Rise in contract workers spawns challenges for HR professionals

by 11 Sep 2012

A greater emphasis on short-term and project-based work is having a significant impact on the type of worker required by businesses today. Matthew Franceschini outlines the challenges and opportunities associated with contract workers.

In organisations across Australia, strong winds of change are blowing through recruitment departments. The days when an organisation's workforce predominantly comprised of permanent employees has well and truly passed.

Driven by the need to become more agile in the face of shifting market conditions, organisations are placing greater emphasis on short-term and project-based work. In addition, changing business conditions and a desire by many professionals to maintain employment flexibility means more and more skilled individuals are opting to seek contract/project based/assignment based work.

The reality is that organisations are becoming increasingly reliant on white collar contractors (referred to as Independent Professionals or IPros by Entity Solutions) to form an easily scalable workforce that can support sustainability and profitability. With considerable skills and experience, these IPros are able to 'hit the ground running', delivering immediate value to the organisation.

For HR and recruitment professionals, these fundamental changes in workforce makeup bring challenges. As well as the increased workload caused by rising staff turnover, many HR professionals feel they are losing control of the talent sourcing process.

Various departments within organisations often directly hire IPros to fill specific gaps, bypassing traditional HR processes. This leads to a lack of uniformity in contracts and can result in increased risk and exposure for the organisation. Methods and processes that have worked in the past are no longer sufficient.

The changing recruitment landscape

One factor at play is the sheer number of IPros now being required by businesses. Where, traditionally, staff numbers tended to remain relatively stable over time, now they can vary significantly depending on the projects being undertaken.

There is also an increasing tendency for some departmental managers to undertake ad-hoc hires from non-approved or specialist talent providers. While their reasons for doing so may be valid, the result can be a complex web of supplier relationships, contracts, and payment trails that can adversely impact HR, recruitment, accounts, legal and other departments. This complexity can also make it difficult to track the true cost of contractors to the business.

The benefits of Managed Vendor Services

To overcome these challenges, organisations must adopt a more holistic approach to the management of their IPros.

Rather than trying to deal with multiple suppliers and a growing range of directly hired workers, HR departments need a single provider that can engage, manage and maintain IPros relationships across the organisation. Such a provider can deliver a best-practice solution to assist in achieving visibility and ensure vendors and the IPro workforce are properly managed.

Dubbed Managed Vendor Services (MVS), this approach reduces the HR administrative burden, provides better cost control, and ensures transparency of the entire IPro recruitment process.

As well as streamlining management, an MVS approach can ensure critical elements such as occupational health and safety (OH&S) training and legal requirements are met. These issues can easily fall by the wayside when multiple parties within an organisation are hiring new staff and putting contracts in place.

The challenge is exacerbated by the increasing amount of legislation that governs IPros. When you add this to the existing laws covering permanent workers, it has the potential to become a real nightmare for the HR department. 

An MVS partner can also ensure an organisation is complying with legal requirements in areas such as workers’ compensation, income and payroll tax and superannuation.

When to consider Managed Vendor Services

HR professionals should consider adopting an MVS approach as soon as the size of their organisation's IPro workforce begins to grow or if they are planning for a headcount increase.

Putting an MVS partner in place early also ensures ongoing visibility of the true cost of staffing across the organisation can be maintained. This allows accurate budget predictions to be made and ensures costing overruns are avoided. MVS puts the HR team back in charge of the recruitment process.

When selecting an MVS provider, the aspect of vendor neutrality is particularly important. It is wise to seek out a provider that does not also perform recruitment activities, thereby eliminating any conflict of interest or any risk of redeployment of your valued talent. Vendor neutrality also means your existing recruitment vendors can be comfortable in the knowledge that the MVS provider is a trusted partner.

Conclusion

As the number of IPros within organisations across Australia continues to grow, the challenges for HR professionals will only increase.

The structured approach offered by an MVS partner can ensure these challenges can be mitigated, if not completely removed. By providing a single point of contact for all IPros working in the organisation, control can be maintained and administrative burdens reduced.

The result for the organisation is significant. It can benefit from the advantages of an IPro workforce without having to deal with the complexity that such a workforce has traditionally created.

About the author

Matthew Franceschini is CEO, Entity Solutions

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