For some procurement groups, convergence has come in the form of new, complex categories to manage like travel, contingent workforce, business process outsourcing (BPO), and meetings and events, while others have taken over wholesale business functions such as accounts payable and facilities management. Whether by design or necessity, the responsibilities of the procurement department in 2016 continue to grow and sometimes shift, with it comes the opportunity to make a larger impact.
One fast growing category worth a CPO’s focus is the Contingent Workforce. Ardent Partners research predicts that the utilization of contingent labor will increase by 30% over the next three years, further cementing the need for more robust capabilities within this arena. The use of non-permanent labor is also growing from a strategic use and deployment standpoint.
Given this, Ardent expects procurement’s influence and expertise to expand rapidly across the entire contingent workforce spectrum, since the successful management of this category is based upon classic procurement principles like strategic sourcing and supplier management. In our State of Contingent Workforce Management: A Framework for Success report, we introduced a new model (the “Ardent Partners CWM Framework”) designed to help enterprises evaluate the current state of their contingent workforce operations and develop a series of processes and capabilities to effectively manage the three major categories of modern contingent workforce management which Ardent defines as:
- Traditional temporary laboris the “classic” view of contingent labor and involves an enterprise sourcing a variety of short-term roles with candidates from staffing suppliers, agencies and vendors.
- Complex contingent laborincludes statement-of-work-based (SOW) labor, professional services and non-professional services, and is perhaps the most “evolutionary” aspect of modern contract talent. These aspects are “complex” due to the fact that they touch various divisions within the typical enterprise and need to be managed from a variety of “angles,” including procurement, HR and finance.
- Independent contractorsare comprised of freelancers, consultants and contractors. They are sourced directly by the enterprise. Independent contractors (colloquially known as ICs) carry a variety of risks (namely federal audits and co-employment) if misclassified, but often represent a superior level of talent.
By developing a clear view into the scope of activities within each category in Ardent’s CWM Framework and understanding what resources and systems are utilized and what processes are followed, procurement professionals tasked with managing contract talent will be enabled to implement standardized and centralized competencies enterprise-wide. The CWM Framework can also help groups identify any gaps in their current CWM programs, pinpoint the obstacles to improving performance, and support the development of a proper business case for investing in the solutions and services currently available in the market. All told, the CWM Framework can help procurement leaders effectively balance the delicate stability of cost efficiency, talent quality, and enterprise performance, and find a clear path to Best-in-Class performance in this complex and rapidly-evolving category.
Contingent workforce management will be one of many exciting topics covered at Ardent Partners’ CPO Rising 2016 procurement executive summit to be held in Boston on March 29-30, 2016. Click here for more details!