Every business faces risk in their processes. In most cases, effective management programs and strategic internal processes are implemented to mitigate those risks. But what happens when you don’t have the expertise, experience and know-how to manage a business operation successfully?
Here at Conexis VMS, we see this frequently with the contingent workforce. Particularly with organizations which have small volumes of contingent workers, and often don’t see the value in developing a proper contingent workforce management program or investing in the technologies (such as a vendor management system) needed to underpin that program.
Yet, managing the contingent workforce staffing is crucial. To minimize risk and realize true ROI on your contingent workforce, it’s essential that your business is able to both successfully manage contingent workers and the staffing agencies you use to source them.
So, with that in mind, in this blog we take a look at the top risks associated with managing a contingent workforce, and how your organization can better manage its contingent workforce to improve worker quality, speed up talent acquisition, reduce costs and improve workforce visibility.
Let’s start with a look at the top five contingent workforce risks:
#1 - A lack of transparency into your contingent workforce
If you don't have an effective contingent workforce management program in place, it’s likely that your business has no visibility into its contingent workforce. This lack of transparency gives you no insights into rogue spend, with hiring managers sourcing and hiring contingent workers independently - without using the requisite screening, quality control, preferred contractual terms, and predetermined rates that are part of your vendor agreements.
#2 - Vendor performance
The staffing agencies you partner with are crucial to the success of your contingent workforce program. Not having an effective vendor management program will result in poor workforce quality, slower hiring times, a lower ROI on your contingent workforce costs, as well as a complete lack of visibility into vendor performance. Without insights into vendor performance, you’ll have no real way to see how your agencies are performing nor provide insights into how they can course correct.
#3 - Misclassification or co-employment
When engaging contingent workers, their relationship with your business and your staffing agency must be properly defined and recorded. Incorrectly identifying the relationship that exists between your business and the contingent worker could lead to misclassification or co-employment. This would result in hefty fines, back taxes and penalties for your business.
#4 - Security risks
Your contingent workforce program should have a set of processes in place to engage, manage, onboard and offboard contingent workers successfully. Without those processes, your organization is vulnerable to the loss of intellectual property, trade secrets, competitive data and even security threats on your network. All contingent workers should be vetted properly before joining your organization.
#5 - Financial risks
The contingent workforce can be highly beneficial for your business, helping you to fulfill workforce goals faster and cheaper. Yet, if you don’t have visibility and control of your contingent workforce, then there’s a financial risk. Poor visibility into your contingent workforce could leave you with no transparency of your financial burden, the risk of overpaying for talent and being overcharged by your staffing vendors.
How to manage contingent workforce risk
Developing a contingent workforce program can be complex, and doing so without the right processes and technologies in place will only result in chaos. With no centralized contingent workforce strategy in place, your business is vulnerable to a wide range of risks.
Businesses that manage their contingent workforce with manual spreadsheets soon have a huge number of risks impacting their bottom line - that’s because they don’t have the visibility and control they should over their program.
A lack of visibility and control leads to contingent workforce risk. The quality of vendor performance suffers, rogue costs run rampant throughout the organization, there’s a risk of the misclassification or co-employment of contingent workers and hiring managers go rogue - spending money outside of the predetermined rates and contractual standards agreed with your vendors.
So, what’s the solution? A vendor management system (VMS).
VMS software will centralize your contingent workforce data in one location, and automate the processes associated with managing both your contingent workers and staffing agencies.
Contingent workforce recruiting technology will help your business monitor and track vendors and their performance, gain complete visibility of your workforce, automate the end-to-end processes of managing your contingent workers and staffing agencies, ensure contingent workforce compliance and consolidate your vendors (and program) into one centralized location.
Interested in learning more about Vendor Management Solutions?
Whether you are looking for a new VMS Solution, or just getting started, we are here to help. See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour. Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights) or Book a Personal Demo Today!
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