2017, at least deploy tracking functionality of those workers, using VMS to ensure – at a minimum – the organization knows who is supporting the business, what function they are providing, from which supplier they were sourced and at which locations they work.

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