By Debra Timmerman, President - MSP
Your contract workforce (freelancers, temps, consultants) is a strategic asset, crucial for flexibility and filling skill gaps, especially in today's market. But if managed carelessly, you face inconsistent costs, compliance nightmares, and difficulty finding the right people. This checklist digs deeper into whether your program is truly effective or just getting by. If these points don't sound like your reality, it might be time for an upgrade, potentially with help from a Managed Service Provider (MSP).
- Pay Smart & Fairly: Stop guessing worker rates or letting individual managers make ad-hoc decisions, which often leads to paying different amounts for the same job. Base your rates on solid evidence: current internal pay data combined with external market benchmarks for specific skills and locations. Use analytics to determine optimal, consistent rates. While allowing suppliers some flexibility on markup can yield better talent, demand data-driven intelligence (often via an MSP) to ensure your costs are competitive and justified.
- Widen Your Talent Net: Relying only on preferred suppliers or managers' personal contacts severely limits your access to talent, potentially leaving roles unfilled or filled with subpar candidates. Actively manage and nurture a diverse supplier network, holding them accountable for quality and speed. Critically review job requirements – are you asking for unnecessary credentials that shrink your talent pool? Make sure managers see all available options, including talent from direct sourcing channels, to find the best fit.
- Leverage Your Data: Don't let valuable data sit unused in your Vendor Management System (VMS) or other HR systems. Integrate information from internal sources, your VMS, and external market data to get a comprehensive view. Demand predictive analytics, possibly using AI tools, to anticipate future needs, understand cost drivers, and make informed strategic decisions about your extended workforce. Data should be embedded in your routine decision-making, not just reviewed occasionally.
- Actively Manage Compliance: Letting managers hire contractors independently is a recipe for compliance disasters. Establish clear, centralized governance for contracts, background checks, and especially worker classification (are they truly independent contractors or should they be employees?). This helps avoid significant legal and financial risks like co-employment. Use data and reporting to continuously monitor compliance, as regulations and business needs evolve. An MSP typically provides essential governance and payrolling functions to mitigate these risks.
- Treat Suppliers Like Partners: Don't just send job orders out and hope for the best. Proactively manage your staffing agency relationships. Provide clear communication about expectations, performance feedback (using data!), and upcoming needs. Understand and remove unnecessary barriers you might be creating (e.g., overly rigid requirements, inflexible rates) that prevent them from finding the best talent quickly. An MSP often serves as the crucial liaison for effective supplier management.
- Improve the User Experience: Your contingent workforce program impacts both internal managers and the external workers. Give hiring managers easy access to data, clear processes, and responsive support so they feel confident. For contractors, provide a transparent, professional, almost consumer-like experience: clarity on assignments, timely pay, easy communication channels, and knowing where to turn for help. Regularly solicit and act on feedback (e.g., through surveys) from both groups to continuously improve.
- Use Direct Sourcing Strategically: Utilize direct sourcing when your standard suppliers struggle with specialized talent, for infrequent large-scale hiring needs, or to leverage your employer brand. This involves applying recruitment best practices, like talent pool development, to directly hire contractors. Remember, it's a supplement to your supplier network, not a replacement. If an MSP is managing this, verify their recruitment (RPO) expertise.
- Adopt a Total Talent Mindset: The most advanced approach involves breaking down the traditional silos between hiring permanent employees and engaging contingent workers. Look holistically at the work needed and consider all talent types (internal mobility, full-time hires, temps, freelancers, SOW projects) to determine the optimal resource. Technology is key to gaining this unified view across all talent pools, and an MSP partner with expertise in both contingent and permanent talent acquisition can often facilitate this strategic shift. Start by identifying key pain points where this approach offers clear benefits.
The Honest Takeaway: If your organization struggles with these points, you're likely leaving value on the table and potentially exposing yourself to unnecessary risks. Getting serious about optimizing your contingent labor strategy, often with expert MSP support, is essential in today's complex talent landscape.