Organizations cannot afford to approach their contingent workforce management in an ad-hoc, as-needed manner. They must begin to manage their entire workforce, including the contract and temporary segment, efficiently. A third party can assist organizations to create an effective contingent labour management program that gives visibility into the costs, mitigates risk, and provides a record of the worker’s employment with the organization.

Aberdeen research surveyed companies and divided these organizations into best-in-class, industry average, and laggard categories. The best-in-class category consisted of organizations that were in the top 20% performers. They had 87% compliance to federal/state/regulatory labour and tax policies concerning contingent workers, 4.4 contingent worker quality ranking score, and 21% contingent worker spend savings.[1] These organizations have implemented many best practices that organizations should imitate when using a third party or managing contingent labour internally.

There are various third parties that organizations can use that provide different aspects of a successful contingent labour management program.

  • Independent Contractor Engagement Specialists (ICES) work with organizations to manage independent contractors — including high-rate, project-based SOW (Statement of Work) consultants — by acting as an Agent or Employer of Record (EOR) for IRS purposes. ICES will assess the eligibility of a potential contractor for 1099 status. If they are found ineligible, ICES will hire the worker as their own W-2 employee, allowing him/her to work for the client on subcontract. For those that are eligible, ICES will act as the “Agent of Record,” simplifying the process for their clients.[2]
  • Vendor Management Systems, or VMS, are technology solutions that provide visibility into how many contractors a company is using, for how long, and for what. These technology solutions provide visibility into the cost of the overall contingent labour program. The basic systems handle everything from requisition to off-boarding, including hiring approvals and processing time sheets and invoices.[3]
  • An MSP (Managed Service Provider) is an out­sourced service provider who is responsible for procuring and managing contingent workforce needs according to client requirements. MSPs may or may not offer a Vendor Management System (VMS) of their own but they normally combine a VMS technology offering into the programs they run for clients.[4]

All of these third parties can be used in combination or separately. Aberdeen research has found that although all types of third parties are used by best in class organizations, a VMS was the most commonly employed third party by best in class enterprises.[5] Top performing companies were 33% more likely to employ an MSP program than other companies.[6] Best in class organizations were 60% more likely to employ ICEs than other companies, and ICEs have historically shown to increase contract worker compliance by nearly 80%.[7]

For more information about how your organization can benefit from a third party, and to find out more about VMS, MSP, or ICES, Click here or contact:

Christina Fabugais
Marketing Manager
Contingent Workforce Solutions Inc.
Direct Phone:  416-642-9077
Toll Free:  1-866-837-8630 x9077
Email:  christina.fabugais@cwsolutions.ca

[1] Dwyer, Christopher J. Contingent Labour Management: Strategies for managing the complexities of the Contingent Labour Umbrella. Aberdeen Group. June 2010

[2] The ROI in Enterprise Contract Talent Management. The Human Capital Institute. Sept 2009

[3] Muson, Howard. Treating Contingent Workers as a Strategic Resource. The Conference Board: Trusted Insights for Business Worldwide. Sept 2010

[4] The ROI in Enterprise Contract Talent Management. The Human Capital Institute. Sept 2009

[5] Dwyer, Christopher J. Contingent Labour Management: Strategies for managing the complexities of the Contingent Labour Umbrella. Aberdeen Group. June 2010

[6] Dwyer, Christopher J. Contingent Labour Management: Strategies for managing the complexities of the Contingent Labour Umbrella. Aberdeen Group. June 2010

[7] Dwyer, Christopher J. Contingent Labour Management: Strategies for managing the complexities of the Contingent Labour Umbrella. Aberdeen Group. June 2010

In my years covering the contingent workforce management market, there have been three major solutions that Best-in-Class organizations have heavily relied upon to drive process improvements and enhance their overall management of the modern contingent workforce umbrella. Managed Service Providers (MSP), Vendor Management Systems (VMS) and Independent Contractor Engagement Specialists (ICES) solutions have provided companies […]

SimplicityVMS, the only Canadian-based Vendor Management Software available on the market, was recently featured in Staffing Industry Analysts’ VMS and MSP 2011 Competitive Landscape report. Staffing Industry Analysts surveyed 42 of the world’s largest VMS/MSP companies for its annual report. For five years, the VMS and MSP Competitive Landscape report has provided the most detailed and comprehensive insight into the experience, positioning, and capabilities of VMS and MSP suppliers.

Interestingly, the report revealed that corporations are continuing to become more sophisticated at managing temporary labour. The report shows that companies have already, and are continuing to employ technology for their contingent labour management needs. The complexity of the techniques applied by services providers has evolved to such a point that companies are now expanding their programs globally and including non-traditional labour categories such as Statement of Work (SOW) project services or high end consulting engagements through their vendor management systems (VMS).

SimplicityVMS is unique because it is the most configurable, and it has the fastest implementation time of any VMS on the market. This system can easily be customized to suit customer needs, and because implementation time is greatly reduced, clients save money. SimplicityVMS is also white-labelled, allowing clients to implement their own brand and create a common user-interface. SimplicityVMS is a low cost solution that provides Small to Medium size businesses with the necessary tools to manage their contract labour.

Spend under management is the contingent labour spend that is being managed by a technology or alternative service. Spend under management grew from $66 billion in 2009 to $83.7 billion in 2010, which was a 26.8% increase. This reflects the strong growth that providers have experienced. Staffing Industry Analysts’ research shows that companies of all sizes, in just about every industry, are using MSP and VMS providers to manage their contingent workforce programs, and the penetration of MSP and VMS spend in the staffing market continues to increase. The report covers spend across the globe including the U.S., Germany, the Netherlands and France, some of the largest staffing markets in the world as well as developing markets such as Brazil, India or China.

Staffing Industry Analysts’ VMS and MSP 2011 Competitive Landscape report reveals that organizations are recognizing that they need to employ VMS and MSP programs in order to manage their contingent workforce and remain competitive. SimplicityVMS can give organizations the management tools they require to gain an advantage.

To find out more about how SimplicityVMS can help you, contact:

Jeff Nugent
Direct Phone:  416-642-9126
Email:  jeff.nugent@cwsolutions.ca
Linkedin: http://ca.linkedin.com/in/jeffnugent

Contingent Workforce Solutions also provides MSP services. Click here for more information about how your business can benefit from CWS’ MSP programs.

Volatility in the economy drives companies to hire more contract workers, and this is a trend that has become apparent in the last few years. Recent news of the world economy slowing further will only cause this trend to increase. Companies need to consider their contingent workforce as part of their total talent strategy, because they can no longer afford to treat permanent and contract workers separately.

While the downturn in the economy has driven the increase in contingent labour, many workers are also choosing contract labour as an alternative to permanent work. Contract Labour gives individuals the freedom to determine their own work schedules, be their own boss, and pursue work that they find challenging and rewarding. For many, this is enticing.

While the increase in contract labour allows companies to be more agile and better cope with specific needs, it also presents management challenges. Companies need insight into their contract workforce so that they can manage costs, ensure compliance with employment and tax laws, and be sure they continue to hire quality performers.

Human Resources Executive Online recently published an article detailing how companies need to better manage their contract labour. The article also described how “In organizations where contract labor isn’t managed by HR, there likely will be some resistance to change”. However, the benefits of properly managing contract labour need to be emphasized. The article gave some advice about influencing key people to consider a different management approach, including:

  • Illustrate why it is important for HR to have control of all talent, whether that is due to demographic shifts or volume-hiring needs and to ensure workforce planning efforts align with business requirements.
  • Communicate the risk and rewards of not centralizing the contract workforce and how worker misclassification and improper budget alignment can be costly.
  • To ease the transition and get buy-in from stakeholders, help participants visualize the end result and how processes can come together to make using contract labor successful.
  • Make the connection between how optimizing all human potential — employees and contractors — can impact customer experience, sales and other business outcomes.
  • Take the time to update roles and responsibilities to gain visibility into how many contract workers are filling job descriptions that are actually full time jobs[1].

Today, contract labour is unavoidable. Workers are increasingly finding that contract work suits their lifestyle and turbulent economic times require companies to look for alternative staffing strategies. It is important that key people recognize the need to revamp their company’s HR department to meet today’s needs.

For more information about how we can help you better manage your Contract Labour, click here

[1] Orler, Elain. Human Resources Exectutive Online. http://www.hreonline.com/HRE/story.jsp?storyId=533340887

It may seem unlikely in today’s economic climate, but a war for top talent is looming. The recession has given companies the false sense that good people are abundant; however this is will quickly change as the largest segment of the workforce, the baby-boomers, begin to retire en masse. Profit Magazine recently published an article entitled “The Incredible Disappearing Workforce” which details the struggle companies are facing, and will continue to face, with finding suitable replacements for their retiring employees.

Profit Magazine states that “the boomer wave is so big that no combination of measures can replace all of the retiring workers”[1], which indicates that companies need to get resourceful in their search and retention strategies for top talent. One way to do this is through contract work. Many older boomers have indicated that they are eager to return to work; however they are not eager to return to 60-hour work weeks, having employees report to them, and moving up the corporate ladder[2]. Instead, they want to work as individual contributors[3]. Contract work provides the perfect opportunity for retired or soon-to-retire to do this. The statistics already show that this trend is occurring, and it will continue to increase in the coming years[4].

Companies need to prepare themselves for uncertain labour conditions, and, as contract labour continues to rise with this trend, companies will require assistance with managing their contract labour. Aberdeen Group’s comprehensive study of Contingent Labour Management indicates that 50% of enterprises need to better manage all facets of contingent labour[5].

Already, best-in-class companies are 35% more likely than industry average companies to use a Managed Service Provider solution for their contract workforce needs, and 63% of best-in-class companies are using a Vendor Management System[6]. This trend will likely continue as organizations hire more contract baby boomers.

In order to remain competitive when top talent is difficult to find, organizations need to be resourceful when recruiting and retaining experienced workers. Using a Managed Service Provider that focuses on managing contingent workers allows companies to develop and implement strong alumni and retiree programs, and keep sought after knowledge and experience for longer.

[1] McElgunn, Jim. The Incredible Disappearing Workforce. Profit Magazine. Oct 2011

[2] McElgunn, Jim. The Incredible Disappearing Workforce. Profit Magazine. Oct 2011

[3] McElgunn, Jim. The Incredible Disappearing Workforce. Profit Magazine. Oct 2011

[4] Orler, Elain. Managing Contingent Labour. Human Resources Executive Online. Sept 2 2011. http://www.hreonline.com/HRE/story.jsp?storyId=533340887

[5] Dwyer, Christopher, J. Contingent Labor Management: Strategies for Managing the Complexities of the Contingent Labor Umbrella. Aberdeen Group. June 2010

[6] Dwyer, Christopher, J. Contingent Labor Management: Strategies for Managing the Complexities of the Contingent Labor Umbrella. Aberdeen Group. June 2010

This week is the 17th annual National Payroll week, which is designed to build greater awareness of the size and scope of payroll and its impact on business, government and employees across Canada[1]. The workforce is constantly evolving, requiring today’s payroll professionals to keep up with ever changing employment and tax legislation.   Contract labour has emerged as a major workforce trend and this has impacted traditional methods of payrolling, which are typically designed for full and part time employees.

Contract labour has increased in Canada; a trend that was driven by the downturn in the economy as more companies began to hire contract and temporary labour in order to adapt to organizational needs and changes in the economy.  Since 1997, the contract labour market in Canada has grown by 300%, and it currently accounts for 25 to 35% of the North American workforce, bringing in 250 billion dollars annually.

The shift in the workforce toward contract labour has had an impact on the efficacy of traditional payrolling methods. It is now important that organizations execute the necessary due diligence when administering and payrolling contract and temporary workers. In the last 18 months Canada Revenue Agency (CRA) has increased the frequency of Worker Classification Audits to determine whether organizations are properly classifying their workers as employees or self employed contract workers. Without proper documentation and administration, organizations face the risk of having their contract worker deemed an employee. They are then subject to pay up to millions of dollars in owed payroll remittance premiums, back-taxes and wages.

Contract workforce administration specialists like Contingent Workforce Solutions (CWS) assist organizations with identifying worker classifications and ensuring proper government remittances; this mitigates the risk of worker misclassification and can save organizations millions of dollars. Jeff Nugent, Managing Director of Contingent Workforce Solutions believes, “Companies can no longer afford to do without the tools that allow them to account for and manage contract labour.  This is not a luxury item – it’s a need.”

About CWS: Contingent Workforce Solutions is a business process management and advisory firm that help its clients gain control of their contract workforce. With close to 25 Years of Experience in Contractor, Temp staffing and Vendor Management Solutions, CWS is a partner that you can trust. Contingent Workforce Solutions’ was recently recognized in Profit Magazine’s 12th Annual PROFIT HOT 50 Ranking as Canada’s top new growth company, and was also awarded LoyaltyOne’s 50 Most Engaged Workplaces.


[1] National Payroll Week. The Canadian Payroll Association. http://www.payroll.ca/AM/Template.cfm?Section=National_Payroll_Week

For more information about how you can update your payrolling system to match the needs of today’s workforce, visit our website, or contact:

Christina Fabugais
Sales & Marketing Manager
Phone: 1-866-837-8630 Ex. 9077
Email: christina.fabugais@cwsolutions.ca

My latest Contingent Labor Management research study, which published last month (and which is available for free here), delved into the modern components of the contemporary contingent workforce. The report highlighted many evolutionary aspects of this complex category of corporate spending, such as the rise in usage of SOW-based projects and services, as well as the benefits of analytics in improving intelligence around the subsets of the modern contingent labor umbrella.

Join me for a webinar on Tuesday, June 14 at 2:00pm Eastern that will feature the findings of my new research study. The event, presented by Fieldglass and hosted by the Sourcing Interests Group, will also detail the innerworkings of the Best-in-Class contingent workforce program, including reliance on key technology solutions (such as Vendor Management Systems and Managed Service Providers) and data analytics.

Click here to register for the webinar.

Thanks,

Christopher

Hope everyone had a great long weekend! This is the second edition of CWS Talk thatfocuses on Key Definitions and contingent workforce industry acronyms.

Though acronyms are not new, they are becoming a social trend especially among younger generations. Phrases such as LOL (laugh out loud), BRB (be right back) help to increase the efficiency of conversations, except of course, for those who are not privy to this new form of communication

Below are a few terms commonly used by contingent workforce professionals. Hopefully next time someone uses these acronyms you won’t be left thinking IDKWTM (I don’t know what that means).

Key Definitions

VMS – Vendor Management Software automates the contingent labour acquisition processes and provide a technology system to manage the entire process of procuring, engaging and administering contractors and staffing suppliers/vendors.  VMS solutions can be leveraged to support temporary and contract staffing augmentation and statement of work services spend management.

MSP – Managed Service Providers take on responsibility for outsourced management of all facets of contingent labour program, including day-to-day operations including hiring, on-boarding, administration and off-boarding activities.

ICES – Independent Contractor Engagement Specialists are providers that facilitate all components of managing independent contract workers sourced directly by the client through internal referrals or talent acquisition efforts.  ICES work in partnership with the client to engage and payroll independent contract workers efficiently and compliantly with tax and employment laws.  Services provided include worker status classification, worker contract negotiations time tracking invoicing and payment, as well as contract worker auditing and compliance reviews.
Definitions By: Christopher Dwyer, Contingent Labor Management – Strategies for Managing the Complexities of the Contingent Labor Umbrella, Staffing Industry Analyst, June 2010

Last year’s Contingent Labor Management research study, which delved into the various subsets of the modern contingent labor umbrella, was considered an evolutionary series of data findings that supported the notion of the contingent workforce as a viable power within the typical organization. With 20% of the average company’s workforce considered contingent in some sense, the stage was set for organizations across the globe to leverage robust contingent workforce strategies and technology solutions.

I am pleased to announce that Aberdeen will be publishing my new Contingent Labor Management study at the end of April. As always, the data will be fueled the intentions and insights from all of you. I ask you to participate in the new survey.

The new study will be more focused around the management of services (and services procurement) and statement-of-work (SOW)-based labor. The new research report will also capture the benefits of leveraging Vendor Management Systems (VMS) and Managed Service Providers (MSP) in management of these crucial contingent labor subsets. I expect to unveil a fresh and unique take on the specific strategies, capabilities and efficiencies required for managing services and SOW-based temporary labor.

The new Contingent Labor Management 2011 research study will also deep-dive into the management of “classic” temporary labor (sourced through staffing agencies) and present new strategies for companies currently struggling with independent contractor compliance.

Participate in the survey, and please note that all survey respondents will receive a complimentary copy of the final report upon publication at the end of April.

Thanks,

Christopher

A number of economists I’ve read lately suggest that the past twelve months have been, to some degree, a jobless recovery. But perhaps labeling the period a “full-time” jobless recovery would be more accurate. Contingent labor hiring is thriving, in fact. And this, of course, is contributing to the rising interest in procurement’s involvement in services spending in general, especially in the contingent arena. Consider this WSJ article from Friday that suggests “temporary-help payrolls have risen for 11 of the past 12 months, with the sector adding 16,900 jobs in September, according to Labor Department data released Friday.”

Moreover, the article also cites a recent Duke University/CFO study suggesting “Chief financial officers say about 23% of recent hiring has been directed at contract and part-time employees, up from 17% prior to the recession.” Moreover, “Companies expect temp hiring to continue growing faster than overall hiring in the next year,” the same survey suggests.

The WSJ provides concrete evidence of the trend towards a contingent and part-time workforce, even in the case of unionized companies. Consider the case of Harley-Davison, that “signed a new union contract last month that creates a tier of ‘casual workers’ with no benefits and no minimum number of hours, allowing the company to call up workers when they’re needed.” Of course underlying this move to non-full-time hires is the state of the economy — not to mention the uncertain economic environment (we’re not uncertain at Spend Matters. We believe we’re currently in recession, but don’t let us say “we told you so” in 2011).

In our view, procurement organizations that aren’t aggressively ramping up their global contingent workforce management efforts are going to be left behind as their company’s actions get ahead of their ability to deliver on effective services procurement programs. But don’t think for a minute of “leaving it to HR.” Granted, procurement must work hand-in-hand with HR and key business leaders (e.g., IT), a department increasingly dependent on contingent workers. And they should also get to know the managed services provider (MSP) and vendor management system (VMS) landscape as well. HR should definitely be a partner and not the driver of contingent procurement efforts.

If you’re curious to learn more about the services procurement landscape and the differences best-in-class providers and partners can make, I encourage you to check out our latest (free) Compass research on the subject:

Selecting Services Procurement Technology – Options, Approaches, and Philosophy

Services Spend — Beyond Contingent Labor: Achieving And Implementing Savings Across Previously Unmanaged Categories

Making Procurement a Services Spend Ally: Tips and Tactics for Winning over Business Stakeholders and Spend Owners

The Managed Services Connection — The Evolving Role of MSPs in Services Procurement

– Jason Busch