How to optimize your contingent workforce

To be competitive and agile, your organization needs a flexible, adaptable workforce to deliver on your business goals. With the right blend of permanent hires and contingent workers, businesses across all sectors are achieving just this. But how can you identify that ideal combination to deliver the right skills at the right time for the right price?

Using a vendor management system (VMS), you can gain access to a single source of contingent worker data that details skills, availability, location, and cost. With this increased visibility, your HR and procurement functions can overcome internal barriers and collaborate to find the right mix of employees and non-employees who can achieve your organizational objectives.

This concept, total workforce optimization (TWO), is enhancing the people strategies of enterprises across several industries. It reduces their outlay on workers while maximizing their return on investment.

What is total workforce optimization, or TWO?

TWO is one of two elements of total talent management (TTM). According to Staffing Industry Analysts (SIA), total talent management is:

An emerging talent or workforce management model includes an organization’s management of ‘permanently hired’ workers as well as ‘contingent’ workers. It seeks to integrate the respective management of permanent hires and contingent workforce by HR and procurement functions.

The second element of TTM is total talent acquisition (TTA). Traditionally, talent acquisition focused on hiring permanent employees for an organization. However, as more organizations use contingent workers, TTA now includes finding and hiring contingent and permanent employees.

So, how does TWO fit into TTM and alongside TTA? Essentially, TWO is finding the right blend of employees and non-employees to achieve specific outcomes at an enterprise level and departmentally. In short, TWO is ‘fixing the mix’ of employees and contingent workers.

Do you know if your HR and procurement functions are symbiotic?

In biology, symbiosis is where two organisms seamlessly co-exist for mutual benefits, like clownfish and anemones. The relationship between TTA and TWO is the same. You can’t optimize your workforce if you can’t acquire the right talent at the right time for the right cost. And you don’t know what talent to acquire unless you know the optimal contingent and permanent skills needed to ‘fix the mix’ and to achieve the specific outcomes your organization wants.

For contingent workers, the same analogy applies to your HR and procurement functions. Following an operational request for a particular skill set, HR creates the job requisition specifying what skills are needed and for how long. Procurement, usually via a staffing agency or vendor, locates and acquires the worker.

This sounds straightforward, but there are barriers to achieving this balanced symbiosis. HR and procurement are often siloed. In global enterprises, the functions may be separated by entire continents. They use a different vocabulary and often separate technology platforms. This disconnect can lead to the wrong skills arriving at the wrong time, all costing far too much.

As a result, the first step towards optimizing your contingent workforce is coordinating HR and procurement so the functions perform symbiotically. How can you do this?

Use a shared platform to optimize your contingent workforce

A range of focused tech and collaboration solutions, such as an extended workforce platform specifically configured for your organization, can help you overcome the challenges of disconnected HR and procurement functions. Such a solution will connect all your contingent staffing activities and simplify processes while providing greater visibility over your contingent workforce.

Use the following six-step process to transform your internal data into actionable insights and, ultimately, TWO:

1. Get your contingent workforce data in one place – Consolidate individual contingent worker information from all platforms into a single database so you have clear visibility of their skills.
2. Understand worker status – How are they classified, engaged, paid, and contracted? Is the engagement model appropriate for the work they do? Consider risk and compliance.
3. Assign quality scores to all workers – This is routine for full-time employees. Contingent workers should be no different. Who is rated as good? Who would be hired again? Who receives poor feedback?
4. Merge the data into a common platform – Take feeds from the applicant tracking systems (ATS) and human resources system (HRS) into a single platform, such as the VMS, and then use consistent job titles and categories so you are comparing like with like.
5. Data analysis and decision making – Use analytics tools and AI to support optimization decisions and model decision outcomes. For example, would the outcome be improved if a contingent worker was hired permanently? This analysis can also improve the outcomes of future decisions.
6. Do something – Use the contingent workforce data to achieve total workforce optimization and deliver your organizational outcomes.

Choosing the right VMS provides deeper insights and supports contingent workforce optimization. Use the data to choose the best-performing staffing suppliers, manage your contingent workforce risk more effectively, and ensure proper spending controls.

To learn more about what a VMS is, what its key features are, and what benefits it can bring to your organization, download our free guide. This will show you how a VMS can aid contingent workforce planning, forecasting, management, and procurement.