Unpacking the Challenges in Contingent Workforce Management

Business → Sales / Service

  • Author Joel Schwan
  • Published November 29, 2023
  • Word count 927

Those involved in the world of contingent workforce (CW) industry have repeatedly emphasized the importance of bringing Statement of Work (SOW) worker spend under management. The quest for total visibility into who, what, where, when, why, and at what cost is a shared goal among both buyers and providers. Many have touted it as the path toward achieving the elusive "Total Talent Management." However, despite the mutual acknowledgment of this necessity, recent data from the Staffing Industry Analysts (SIA) reveals that a mere 29% of all spend within CW programs pertains to SOW workers. This low figure raises questions about why progress in SOW management remains sluggish despite more than a decade of effort. In this article, we delve into the underlying issues and explore why SOW management adoption is moving at a snail's pace.

Challenges Stemming from Program Size and Complexity

SOW worker spend often dwarfs that of temporary workers or independent contractors within the CW programs I've encountered, making it a fertile ground for achieving spend management and much-needed visibility. However, this massive gap in expenditure also introduces intricate challenges in terms of program size and complexity, which have been significant roadblocks. Let's dissect these complexities to better understand their impact:

Scoping: The complexity of defining the scope can impede SOW programs at their inception. Reaching alignment on which functions to include in the program, such as sourcing/RFP, contract management, worker management, SOW management, payment, and more, can be an arduous task, given the multitude of stakeholder groups involved.

Data: Even after determining the scope, collecting, organizing, cleansing, validating, and integrating data from tens of thousands of workers spread across thousands of SOWs can seem like an insurmountable challenge. Extracting necessary data elements buried within legal jargon only adds to the enormity of the task.

Integrations: Depending on the chosen scope and tracked data elements, synchronizing systems with others that house and share those data elements can become a complicated endeavor. Custom builds may be required, further complicating the landscape.

Change Management: Managing the substantial change necessitated by SOW programs is a significant undertaking. A comprehensive change management plan, inclusive of impact assessment, messaging, and training, becomes essential to ensure that end-users are adequately prepared for this transformative shift.

Lack of Client Prioritization

Apart from the inherent complexity, another critical factor contributing to the stagnation of SOW management adoption is the lack of commitment and prioritization from clients. The client-side needs to be resolute in its determination to incorporate SOW workers into CW programs to achieve the desired visibility and value. Here's why this often falls short:

Stakeholder Buy-In: Commitment begins with stakeholders who must sponsor, partner with, and leverage the program and services. Garnering enthusiasm across multiple groups for a complex topic like SOW takes time and concerted effort.

Investment: Implementing SOW management comes with upfront investments in terms of time, resources, and soft costs. Despite the substantial cost savings it can bring, this upfront investment may be difficult to justify if other priorities take precedence or if the return on investment will be realized over a more extended period.

Resource Constraints: Scarcity of resources, particularly in HR, IT, and procurement projects, can hinder progress. Without the necessary personnel on the client-side, projects can experience delays or remain unrealized.

Resistance to Change: Shifting a procurement process into a new system or provider can be a drastic change. Without a clear understanding of how this change will enhance processes, stakeholders may be reluctant to invest time and effort.

Existing Systems: Resistance can also arise when companies are already performing some functions in other systems, such as supplier management, sourcing/RFx, contracting, onboarding, and deliverable management. Consolidating these functions into one system and transitioning processes can be seen as burdensome.

Past Experiences: Negative experiences with previous CW implementations can deter clients from expanding services. If past efforts were time-consuming and challenging, clients may hesitate to embrace similar initiatives.

Supplier Resistance

Additionally, one of the major hindrances to SOW module adoption relates to supplier and vendor reluctance to participate in these programs. Suppliers offering worker-related services should ideally be incorporated into a formal system for improved visibility and consistency. However, many large consulting firms tend to resist the notion of participating in CW programs for several reasons:

Cost and Margins: Going through an MSP and VMS entails paying program fees, which suppliers may prefer to avoid. They may view this as an unnecessary cost that disrupts their relationships with managers or company leadership.

Relationships: The involvement of intermediaries like MSPs and VMSs can interfere with existing relationships that suppliers rely on for business. This disruption can hinder their business model, regardless of the quality of their services.

Visibility: Properly established SOW modules can provide detailed insights into the work being performed, resource allocation, and associated costs. Suppliers may be reluctant to reveal the true cost of their services, especially when it becomes apparent that similar work is being done by resources in the temporary staff model at a lower cost.

A Call for Dialogue and Solutions

The low adoption of SOW management is a multifaceted issue with no singular cause. This article presents one perspective, but it is crucial to continue the conversation and explore additional reasons behind limited or nonexistent SOW management adoption. If you are encountering similar challenges in your CW program, rest assured that you are not alone. CWM Strategies can provide solutions to navigate these obstacles and bring about meaningful change. Thank you for reading; please consider liking, commenting, or sharing this article to promote further discussion and awareness of these critical issues.

Joel Schwan is a contingent workforce professional with a passion for workforce strategy and program management. With a diverse background in various roles across the human resources, recruiting and management consulting sectors, Joel has amassed a wealth of MSP experience and expertise in areas such as program management office enablement, change management, procurement services, and client/supplier relationship building.

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