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The contingent labour conundrum

Jon Milton

Contingent labour offers a cost-effective way for businesses to grow and prosper without having to expand permanent headcount. However, for HR it can present an array of risk management challenges. Jon Milton, business development director at temporary labour management specialist, Comensura explains.

For any organisation that regularly hires contingent labour, its cost and strategic importance to the business should never be under-estimated. In a tough economic climate many organisations find it difficult to justify their permanent headcounts or if a recruitment freeze is put in place, contingent labour offers an economical and often more viable alternative to the hiring of permanent staff. In fact, such is the demand for temporary labour in the UK that the Recruitment and Employment Federation recently reported that over a third of people with hiring responsibilities have recruited temporary workers.

The process of finding, engaging and managing large numbers of staff to fulfil important roles remains an ongoing challenge for businesses. And the cost of this resource can often be the least of an HR or procurement manager’s worries.

In conversations with a variety of business stakeholders with the responsibility for hiring and managing contingent labour, we found that there are four recurring themes that challenge HR teams in organisations of all shapes and sizes when it comes to taking on temporary labour:

1. Filling vacancies with the right people
The contingent market is made up of a diverse range of individuals. Some prefer the variety of moving from job to job, while for others short-term contracts is a lifestyle choice that fits around plans to study or travel. And competition for staff from this mixed pool in a variety of sectors has never been more fierce; regardless of whether you’re recruiting for specialist roles that require a particular skill, creative workers in the marketing or advertising sector or factory or warehouse workers. Speed and availability of resources is a key consequence of this temporary candidate shortage with many employers struggling with the speed at which new starters can be brought on board. Many organisations have seen the best candidates go elsewhere because the recruitment process has been too slow. It’s therefore essential to have effective and fast engagement.

2. Process efficiencies
Contingent labour is without question complex to manage. Ensuring that the business has the right numbers of people in the right locations, delivering the right service on behalf of your organisation at the right time can be a difficult task, especially if you’re a global business that has grown quickly and made a number of acquisitions along the way. The process for taking on temporary workers therefore needs to be simple and uniform across the entire business so that hirers can comply with the organisation’s guidelines around agency use easily.

We’ve seen many occasions where complexity leads budget holders to buy from just their preferred agencies or if they can’t get staff from the organisations’ preferred supplier list, they just go elsewhere without a thought towards cost or compliance. Clearly if the process for hiring a temporary workforce becomes too difficult, then inevitably, users will stray outside of the set process for taking on casual staff.

3. Visibility
Visibility across the organisation of who has hired temporary staff, at what cost, for how long, and for which roles is vital. And knowing how those people fit into the business’s overall work force plans is also a major challenge, especially for organisations with large contingent workforces.

Keeping track and reporting on performance is also essential but increasingly difficult to manage. We’ve seen many instances where a temporary candidate joins the business to do a specific role, then ends up working in a completely different role in a different department. This can easily happen if an individual proves to be a popular addition to the business and is then rehired by someone else. Although it might seem like an easy solution for the hirer, the reality maybe that the candidate is being paid the same amount for the role which they were originally hired, and should now actually be paid a lower rate.

It’s not uncommon for key stakeholders across the business to be completely unaware of the numbers of temporary staff in their business and the roles they perform. HR needs to engage with procurement and other key stakeholders to work as a team in order to track, record and drive good performance across the business’ contingent workers.

4. Risk management
It’s impossible to take on contingent labour without some degree of risk as to whether the hires are the right for the business; the challenge is to ensure you’re doing all you can to mitigate against risk as much as possible.

Background screening is one just one element of risk management; for example, we’re aware of a large pharma organisation who has to be extra vigilant with background checks due to the risk of animal rights activists trying to get into the organisation.

Clearing defining guidelines for hiring staff can help mitigate risk for HR who need to ensure compliance with issues such as the right to work in this country, and if they have certain certifications which are required in certain roles (e.g. working with children). Many organisations find themselves relying heavily on their recruitment agencies to get it right to check these important details and have provisions in their contracts to put the responsibility for these checks on to them. However, even with these caveats in place, eligibility to work, and a candidate’s ability to perform at the required level is a growing area of concern for HR professionals.

With more and more organisations relying on contingent labour as a viable, cost effective alternative to support their business during busy times, it’s clear that the right processes and policies need to be in place to support HR’s challenge in the management of these roles.

The UK recruitment industry is incredibly diverse and relies heavily on its suppliers to deliver first-class, reliable candidates to fulfil a variety of roles. HR needs to ensure it has a robust and agile supply chain of recruiters in place that can help it meet any future challenges head on.

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