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Adapt or Fall Behind: How Top Companies Are Winning with Flexible Workforce Models

Published November 4, 2023

Category: Procurement

Written by: Nikhil Parva
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Nikhil Parva

Nikhil Parva is a former consultant from a global professional services firm. He's passionate about procurement transformation and delivering value in the area of Contingent Workforce Management, Supplier Relationship Management and Source to Pay. He has a proven track record in designing and executing complex programs that generate cost savings, process improvement, and stakeholder satisfaction. As a recognized thought leader, Nikhilenjoy's building high-performing teams, fostering strong stakeholder relationships, and sharing his insights and learnings with the industry. 

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In the face of today’s economic challenges and unpredictable market landscape, the utilization of flexible workforce has become an essential strategy for organizations around the globe. The flex workforce, encompassing Contractors, Managed Service Providers (MSPs), and 1099 resources, offers a distinctive advantage, enabling companies to augment human resources without binding themselves to long-term retention commitments. Remarkably, the proportion of an average enterprise’s contingent workforce has surged from 20% to 43%1 over the past decade. This growth reflects the critical role of flexibility in swiftly scaling resources to meet evolving business demands—a crucial factor in achieving successful outcomes in the current environment. In the ensuing discussion, our focus will be particularly on the employment of contractors, examining their vital contribution within the framework of hyper-growth companies.”
 
While the successful leverage of this flexible workforce model may stem from investments made by organizations over time, the rapidly shifting economic landscape emphasizes that it’s never too late to implement or refine a functional flex workforce approach. The continuous evolution of this strategy, tailored to the unique needs and maturity of a given program, remains an essential component for navigating the complexities of today’s market.
 
KEY ELEMENTS OF AN EFFECTIVE FLEX WORKFORCE MODEL  
 
Design and success of flex workforce models rest on a combination of three main ingredients. (1) Lead time – How fast can the flex workforce be ramped up (2) Quality – How can we maintain an expected level of quality hires? And (3) Cost – Are we paying reasonable prices for these resources in line with the market rates? 
 
Oftentimes, even organizations with mature flex models struggle with one or more of these key areas. Whether you are a Business Unit “requiring” contractor resources (a.k.a. consumer) or a centralized team responsible for “providing” contractor resources (a.k.a. provisioner), implementing a nuanced approach addressing these key areas can drive significant value for your organization. BUs can drive close tracking of contractors by maintaining their own ‘Contractor Operational Response & Readiness’ (CORR) programs.
 
1. Lead time: In light of employers shift to less experienced talent in a tightening Labor market 5, rehiring of existing contract resources at the end of their current initiatives seems to be a logical choice. Followed by 87% of best in class companies,6 this simple process can be enabled by transferring contractors from one team to another at the end of their assignments. Organizations can bypass the need to hire ‘new contractors’ and instead utilize the ones that are already a part of the existing/shared pool of resources (a.k.a. SST – Shared Services Team) while addressing existing constraints such as performance issues, lack of visibility on the contractor pipeline, and tenure limit. To drive enablement, all (new) requests raised by hiring managers in a given BU should go through a localized CORR database instead of being raised as a net new request. Not only will this lead to a reduction in lead time but also enable hiring of existing CW resources through the Contract to Hire (C2H) process. 
 
2. Quality: Business Units can drive effective retention strategies for high performing contractor resources through rotation across initiatives and taking into account the tenure limit set by the organization. By providing performance feedback to staffing companies, companies can avoid co-employment risk while identifying and increasing the longevity of their high performing flexible hire. 
 
3. Cost: Organizations can achieve 40% higher year-over-year cost savings 3 by driving cost rationalization through closer management of  contractor resources and seamless information sharing. E.g. identification of cases where contractors have a higher Bill Rate (BR) than the MBR (Maximum Bill Rate) and wide variation between Bill Rate (BR) for contractors with similar skill set,  
 
The applicability and impact across these key areas may not be restricted to BUs (consumers) alone but can be leveraged by centralized teams responsible for provisioning contractor resources across the organization as illustrated in the graphic below.. 
 
 
 
 
5 STEP IMPLEMENTATION PROCESS
 
Here are 5 simple steps for managing your contractor resources through the CORR framework.
  1. Current state assessment: Perform a current state assessment of your Contingent Workforce. Pay special emphasis on foundational metrics such as contractor classification, count, lead time for hiring contractors, pipeline of contractors going through onboarding and offboarding, and contractor catalog (comprising level and rates across multiple geographies).
  2. Streamline intake and output pipelines: Document the contractors that are currently going through the hiring process. Similarly document and understand the contractors that are required to be off-boarded as a result of performance issues, tenure limit, or expiry of the contractor contract.
  3. Establish a communication framework: Identify the key stakeholders and establish a communication framework. Provide focus on the frequency and content of the communication with the audience in mind.
  4. Implement a pilot: Prior implementing the program BU or organizational wide, run a pilot to understand the program nuances including potential points of failures. Create an effective change management plan to enable an effective blueprint for scaling the program.
  5. Scale: Implement the lessons learned as part of program scaling to cover one and more BUs or organization-wide.
 
CONCLUSION
 
Companies can drive a paradigm shift in their CW programs by driving the right balance between the growing need for flex workforce with risk and cost to enable a truly agile workforce. FTEs and CW resources can drive significant value to critical projects and initiatives  in-line with the direction that a majority of the organizations are planning or currently undertaking 4. These impacts, although substantial for organizations, will be even greater for hyper growth companies due to a need for quick ramp-up and ramp-down of resources to support their business needs.
 
Authors
 
Nikhil Parva – Is a former consultant from a global professional services firm.
Sougata Banerjee – Is a Managing Director at a global professional services firm 
 
References 
  1. Page 5 – The state of contingent workforce management 2020. Report published by Ardent Partners in collaboration with Coupa. https://get.coupa.com/Ardent-Partners_20-State-of-Contingent-Workforce_T…
  2. Page 18 and 19 – The state of contingent workforce management 2020. Report published by Ardent Partners in collaboration with Coupa. https://get.coupa.com/Ardent-Partners_20-State-of-Contingent-Workforce_T…
  3. Page 19 – https://get.coupa.com/Ardent-Partners_20-State-of-Contingent-Workforce_T…
  4. Page 28 – https://get.coupa.com/Ardent-Partners_20-State-of-Contingent-Workforce_T…
  5. Employers Shift to Less Experienced Talent  in Tight Labor Market https://magnitglobal.com/us/en/resources/knowledge-center/white-paper/us…
  6. Redeployment is a great strategy for sourcing, taking less time and costs to fill a role. Particularly in a tight labor market, redeployment is a great strategy for uncovering hidden talent pool and retaining quality talent. https://www.spiceworks.com/hr/engagement-retention/news/retaining-contin….
 
 
 

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