Change can be a scary thing. In our modern world we have the ability to effect and control things that would have seemed like science fiction not that long ago, but two things we have yet to figure out how to control are time and change. They happen whether we want them to or not. Whether it be the seasons, our age, technology, or tradition. Look out the closest window from where you’re reading this; it’s happening right now. Most of us fail to notice daily change and even less find the time to think about the big picture. Tasked daily with the duty to fulfill the needs and requirements of our jobs and busy lives outside of work it’s easy to forget to stop and think about change in the context of the big picture. There’s mortgages, kids, education, retirement, and (hopefully) a little vacation and social activity to worry about as well. However, it’s long term and big picture thinking that keeps us motivated, helps us shape and sharpen the daily decisions of our lives, and give us the ability to remain focused even through short term pain or discomfort (See: that fitness plan). Change, both large and small is a healthy and natural part of our human existence. So, as we’ve continually heard that a business is only as good as the people it employs, and corporations are in fact people under the law, then perhaps it’s time to start applying the rules that work for people, to enterprise.
In an interesting piece on Strategic Sourcing, that is, a specific plan of action regarding the procurement and hiring of top talent, Argentus Talent Acquisition poses the question: Who is better to Effect the Toughest Changes in Strategic Sourcing? Your Permanent Team or Third Party Contractors? (Go here for the full article) They deduce that the contractor/consultation model allows for greater opportunity for change within your organization by allowing for a fresh perspective and minimizing the personal and political hurdles that can stop an organization from moving away from the status quo.
If we apply this same line of thinking to the larger context of Contingent Workforce Management, it may be time to ask: When is the last time your enterprise truly thought about the long term goals regarding your Contingent Workers? And are small steps being taken daily to effectively embrace that strategy? As we’ve already discussed, change is happening, the only variable is how we respond to it.
Ardent partners are set to release new research later this month that indicates that Contingent Labour is set to rise 30% over the next three years, a figure that they state “Accurately represents the growing reliance on the non-traditional workforce.” If you follow Contingent Labour, deal with mitigating risk on independent contractor compliance, or Talent Management and Procurement, you know the stats already. It’s very easy to get lost in them. While effective, they can also over complicate the matter at hand. Enterprise at its core needs to innovate, it needs to be adaptable, and it needs skills present to make those first two things achievable. If the big picture is growth and competitiveness in the marketplace, then it’s a major priority to always make sure the base needs of innovation, adaptability, and skills are constantly being met. Even if the path to get there requires some short term pain or discomfort. (See: that fitness plan again) More and more, it is Contingent Labour that is being utilized to meet these needs—and while cost savings is usually the most immediate and alluring statistic in moving an Enterprise into this type of model, it can’t be the only thing. Sure, in the short term, it’s easy to be won over by the idea of utilizing IC’s (independent Contractors) to have flexibility in staffing, or save money on taxes and entitlement & benefit programs, but cost savings needs to be looked upon as daily actions of a larger goal, not the entire plan. Or, as we’ve looked at it previously, the small change that sets up the big change.
Long term change, requires long term strategy. If Contingent Labour, is at the core of your business than it’s time to start putting the plans in place to manage it. Whether it be through an Administration or Payrolling Service for your Contingent Workforce, Managed Services, or through Consulting. Not thinking long term about the inevitable change, management, and caliber of your Contingent Workforce may get you through today, but perhaps it’s time to turn that age old interview question on your own Contingent Workforce Management plan. Where do you see it in 5 years? How about 10?
Some groups are calling it systematic and deliberate wage theft, others (slightly more diplomatic) are calling it a labour friendly campaign, but there is a tidal wave of turmoil brewing in the trucking Industry of the Ports of Los Angeles.
A report entitled “The Big Rig Overhaul: Restoring Middle-Class Jobs at America’s Ports Through Labor Enforcement” is a collaboration between three organizations alleging years of what they call the “enormous scale and shocking costs of an illegal business practice used by employers..” to bring attention and demand restitution and change to the industry. The National Employment Law Project, The Los Angeles Alliance for a new Economy and the Change to Win Strategic Organizing Center allege that worker misclassification in classifying port truckers as Independent Contractors instead of Employees became the port industries business model and was in fact a “scam”.
The numbers in the report allege a 1.4 billion dollar (includes wages and lost state tax revenue) misclassification scam that involves 60% of port truck drivers. Amounting to lost wages and benefits translating to 5,072$ per driver, per month.The report was published in the hopes to leverage Congress to pass legislation including The Payroll Fraud Prevention Act, The Clean Ports Act of 2013, and the Fair Playing Field Act of 2012.
From a Contingent Workforce Management perspective, the main point of emphasis and what it may come down to in the courts to deem who (if anyone) is in fact responsible for this misclassification will rely on the Nature of the Working Relationship between the alleged Independent Contractors and the trucking companies themselves. The CRA (Canada Revenue Agency) and IRS (Internal Revenue Service) do have a different set of standards in how they define the classification of workers, but where they agree in terms of how they view this report will be that:
A) They do not differentiate between errors of omission and errors of commission. If misclassification occurred, the company will be liable, regardless of intent.
B) Determining of the amount of control a company can have in regards to the daily tasks of an independent contractor. Two instances of note in this example would fall under Exclusive Service, and Supervision. (Both are further defined below)
While the outcomes of this report remain unclear at the present time, there was fair warning that 2014 would be a year of heightened scrutiny at all levels regarding worker misclassification. If nothing else, the groups involved in the allegations of this report shows that those warnings are true.
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The pace at which the needs of business and Contingent Workforce Management shift are sometimes staggering. By the time we catch up to one, another rears its head. It can sometimes feel as though it’s a constant game of reacting to problems that are occurring rather than being proactive and seeking and solving those problems before they become an issue. It’s the industry’s equivalent to the Whack a Mole game at a carnival. With that in mind it’s imperative enterprises’ of all sizes take the time to investigate the potential holes in their Contingent Workforce Management processes as often as they can. In the past, there has been heavy focus on issues such as Direct Sourcing, understanding the legal issues surrounding changing legislation such as the Affordable Care Act, or even the heightened focus of government agencies surrounding the issue of worker misclassification and compliance. As we accelerate through what is sure to be another banner year of growth for the Contingent Workforce there is an issue looming on the horizon that will be on the tip of everyone’s tongue by the time we roll into June of this year. That of the process of Identity Management, or IDM. Identity Management refers to “the management of individual principals, their authentication, authorization and privileges within or across system and enterprise boundaries with the goal of increasing security and productivity while decreasing cost, downtime and repetitive tasks.” In simpler terms, it means
- Who has access to the system?
- What do they have access to?
- Can those who access the system do so efficiently?
- Is sensitive data properly protected?
- Does the system allow the best balance of access, usability, and security in terms of cost savings?
Whether fully integrated already or slowly adopting it, businesses are becoming increasingly mobile. Work is completed in the cloud, collaboration is done over smart phones and tablets, and even “hangouts” have become the lexicon of an increasingly mobile and data based workforce. So the challenge to be faced by those in the business of managing growing percentages of contractors and contingent workers is to balance the need for security regarding sensitive and intellectual data, with the need for efficiency for those who require increased sharing and flexibility in order to complete the tasks and projects businesses require of them. Refer to the graphic below for an illustrated view of the process and workflow of an IDM process.
*Courtesy Identity Automation
The timing of the concern regarding Identity Management is not a complete shock to those who have been following the numbers around the growth in the Contingent Labour Market. According to SIA (Staffing Industry Analysts) 2014 is poised to be a big year for IT, with almost all of the top 10 salary increases for Contingent workers being in the IT field. So, coupled with the boom of demand surrounding expert- skilled workers in IT, and the well documented struggles to find this kind of top talent, there is sure to be more contractors working for multiple companies and having access to multiple systems. What remains to be seen is how prepared enterprises are for this.
A Recent study by Ardent Partners suggest some early warning signs of some potential blind spots in regards to IDM within the current CWM processes of some enterprises.
- While nearly 64% of organizations institute regular reviews of contract labour compliance against requirements only 43% include detailed written assumption of risk of work completion ownership in their SOW’s (Statements of Work)
- Although 70% of enterprises have visibility into system access by contract talent, only 44% have implemented proper compliance measurements during the offboarding phase.
2014 is poised to be the year of the big data enterprise, and do you know who has access to yours?
Restaurants have always been a deliciously perfect mix of temptation and entrapment. Take a bunch of hungry people, stack them by the dozens in a room surrounded by drool educing aromas, and then drop an entire menu full of options and choices in front of them. More often than not the hungry masses will leave satisfied, but they’ll probably have to put on their glasses to believe at how much the meal actually cost. The lesson: Hunger trumps budget, almost exclusively.
The same could be said for the proverbial buffet of Contingent Labour flooding the market. With businesses staffing their ranks from this talent pool at record highs, it’s truly a feast fit for a king for companies looking to tackle their project based labour needs. According to a recent report published by IQ Navigator-who provides technology that manages staffing vendors and temporary workers-even with the rapid growth in the use of Contingent Labour in 2013, costs stayed relatively flat. As with any great meal out however, comes the bill.
Contingent Labour hit record highs in 2013 with a total of 17 million workers in the market. Which works out to be almost an 8% jump from the previous year with no signs of slowing down. That number is expected to grow to 23 million by 2017 (MBO Partners). With analysts predicting what Gary Pollard (VP of Information Products at IQ Navigator) calls “upward pressure” in 2014, companies that got into the market to save on labour costs could be looking at a giant bill, not a giant profit. The reasons for this steady rise in the cost of using temporary workers will be associated with “A continued increase in demand, coupled with an expected tightening supply of workers-thanks in part to a declining workforce participation rate, and an increase in college enrollment for people over 25 years old.” Pollard also goes on to say that the aging Baby Boomer population will also contribute.
Considering staffing agency markups are generally 20-25%, the math does look daunting. A worker in IT currently making 30 dollars an hour (a position poised for a steep raise, but more on that later) may go to 45-50 dollars an hour. That’s an increased profit to the staffing agency of 5 dollars per hour. Over the course of the year that translates to approximately 19,200$ extra paid to the staffing agency-and that’s just for one employee. In Restaurant terms, that’s one heck of a corking fee.
Employers are still looking to cut labour costs wherever they can, but the need for labour isn’t going to dry up. Projects will still need to be completed and expert skills will be in demand. So, if you can’t save on the labour, perhaps you can save on the mark-up. By tweaking their current model, employers could find themselves embracing direct source hiring, coupled with IC (Independent Contractor) Compliance and Payroll providers that can offer drastically smaller mark-ups and allow the company to still attract and afford top talent. This would be especially attractive to companies that already have established relationships with Contingent Workers at their locations.
Nobody likes to be told to think long-term and look at the big picture (especially when they find themselves starving and staring at a bevy of choices and opportunity) but making the right choice in regards to how enterprises source their contingent workforce and who (through Admin and Payrolling or MSP) offers the best opportunity to cut costs, and stay compliant and competitive may allow them to have their cake, and pay the bill too.
Amidst a flurry of political and social controversy, the Olympic Games are underway, and for the international firms responsible for staffing the Sochi Games, they hope it’s all downhill from here.
Sochi’s three official staffing Suppliers: Adecco Group, Kelly Services, and Russian firm Exect Business have put three years of work into building the Contingent Workforce for the Olympic Games and the sheer numbers are staggering. The total number of temporary workers for the games may top 150,000 people, and that isn’t counting the roughly 25,000 volunteers that will be lending a hand to make sure the games run smoothly. Among those 150,000 workers 65,000 are skilled workers. These skilled workers were culled from a worldwide recruiting search, offering the opportunity for the organizing committee of the games the chance to hand pick expertise from the very best the world has to offer, as well as the chance for those skilled workers to show off their talents in front of an audience like no other. On paper it’s the perfect trade off, but somewhere along the way things went off the rails.
Vancouver temporary worker Johnnie Balfour’s exposing blog posts and statements about the treatment of himself and his team at the games has been well documented. (Go here to catch up) Even an entire twitter feed, @SochiProblems emerged to document all the issues journalists and athletes alike had encountered upon first arriving in Sochi. Littering news feeds around the world with pictures of brown water and unfinished construction. While these images weren’t exactly the image that the staff and Olympic Committee wished to have us see, the big picture moment of truth for the staffing agencies of the games going forward may not be boiled down to pictures or politics. It may boil down to the larger issues of transparency and control.
For those in the business of the Contingent Workforce this is an issue of risk debated and managed daily, as the decision to either outsource or direct source (hire from within) is weighted against the factors of cost, availability of resources (skills), and time. As the world’s eyes turn to Sochi for the games, administrative/payroll miscues and a lack of communication is not the way to put our (those in the contingent workforce solutions business) best foot forward. In this case, while a pool of extremely talented and eager workers were recruited and gathered for the games, it seems as though when they got there, the communication regarding their income was (at least according to Balfour) left open to interpretation . There is nothing that will turn an IC (independent Contractor) off faster than the notion that they’re not getting paid, and in Balfour’s case, seemed to be the last straw.
As an Employer and a Business you only get one chance to make a first impression with your Contingent Workforce and Independent Contractors. Making sure your T’s are crossed and your I’s are dotted is an absolute must in an industry where word travels fast. If your goal is to recruit and retain top talent, miscues are simply unacceptable. In the case of Balfour, the simple and affordable option of an IC Compliance and Payroll service could have been made available to figure out payment options and schedules before he even left for Sochi, and in the process, saved the staffing agencies responsible for 150,000 workers the potential firestorm of being made to look as a willing participant in the headache inducing and livelihood threatening payroll practices of the Sochi Games.
There is truly no replacement for transparency and efficiency in this business and the sheer size and publicity of this only goes to remind us that even a small administrative miscue or oversight can become a giant problem.
If all goes according to plan when the games close on February 23rd, viewers will hopefully be inundated with images of the athletes’ fists in triumph, their tears in defeat, and memorable moments of sportsmanship and diplomacy. Not pictures of brown water, unfinished construction, and the supposed mismanagement of temporary workers. If the stumbles in the weeks leading up to the event are any indication, the staffing agencies may be the ones in the front row cheering the loudest for the athletes to steal back the spotlight.