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Vish Baliga, Chief Technology Officer, SAP Fieldglass

In today’s unpredictable landscape, businesses must operate with a highly skilled and adaptable workforce that can be promptly scaled up or down. This is where the external workforce comes in. These are individuals who are hired to work for a company, but not as employees, including independent contractors, agency workers and freelancers. External workforces have become a key priority for organisations as they seek to build resilience in the wake of economic downturn and according to a study conducted by SAP in conjunction with Oxford Economics, 55% of executives state they would be unable to conduct business as usual without utilising contingent workers.

In spite of this increasing reliance on freelance employees and service providers, many executives still lack visibility into this large and critical spend category. The study also uncovered that clarity around even the most basic insights such as contract terms, who is doing the work, where they are located and what they are doing is often insufficient. This leaves companies speculating when it comes to making major decisions, because they can’t manage what they can’t see. As such, this reduces business productivity, creates compliance and security risks, and means organisations are leaving money — and value — on the table.

So, how can HR teams address these vulnerabilities to minimise the potential risks of their growing external workforce?

Complete offboarding and onboarding

Temporary workers have set dates on their assignments. If their contract is terminated earlier than anticipated, it is important that HR leaders properly offboard them following the end date and immediately ask that they return any devices, accessories, and security cards. This prevents unauthorised access to buildings or confidential information once their contract has ceased. If the offboarding is not correctly completed, companies run the risk of intellectual data theft or ex-workers continuing to gain access to company systems and buildings.

Incomplete onboarding is another area that can cause risk for companies and one that HR teams must watch out for. Onboarding can sometimes be overlooked due to a misunderstanding between the supplier and the hiring manager as to who carries out that process. Incorrect or non-existent onboarding can cause risk for some companies more than others. Take those who need to complete safety training in order to carry out their role while also ensuring all co-workers are safe. If such training is overlooked, it can result in a greater number of preventable incidents on the site. 

While contingent workers are not employees, they do have certain expectations around the businesses they chose to work with. And one of those is to feel as if they are an integral (albeit temporary) part of the team. Therefore, having a streamlined, efficient, clearly communicated onboarding/offboarding process is crucial to finding — and keeping — the hard-won contingent talent your organisation has added to your team and can result in the worker choosing to continue to partner with you on future projects.

Understanding regulatory and organisational compliance

With rigorous government regulations and internal policies, compliance issues pose a serious risk for companies who do not have visibility into their external workforce. Compliance breaches, from a government regulations perspective, can result in many legal repercussions like hefty fines, court appearances and more. It also runs the risk of external employees not adhering to or being aware of internal policies which can lead to poor-quality work, not meeting milestones, or not delivering projects on time. This affects a company’s integrity and bottom line with one in four projects undertaken by services providers not being completed on time or on budget. Tenure tracking and managing across different engagements is key; external workers will often show up in systems under contingent worker for an assignment, and then may show up under a service contract. Unless the individual is wholistically tracked they may end up violating company policies and possibly some regulations.

Aligning HR and Procurement

A best-in-class external workforce management programme establishes defined roles and responsibilities. Its success will depend on how effectively ownership of strategies, plans and initiatives are outlined.

Therefore, to best manage an external workforce, a partnership must be forged between Procurement and HR teams. This allows HR to look at talent holistically and work with Procurement to ensure that it is sourced and managed properly. In addition, this is an opportunity for HR leaders to learn how to better manage vendors, suppliers and utilise market intelligence. Through this cross-collaboration, teams are able to analyse their workforce, make strategic decisions, maximise cost savings and improve worker quality and efficiencies.  

With the contingent workforce now a fundamental element of organisational structure, businesses must integrate the correct process of external workforce management. Through effective decision-making, companies can eliminate the unpredictable costs of compliance, risk and productivity. Moreover, having an effective external workforce management programme allows organisations to easily identify the strengths and weaknesses of its talent pool while also gaining a competitive edge.

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