Costly decisions by managers in the use of a temporary workforce

By on February 23, 2015

Global businesses are increasing their reliance on contingent labour, the practice of filling full-time positions with contractual labour, and it has quickly turned into a trending long-term practice. Nearly 26 percent of the average workforce is considered contingent, temporary, or contract labour. 

According to Kay Vittee, CEO of Quest Staffing Solutions – Africa’s leading staffing solutions company within the white-collar recruitment industry – with this change in labour practice, there is a need for an equal change in management processes.

Vittee says globally, about 41 percent of businesses believe they face increased risk related to the management of contingent labour. This is partly due to businesses using contractual employees, but not adjusting the methods used by their human resource departments in their management.

An example of where contingent labour requires unique management is in terms of contract time spans. Vittee refers to the management of contingent labour through an internal human resources department, which is familiar with dealing with permanent staff. “This can easily present an obstacle in keeping track of when contracts have come to an end and can lead to businesses incurring unnecessary costs to terminate the employment of a contractual employee – who has continued working past the date stipulated in his/her contract.”

“It therefore stands to reason that businesses adopting the contingent labour trend need to be aware of the solutions available to them, not only to meet their general business and strategic objectives, cut costs, improve governance and promote management, but also to eliminate legal and financial risk,” says Vittee.

Referring to the 2014 Buyers Survey: Best (and Worst) Decisions Made by Contingent Workforce Managers, conducted by the Staffing Industry Analysts (SIA), Vittee says the most common best decision among buyers, by a large margin, was adopting a Managed Service Provider (MSP) solution.

“Buyers said this service reduced costs, was easy to use, was completely transparent and offered the buyer control and better management of their contingent workforce. The dominance of the MSP and/or its supporting Vendor Management System (VMS) answer in the survey was notable because the question was open-ended, with no potential answer suggested or prompted,” Vittee says.

Interestingly, she says when the survey asked buyers what their worst decision was, their response was that “allowing local branches or managers to exercise too much control over hiring,” was by far the worst decision followed by “overspending” and “unclear or insufficient management of contingent workforce.”

These respondents, who experienced challenges in contingent labour management, found a solution in choosing to place some of this responsibility on a third party.

“Particularly useful for large companies with many suppliers, the emergence of Staffing MSPs has recently gained momentum in South Africa with staffing solutions companies such as Quest championing the trend,” explains Vittee.

She says staffing MSPs, such as Quest, manage all the staffing suppliers used by a particular business, allows for a streamlined process, and through its supporting VMS also allows the business to track its total spend, control agreed rates, make payments and manage the measurement of the level to which staffing vendors adhere to the client organisation’s standards through a service level agreement (SLA).

“In the management of the contractual employees, whether in-sourced or outsourced, businesses need to take the necessary steps to drive all third party labour categories to a single on-boarding solution to help ensure policy and regulatory compliance,” Vittee concludes.

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