Quality is key to mitigating cost and risk of the contingent workforce: A report from CWS Summit

Posted by: Joel Capperella

I just recently returned from Orlando, where I spent the earlier part of the week at the CWS Summit hosted by Staffing Industry Analysts (SIA). For those of you unfamiliar with SIA, they are an analyst firm that evaluates corporate staff augmentation requirements and all associated models for effectively managing a contingent workforce. SIA’s extensive research provides insight into this segment of the workforce, and for twenty years, has provided sound recommendations to successfully navigate the complex marketplace of service and technology providers aiming to help businesses develop and execute staff augmentation strategies.

Below is a quick recap of the major themes that were the focus of the Summit. We’re encouraged that the discussion in this community has taken on a significantly more strategic tone. Participants at the show are eager to develop strategies that will move their organizations closer to a true talent supply chain, and seek to aggressively add value by implementing efficient workforce strategies that protect the quality of the ‘non-employee’ segment while enhancing cost efficiency.

Cost to value. There is danger in allowing the drive for cost efficiency to trump the development of strategic plans that aggressively leverage the non-employee segment to provide a maximum positive impact to the business. The overriding tone of this discussion was oriented toward placing quality metrics first and foremost when making decisions on how to run staff augmentation programs. Regardless of the maturity of a firm’s contingent workforce, CWS participants were encouraged to adequately define quality metrics, and properly measure cost saving measures against the desired quality level of associated staff and the projected impact that this staff will have upon the business area they directly affect.

Statement of Work. Perhaps one of the hottest topics was how a firm’s use of the statement of work (SOW) could accomplish specific objectives. How aggressively should SOW expenses be evaluated to determine if a percentage could be better utilized through the acquisition of skilled labor? Additionally, should SOW be managed the same way a firm manages staff augmentation? While there were varying opinions, the consensus was that the SOW category of talent-related expenses must be factored into the development of a comprehensive workforce strategy, and that as a firm’s management of non-employee segments mature, greater control must be put in place over SOW. Many participants clearly articulated that any such controls must be considered enabling, not restrictive or prohibitive, by their business partners.

Increased Collaboration. The objective is simple: increase the level of cooperation and collaboration between Procurement/Operations, Human Resources, and Business Leadership in order to drive a quality talent supply chain that serves the needs of the business while maintaining fiscal discipline. CWS participants picked up new statistical planning methodologies that will help them better articulate the use of every category of worker, and determine what the acceptable levels of quality, risk and cost ought to be. While seemingly a simple objective, it was agreed that execution of collaborative workforce development is a potentially complex issue.

Elevated risk evaluation. A simple equation was at the forefront of everyone’s mind this week: (Increase in use of contingent workforce) x (co-employment + independent contractor compliance + equal employment opportunity) = increased risk exposure. There is a palpable awareness that both the federal government and state governments are making a strong push toward capturing tax dollars associated with violations of co-employment and independent contractor compliance. In light of tough economic times, recent court decisions, and the litigious nature of the U.S. corporate climate, standard equal employment opportunity violations are much more likely to be pursued.

Sound decision making. Much focus was placed on the tactics of executing workforce strategies. Foundational criteria such as the elasticity of the contingent workforce structure, desired level of service from the supply chain, and the role outsourcing or technology plays, were identified as central to the decision making process. Not surprisingly, CWS participants tend to skew to the more mature end of the non-employee workforce practitioners. The organization that has not yet made significant investments in developing a contingent workforce plan has much to learn. The consensus for the beginner seems to be that a simple discovery over current non-employee talent expense be scrutinized for a simple statement of volume and “location.” That is, let’s find out what we are spending on who and with whom. Surprisingly, this seems to be a task that is revisited frequently no matter how mature a company’s contingent workforce plan may be.