VMS: Software or Strategic Workforce Solution?

As vendor management software becomes more commonplace in enterprise workforce and service procurement categories, the solutions are often evaluated by the number of clicks it takes to generate a request, track cost savings, and ensure compliance. However, in the midst of such procurement-centered strategies, many organizations are losing sight of their primary objective—securing the right talent, at the right time, for the right price.

As the available labor pool shrinks and companies adjust to changing market demands, staffing mixes are including increasing numbers of contingent workers. This is true globally, as various countries (particularly the United States, United Kingdom, Russia, and Australia) are experiencing the effects of an aging workforce. Corporations are increasing their reliance on a variety of non-traditional work arrangements to develop a more flexible, agile, competitive, and cost-effective workforce.

The latest Kelly study on trends in contingent workforce usage shows that one-fourth3

of all workers (approximately 31 million people) do not work in traditional employment roles. If this trend continues at its present rate, 41 percent of the workforce will be comprised of contingent workers in the next decade.

By automating the process for procuring contingent staff, companies hope to reduce costs, increase administrative efficiency, improve reporting, and gain better control of spend. These are important reasons for seeking automation as part of a solution. But cost containment alone can lead to substandard talent acquisition.

Where Some Companies Stop: The Heart of the Matter

The most important question to ask yourself—a question many companies stop short of—is how you want your workforce strategy to improve your company. In the process of acquiring vendor management software, very few companies make the leap from saving money and knowing which suppliers performed well, to analyzing how their utilization strategy positions them more effectively in the marketplace.

This issue reaches beyond the realm of acquiring talent and supplier performance. How do you measure the effectiveness of those workers, and the positive results that those decisions have on the company? For example, “Why did I use a temporary employee instead of a full-time employee? Is there a correlation between overtime and the workers’ compensation rate? How has our attrition rate impacted the time to market for our   product offerings? Have we been able to develop new revenue opportunities as a result of our workforce strategy?”

Think Beyond Technology

Another important tenet: a VMS solution is not a one-size-fits-all strategy. Many first-generation VMS users learned this the hard way. For example, an application worked fine for a limited scope, like hiring IT and administrative contingent workers, but it didn’t mesh with the way legal and financial workers were sourced or with the way IT was hiring its project-based business.

A VMS should enable you to be more efficient and effective in buying services, regardless of whether you use one or multiple models for doing so. For example, a vendor-neutral strategy may be the right model for one category of labor, while a master vendor/primary supplier strategy may fit better for another.

Similarly, you want a system that encourages vendor participation and offers advantages for those vendors. The right VMS software supports a strategy that combines technology and program management competencies to provide corporate advantage in attracting and retaining the best talent to help grow your company.

Strategy Drives VMS Decision

Despite the VMS software’s siren calls of process automation, efficiency, and cost analysis, technology is not a silver bullet. Buying software before you develop your workforce strategy puts the cart before the horse. Business processes and desired outcomes must first be assessed to ensure that the right software is chosen. First and foremost, a successful strategic workforce solution starts with corporate initiative for a well-defined, enterprise-wide workforce strategy.

Stakeholders Are Key

Development of a workforce strategy touches many departments and external resources that are directly and indirectly involved in hiring contingent staff. Beyond the executive suite, stakeholders from all affected areas need to be engaged, including:

• Procurement

• Human Resources

• Information Technology

• Business Operations

• Finance

• Legal

• Suppliers

• Contractors/Workers

It is important to include all of these stakeholders in establishing a business case for change. Each area has different needs and concerns, as well as their idea of what is most important in managing contingent workers. To fully understand the process, you must understand the unique priorities of your stakeholders.

Human Resources may focus on regulatory and policy compliance, and resource utilization. Procurement will likely focus on issues of supplier performance and contracts. Suppliers may want assurances of timely placements and payments. Finance will scrutinize budgets, spend, and return on investment. Hiring managers may want project accountability, access to qualified talent, and projects completed on time and within budget.

Collaboration among those who define the strategy, craft the solution, procure the partner(s), actively participate in the solution, and manage the outcome has proven to be a challenge for most organizations. But when stakeholders agree on the mechanics of a

corporate workforce strategy, they will be more open to how the strategy is managed and will embrace the automated tool(s) selected for use in procuring talent. This is where the seamless integration of VMS can shine.

To obtain a complimentary copy of this white paper or for more information on how Kelly can help you with VMS solutions, please contact neeru_jetley@kellyservics.co.in