contingent workforce insights 2019 ... - sap fieldglass
TRANSCRIPT
1Lorem ipsum
Research in collaboration with
Contingent Workforce Insights 2019: Expertise in Full Force Unlock more value from your non-payroll workers
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• Gainvisibility
• Managewithrigor
• Collaborate
• Seeyourcontributioninanewlight
Table of contents
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Preface: The external workforce is essentialto thriving in the digital age
Introduction: Why it’s vital to actively manage contingent labor
Conclusion: The value of total workforce management
Four key actions to better manage contingent workers:
Here’s how to get started
About the research
Pacesetters lead the way
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The external workforce is essential to thriving in the digital ageTheworkforcehasforeverchanged.Togetworkdone,organizationsareincreasinglylookingbeyondtheiremployeepopulationsandturningtotheexternalworkforce,whichincludes:• non-payroll(i.e.,contingent)workers,suchasindependentcontractors,freelancersandtemporarystaff
• servicesproviders(companiesthatsupplyservicesdeliveredbypeople,suchasconsultingfirmsandmarketingagencies)
Theexternalworkforcegivescompaniestheagilitytheyneedtothriveinthedigitaleconomy,andprovidesaccesstosought-afterskills.
Toexploreorganizations’relianceontheexternalworkforceindepth,SAPFieldglasscollaboratedwithOxfordEconomicstosurvey1,050seniorexecutivesin24industriesacross21countries.One-thirdofsurveyrespondentsareC-suiteleaders,includingChiefProcurementOfficersandChiefHROfficers.Fromaqualitativeperspective,weconductedin-depthinterviewswithmultipleexecutivestogaintheirinsightsandreactionstothesurveyfindings.
Thisreportoutlinestheresearch’sfindingsonhoworganizationscangaincompetitiveadvantagebymoreactivelymanagingcontingentworkers.We’llalsoexaminethevitalroletheexternalworkforceplaysingettingworkdone.Tosetthescene,let’sfirsttakealookatthebroadercontextoftheexternalworkforce.
Preface
of executives strongly agree their organization
has a talent strategy that encompasses employees
and the external workforce
29%
of executives say their external workforce is
important or extremely important in meeting
business needs for specialized new IT and
digital skills
62%
Preface3
Critical to organizations’ successOurresearchrevealsthattheexternalworkforceiscriticaltoorganizations’success.Itoperatesatthecoreoftheenterprise,andalmosthalfofexecutives(48%)surveyedsaytheircompanywouldbeunabletoconductbusinessasusualwithoutanexternalworkforce.
Theexternalworkforceisalsosignificantintermsofitssheersize,makinguparound42%ofworkforcespend.Toputthatanotherway,only58%oftotalworkforcespendisonemployees.
Non-payrollworkers
Servicesproviders
42%of spend is on the external workforce
23.9%57.9%
18.2%
Employees
Fig. 1: The way work gets done
What is the split of your organizational spend across employees, non-payroll workers, and services providers?Averages shown
Manybelievetheexternalworkforcewillcontinuetogrowinthefuture,becauseoftheflexibilityitprovidesforworkersandorganizations.MartinThomas,HeadofTotalWorkforceManagementatPhilips,says:“Icanseeaworldwheretheexternalworkforcemakesupanevengreaterproportionoftheworkforce.That’safutureweanticipateforPhilips.”
Vital to achieving business goalsOurresearchrevealsthattheexternalworkforceisimportantforcompaniestomeetawiderangeofbroadbusinessgoals–fromboostingorganizationalagility(citedby63%ofrespondents)toincreasingspeedtomarket(61%).Critically,67%ofrespondentssaytheexternalworkforceisimportantinimprovingthecustomerexperience/clientsatisfaction–atopgoalatmanycompanies.Theexternalworkforceisalsoseenasvitaltoinnovation,with59%ofexecutivesstatingthattheexternalworkforcehelpsthemcompeteinadigitalworld.56%ofrespondentssaytheexternalworkforceisimportantorextremelyimportantindevelopingorimprovingproductsandservices.
Preface 4
Fig. 2: The external workforce is key to organizations’ success
How important is the external workforce in meeting the following business goals?“Important” and “Extremely important” responses
74%
67%
66%
63%
61%
61%
56%Developing or improving products and services
Increasing speed to market
Reducing risk
Increasing organizational agility
Operating at full capacity/meeting market demands
Improving the customer experience/client satisfaction
Managing costs
Thesefindingsrevealtheimportanceoftheexternalworkforcetoorganizationstoday–notjustinkeepingthelightson,butinachievingbusinessgoalstothriveinarapidlychangingworld.JPStadelmann,HeadofPurchasingfortheExternalWorkforceatSwisscom,remarks:“Forus,thevalueoftheexternalworkforcehasneverbeencost.It’sflexibility.It’sstrategic.”
““For us, the value of the external workforce has never been cost. It’s flexibility. It’s strategic.”
JP StadelmannHead of Purchasing for the External Workforce, Swisscom
Preface5
Skills shortagesManyorganizationsfaceskillsshortages–andtheshortfallsareparticularlyacuteincountrieswithlowunemployment.Asaresult,itcanbeextremelydifficultforcompaniestosourcetheskillstheyneedtothriveandseizenewopportunities.
Theexternalworkforcedeliversenormousvaluebyprovidingflexibleaccesstosought-aftercapabilities.Forexample,62%ofexecutivessaytheirexternalworkforceisimportantorextremelyimportantinmeetingbusinessneedsforspecializednewITanddigitalskillssuchasAI,machinelearning,datascience,blockchain,automation,cloud,roboticsandtheInternetofThings.Althoughthesenewertechnologiescanhelpcompaniesoutperformcompetitorsinthedigitaleconomy,only31%ofexecutivesreporttheyhaveenoughskillsintheseareasnow,andjust56%anticipatetheywillhaveenoughinthreeyears.
Otherkeyskillsthatcompanieslacknow,andinwhichtheyforeseefutureshortfalls,includedata-drivendecision-making,userexperienceanddesignthinking.Astechnologycontinuestomarchforward,accesstocutting-edgeskillssuchasextendedrealityandquantumcomputingmaybeagame-changer.
Cybersecurity
In 3 yearsToday
Design thinking
User experience
Data-driven decision-making
New productdevelopment
Business operations
Newer technologies (AI, machine learning,
blockchain, automation, cloud, robotics,
Internet of Things)
59%
76%
48%
61%
42%
57%
38%
56%
33%
50%
31%
56%
29%
58%
Fig. 3: Significant shortfalls in key skills, vital for agility and growth
To what extent does your organization have the skills it needs in the following areas now and expected in three years?“Enough skills” responses
Preface 6
The challenge and opportunity for HRDespiteitsimmensesizeandimportance,manycompaniesdonotseetheexternalworkforceasanextensionoftheirworkforce,soitremainsanunder-managedasset.Only29%ofexecutivesstronglyagreetheirorganizationhasatalentstrategythatencompassesemployeesandtheexternalworkforce.What’smore,just17%ofexecutivesstronglyagreethatwhenstartingnewprojects,theyconsideralltypesoflabor,includingemployeesandtheexternalworkforce.
LisaZak,DirectorofStrategicSourcingatMedtronic,theworld’slargestmedicaldevicecompany,sumsitupwell:“ManyC-levelexecutivesdon’thavetheexternalworkforceontheirradarbecausetheyarenotawareoftheextenttowhichitcomprisestheirtotalworkforcemixandfuelsgrowthandinnovationoftheirbusiness.”
Byactivelymanagingtheexternalworkforce,companiescanunlocktheimmensepotentialofthisvaluableresource.Aflourishingexternalworkforcebenefitsemployees,too.
7 Preface
Insummary,theexternalworkforceisavitalleverforcompaniestoachievebetterbusinessoutcomes.Organizations that do not actively manage their external workforce are leaving value on the table and exposing themselves to risk.
74%
66%
64%
55%
The external workforce improves our culture by bringing in new people with different
backgrounds and experiences
The external workforce raises the bar for our employees by bringing in new sources of
skills and talent
The external workforce connects our employees to new ideas
The external workforce challenges our employees to do their best work
Fig. 4: How the external workforce impacts employees
To what extent do you agree with the following statements about the impact of the external workforce on your organization?“Agree” and “Strongly agree” responses
Today’sworkforceiscomprisedofaninternalworkforce(employees)andanexternalworkforce(non-payrollworkersorcontingentlabor,andservicesproviders).Theexternalworkforceaccountsformorethan40%oftotalworkforcespend.Thisexternallaborpoolisvastandvaried,comprisedofmultipletypesoftalentunderanarrayofworkarrangements.
Meet the modern workforce: how work gets done
Employees
Workers who are on the company’s payroll, typically receiving traditional employment benefits.
Non-payroll workers
Also referred to as contingent labor, these individuals are engaged by an organization to do work on its behalf, but not as employees. They can be contracted via staffing agencies, through freelance marketplaces, or directly by the company.
Examples: Independent contractors, freelancers and temporary labor.
Services providers
Companies contracted to get work done, typically on a project basis, via a Statement of Work (SOW). They provide services delivered by people.
Examples: Consultancies, IT outsourcers, marketing agencies, law firms, facilities management companies, call-center operators and accounting firms.
Inte
rnal
Wor
kfor
ceEx
tern
al W
orkf
orce
8Preface
“People want to be engaged the way they want to be engaged, meaning it’s not always going to be the traditional FTE.”
Cynthia MooreSourcing Lead Consultant & Procurement Solutions, Allstate
“
““Our services providers bring thought leadership and help us push boundaries to propel the business forward.”
Sasha Samac Head of Operations, Procurement and Supply Chain, Telstra
Learn about the other half of the external workforce: services providers Thisreportfocusesonnon-payroll,orcontingentworkers–onehalfoftheexternalworkforce.However,servicesproviders–theotherhalfoftheexternalworkforce–alsodeserveattention,astheyareahugesourceofuntappedvalue.
“Servicesprovidersareespeciallyvaluableascompaniesremakethemselvesforthedigitalera.SashaSamac,HeadofOperations,ProcurementandSupplyChainatAustralia’slargesttelecommunicationscompanyTelstra,says:“Telstrahasembarkedonawide-reachingtransformationprogramtouchingallareasofthebusiness.Ourservicesprovidersplayavitalrolebyhelpinguscomeupwithnew,forward-thinkingwaystodeliverexcellentserviceandinnovativesolutionstoourbusinessandretailcustomers.Ourservicesprovidersbringthoughtleadershipandhelpuspushboundariestopropelthebusinessforward.”
Everyyear,organizationsspendbillionswithservicesproviderssuchasconsultingfirms,IToutsourcersandmarketingagencies.Althoughmanycompaniesexcelinmanagingthefinancialsideofcontractswithservicesproviders,theystopshortofmanagingthe“people”aspectsoftheseengagements–suchaswhoisdoingthework,qualityofwork,progressagainstmilestones,andaccesstosensitivedata.Thisunder-managementpreventsorganizationsfrommaximizingvaluefromtheirservicesprovidersandcreatesrisksinsecurity,complianceandmore.
Tofindoutmore,readthesisterreport,Services Procurement Insights 2019: The Big Reveal. Thereportpresentsactionsorganizationscantaketoimprovemanagementofservicesproviderstoachievebetterbusinessoutcomes,boostROIandmitigaterisk.
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10Introduction
It’s all around youIt’sclearthattheexternalworkforceplaysakeyroleincommercialsuccess.Inthisreport,wewillfocusonnon-payroll,orcontingent,labor.
Contingentlaborhasbecomeincreasinglyimportantacrossallindustriesandgeographies.It’snotjustcompaniesdrivingthisshift–it’sworkers,too.Manypeoplearechoosingtoworkmoreflexiblythanbefore.Thinkofhigh-flyingconsultantswholeavetheirfirmstopursuecontractwork,freelancejournalistsandITcontractors.Manypeoplewithindustry-specificskillsalsochoosecontractworksuchasnurses,offshoreoilandgasworkers,andinsuranceclaimshandlers.
Inaddition,manybabyboomersareoptingforcontractworkinthefinalyearsoftheircareers,beforetheymovetofullretirement.HarvardBusinessReviewfoundthatamongthoseage55andolderwhoacceptedearlyretirementoffers,one-thirdhavegonebacktowork–butworkingretireesaremorelikelytobeworkingpart-timeorbeself-employedthantheirnot-yet-retiredcounterparts.i
Peopleenjoygreaterfreedomandchoiceascontingentworkersthantheywouldhaveasemployees.AsCynthiaMoore,SourcingLeadConsultant&ProcurementSolutionsatAllstate,observes,“Peoplewanttobeengagedthewaytheywanttobeengaged,meaningit’snotalwaysgoingtobethetraditionalFTE.”Thereareoftenfinancialbenefits,too.Forexample,manypeoplewithspecialistexpertisefindthatcontractworkcanbefarmorelucrativethanpermanentjobs.
A powerful (work)forceWehavealreadynotedthattheexternalworkforcemakesup42%oftotalworkforcespend.Contingentlaborisjustoverhalfofthat,representingnearly25%oftotalworkforcespend.
Inmanycases,contingentworkersworkattheheartoftheenterprise,accessingtheirclients’facilities,systemsandsensitivedata.Somehavecustomer-facingroles.It’scrucialthatorganizationscantrustthesecontingentworkerstoperformwell–andtrustthemwithinternalconfidentialinformation.
Despite the high stakes, many organizations lack insight into contingent workers and do not manage them effectively.Under-managementpreventsorganizationsfromunlockingthefullpotentialoftheircontingentworkers,andexposesthemtorisksinsecurity,complianceandmore.
Ourresearchexplorestheopportunitiesandrisksaroundcontingentlabor.Basedonouranalysisoftheresearchdata,weidentifiedfourkeyactionsorganizationsshouldtaketoimprovemanagementofcontingentlabor.Theseactionsempowerorganizationstoachievestrongerbusinessoutcomes,maximizevaluefromcontingentworkersandreducerisk.
Why it’s vital to actively manage contingent labor
Introduction
Introduction11
See your contribution in a new lightContingentworkerssupplymuch-neededskillsandhelporganizationsachieveabroadrangeofbusinessgoals.Companiesshouldencourageemployeestohelpnon-payrollworkersmeettheirsetgoalsandobjectives.Thatway,everyoneworkscloselytogethertoimproveoverallteamperformance.
Thefollowingpageswillexplaintheseactionsandrelatedfindingsinmoredetail.
Gain visibilityEffectivemanagementrequiresclearvisibility,yetlessthanhalfofresearchparticipantsarehighlyinformedaboutthebasicsoftheirnon-payrollworkers,suchascontractterms(47%),whoisdoingtheworkandwheretheyarelocated(both39%).Evenfewerarehighlyinformedaboutthequalityofwork(31%)andindividualperformance(16%)oftheirnon-payrollworkers.
Manage with rigorTogainmorevaluefromcontingentworkers,organizationsmustapplythesamedisciplinetomanagingthemastheydotheiremployees.Thatmeansmonitoringtheirqualityofwork,certificationsandtraining,accesstosystemsanddata,andmore.Lackofmanagementrigorexposescompaniestorisk.Forexample,manyrespondentsexperienceissueswithnon-payrollworkerssometimes,frequentlyorinnearlyeveryengagement,suchasdigitalsecuritybreaches(47%),complianceissues(40%)andmisclassifiedworkers(36%).
CollaborateOrganizationsmustfosterclosecross-functionalcollaborationtoachieveaclosedloop,wherebyoperationaldatafromlinesofbusinessisfedbacktoProcurementandHRtoinformsourcing.Thereisroomforimprovementinthisarea,asonly18%ofexecutivessaytheirorganizationhashighlyeffectivecross-functionalcollaborationinmanagingtheperformanceofitsnon-payrollworkers.
Actively manage your contingent workers to unlock more valueFour key actions
Gainvisibility
Manage with rigor
See your contribution in a new light
Collaborate
12Gain visibility
Gain visibility
Youcan’tmanagewhatyoucan’tsee.Unfortunately,manyorganizationsfallintothistrapwhenitcomestotheirnon-payrollworkers,despitetheroletheyplayingettingworkdone.Our research shows that senior executives across industries and around the world have limited visibility into their contingent workers.
Lessthanhalfofresearchparticipantsarehighlyinformedaboutthebasicsoftheirnon-payrollworkerssuchascontractterms(47%),whoisdoingthework(39%),wheretheyarelocated(39%),andresponsibilities(34%).Thesearestraightforwardmatters,andthelackofinsightisconcerning.
31% 29%
47%Contract terms
Who is doing the work
Where they are located
Access to facilities
Responsibilities (what they are doing)
Progress against milestones and/or deliverables
Access to systems and confidential company information
Compliance with required licenses and certifications (e.g., health, life & safety)
39%
39%
38%
37%
34%
33%
23%
Fig. 5: Challenges with visibility
How informed are you personally about the following details of your non-payroll workers?“Highly informed” responses
Fig. 6: Visibility into quality of work and individual performance is particularly low
of executives are highly informed about the quality of work of their non-payroll workers
are highly informed about individual performance of their non-payroll workers31% 16%
of executives are highly informed about the quality of work of their non-payroll workers
are highly informed about individual performance of their non-payroll workers31% 16%
Quality of workEvenfewerrespondentshaveinsightintohowthoseengagementsactuallygo.Only31%ofexecutivesarehighlyinformedabouttheirnon-payrollworkers’qualityofwork,andjust16%arehighlyinformedaboutindividualperformance.With such limited insight into quality of work, it’s difficult for executives to manage non-payroll workers effectively and have confidence in value delivered.
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““Many C-level executives don’t have the external workforce on their radar because they are not aware of the extent to which it comprises their total workforce mix and fuels growth and innovation of their business.”
Lisa Zak Director of Strategic Sourcing, Medtronic
14Manage with rigor
Manage with rigor
Many organizations do not manage contingent workers with the same discipline they use to manage their employees.Withcontingentworkerscomprisingasignificantproportionofanorganization’sworkforce,that’salotofresourcesthataren’tbeingmanagedwell.
Not only can under-management result in unsatisfactory outcomes, it exposes companies to substantial risk.Inmanycases,contingentworkersaccesssensitiveinformationincludingcustomerinformation,internalsystemsandfacilities.Ahands-offmanagementstylecreatesrisksofphysicalanddigitalsecuritybreaches.Ourresearchindicatesthatincidentsarewidespread.Forexample,47%ofrespondentsreportthattheyexperiencedigitalsecuritybreacheswithnon-payrollworkerssometimes,frequentlyorinnearlyeveryengagement.Thisisconcerning.
Organizationsareultimatelyresponsibleforthecontingentworkerstheyengage.Thatincludes,forexample,ensuringthatworkershavetheappropriatecertificationsandtrainingtocompletetaskssafely.Companiescanfacesignificantfinancialpenaltiesfornon-compliance,andinsomeindustries,lifeandhealthcanbeputatrisk.Organizationshaveampleroomtoimproveinthisarea,since40%ofexecutivessaytheyexperiencecomplianceissueswithnon-payrollworkerssometimes,frequentlyorinnearlyeveryengagement.
Anothercrucialaspectofcomplianceisensuringthatpeoplearecorrectlyclassifiedaseitheremployeesorcontingentworkers.Manyorganizationsstrugglewiththis,as36%ofexecutivessaytheyexperiencemisclassificationofnon-payrollworkerssometimes,frequentlyorinnearlyeveryengagement.Severalcountriesareintroducingnewregulationsinthisarea,makingitevenmoreimportanttocategorizeworkersaccurately.Further,lawsuitsinvolvingworkermisclassificationattractsignificantpresscoverageandcausesignificantreputationaldamagetocompanies.Organizations must act fast to mitigate these risks.
of respondents report that they experience
digital security breaches with non-payroll workers sometimes, frequently
or in nearly every engagement
31%47%
of executives say they experience
misclassification of non-payroll workers
sometimes, frequently or in nearly every
engagement
31%36%
15 Manage with rigor
Fig. 7: Executives report frequent issues with managing contingent workers
Spotlight on quality issuesQualityisanothersignificantchallenge,as39%ofrespondentsexperiencequalityissuesregardingresourcesand/orprojectssometimes,frequentlyorinnearlyeveryengagement.Thiscanpreventorganizationsfromachievingtheirstrategicgoals.
Clearly,companieswouldbenefitfromstrongermanagementofnon-payrollworkers.By applying more management rigor, they can achieve better results and reduce risk.
How often does your organization experience the following with regard to its non-payroll workers?
Digital security breaches (e.g., confidential data or information)
Need to use multiple systems to manage (source, manage, pay)
Unauthorized spend without approval of Procurement
Compliance issues (e.g., certifications,workers exceeding tenure)
Quality issues regarding resources and/or projects
Overcharges and duplicate payments
Misclassified workers
Late project delivery, missed milestones, or incomplete work
Rates that deviate from an agreed-to rate card or master services agreement
47%
46%
41%
40%
39%
37%
37%
36%
36%22% 9% 5%
20% 11% 6%
20% 10% 7%
16% 15% 7%
19% 13% 8%
20% 16% 5%
23% 17% 6%
22% 16% 9%
15% 13% 8%
Nearly every engagementFrequentlySometimes
of executives say they experience quality issues regarding resources and/
or projects sometimes, frequently or in nearly
every engagement
31%39%
Fig. 8: Harnessing technology to effectively manage contingent workers
Which of the following does your technology enable you to do, to help you manage non-payroll workers?Select all that apply
The role of technologyMostorganizationsuseHRsolutionstomanagetheiremployees,andmanyhavevendormanagementsystems(VMS)tohelpthemmanagecontingentworkers.However,inmanycases,organizationsdonottakefulladvantageoftheirVMSfunctionality,ordonotrollthesolutionsoutacrosstheentireenterprise.Thatcouldexplainwhy30%ofexecutivesinoursurveycitedlackofadequatetechnologytomanageexternallaborasverychallengingorextremelychallenging.
LimitedVMSfunctionalityandcoveragemakeithardfororganizationstomanagecontingentworkerseffectivelyatanoperationallevel.Onlyaboutone-thirdofexecutivessaytheirtechnologyhelpsthemeffectivelysourcetalentfromdigitalplatforms,ensurethatratesnegotiatedwithsuppliersareadheredto,andre-engagesuccessfulindividuals.AllofthisandmuchmoreispossiblewithasophisticatedVMS.
Ensure that ratesnegotiated with
suppliers areadhered to
Provide automatedbenchmarks to
real-time marketrates and availability
in various geographies, to help with
decision-making
Guide users topreferred suppliersand considerationsbased on internal
policies (e.g.,tenure limits)
Re-engage asuccessful individual
(e.g., a high performer who has finished one
project but has not yet hit their tenure limit)
Effectively sourcetalent from digital
platforms (e.g.,freelance
marketplaces)
Ensure that only peoplewho need to access
facilities and/or systems are badged or have
network access; and access is automatically
turned off at the end of an assignment
37%37%34% 33% 32%
25%
ErikaThier,CategoryManagementforExternalWorkforceManagementatNovartis,says:“It’smucheasiertoeffectivelymanagecontingentlaborifyouhaveeverythinginonesystem,rightdowntothecontractsignatures.Therighttechnologymakesthisprocessmucheasierandmoreconvenientforthebusiness.”
Manage with rigor 16
17 Collaborate
Collaborate
There’snosetstandardregardingwhichgrouphasprimaryresponsibilityforcontingentworkerswithinanorganization.TheresponsibilitycansitwithHR,Procurement,Operations,linesofbusiness,oradedicatedcentralizedgrouporfunction.
Fig. 9: Responsibility for contingent workers can sit with different functions
Which group has primary responsibility for non-payroll workers at your organization?
27%
Lines of business
Operations Procurement HR A dedicated, centralized
group
26%
19%17%
10%
Yetownershipisn’tthetopissue.Infact,effective management of contingent workers depends on close cross-functional collaboration between the relevant stakeholders.
LinesofbusinessandOperationsshouldfeedoperationaldata–forexample,oncontingentworkers’qualityofwork–backtoHRtoinformfuturesourcingdecisionsandwhetherornottore-engageaparticularworker.Procurementcolleaguesshouldalsobeinformed,becausetheynegotiatelargecontractswithstaffingagencies.Insightintocontingentworkers’qualityofworkhelpsProcurementensurethecompanyhastherightprovidersonitspreferredsupplierlist.Thisclosedloopfeedbackprocessisessentialtoinformfuturedecisions.
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Fig. 10: The need for closer cross-function collaboration
How effective is cross-functional collaboration (between Procurement, HR, IT and lines of business) on the following, with regard to your non-payroll workers?
Manyorganizationsstillhavealongwaytogobeforetheyactivateaclosedloopprocess.Just18%ofexecutivessaytheirorganizationhashighlyeffectivecross-functionalcollaboration(betweenProcurement,HR,ITandlinesofbusiness)inmanagingtheperformanceofitsnon-payrollworkers.
Performance management 50% 18%
Workforce planning
Spend management
Governance
Sourcing
79%
68%
68%
65%
58%38% 20%
46% 19%
40% 28%
34% 45%
Highly effectiveEffective
This gap in communication has consequences.IfHRandProcurementdon’treceivefeedbackfromlinesofbusinessandOperations,theycannotmakeinformeddecisionsaboutwhichcontingentworkerstore-engage–orwhichtonotre-engage.Poorcommunicationcouldexplainwhyjust10%ofexecutivessaytheirorganizationmanagesre-engagementofnon-payrollworkersverywellafterapositiveexperience.Figure10revealssignificantroomforimprovementincross-functionalcollaborationacrosstheboard.
DavidSwift,HeadofGlobalCorporateProcurementatNovartis,explainswhycloserteamworkbetweenallpartsofthebusinessiskeytomanagingnon-payrollworkerseffectively:“Tosourceandmanagecontingentworkerswell,youneedinputfrommultipleteams.HRhelpsyougetthebesttalent,ProcurementorFinanceassessesvalueformoney,facilitiesmanagementhandlesbuildingaccess,ITmanagessystemanddataaccess,andlegalprotectsthecompany’sintellectualproperty.”
Collaborate
of executives say that cross-function
collaboration is highly effective when it comes to sourcing non-payroll workers
31%20%
19
Contingentworkersprovidevitalskillstothebusiness,performcrucialworkacrosstheorganization,andaccountfornearlyone-fourthoftotalworkforcespend.RonTate,DirectorofSourcingManagementatAllstate,highlightshownon-payrollworkershelpthecompanyrespondrapidlytonewdevelopments:“Ifanaturaldisasteroccurs,thenumberofinsuranceclaimssoarsovernight.Ourcontingentworkforcehelpsusadjustourstaffinglevelsquicklyandflexibly,sothatweprovideexcellentsupportforcustomersintheirhourofneed.”
Despite their importance, contingent workers are frequently under-managed – preventing organizations from reaping the maximum value of this powerful resource. Thereisclearroomforimprovement,asjust42%ofexecutivessaythatmorethan90%ofnon-payrollworkersmeettheirstatedgoalsandobjectives.
See your contributionin a new light
of executives say that more than 90% of
non-payroll workers meet their stated goals
and objectives
42%
See your contribution in a new light
“If a natural disaster occurs, the number of insurance claims soars overnight. Our contingent workforce helps us adjust our staffing levels quickly and flexibly, so that we provide excellent support for customers in their hour of need.”
Ron TateDirector of Sourcing Management, Allstate
“
% o
f res
pond
ents
Less than 60% 61-70% 71-80% 81-90% 91-100%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%7%
11%
18%
22%
42%
% of non-payroll workers
Fig. 11: Room for improvement in helping contingent workers meet their stated goals and objectives
Approximately what percentage of non-payroll workers at your organization meet their stated goals and objectives?
Everyone who works with non-payroll workers can help them meet their set goals and objectives. It’simportanttocreateanenvironmentinwhichemployeeswhoworkalongsidecontingentworkersareencouragedtotakemoreownershipfortheirsuccess.Thiswillnotonlyhelpnon-payrollworkersmeettheirgoals–itwillalsocontributemoretotheoverallperformanceoftheteam.
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Around11%oforganizationsthatrespondedtooursurveyoutshinetherest.These“Pacesetters”havemuchmorerigorousapproachestomanagingandextractingvaluefromtheirexternalworkforce–includingcontingentworkers.
Pacesettersstandoutinthreeimportantways:• visibilityoftheexternalworkforce• effectivemanagementoftheexternalworkforce• competitivenessinadigitalworld
Let’sexplorehowPacesetterscomparetotherest.
Pacesetters excel in visibility Pacesettershavesuperiorvisibilityoftheircontingentworkerscomparedtootherrespondents,particularlywithregardtoworkers’facilitiesaccess,responsibilitiesandqualityofwork.
Pacesetters lead the way
Fig. 12: Pacesetters have superior visibility
OthersPacesetters
Contract terms
Access to facilities
Quality of work
Responsibilities (whatthey are doing)
Compliance with requiredlicenses and certifications
Who is doing the work
Access to systems andconfidential company
information
67%44%
66%34%
61%31%
59%27%
56%36%
41%32%
32%40%
How informed are you personally about the following details of your non-payroll workers?
“Highly informed” responses
Pacesetters lead the way21
Pacesetters manage with rigorPacesettersmanagecontingentworkerswithmorerigor.Thathelpsthemtomostlyavoidcommonproblemssuchascomplianceissuesandratesthatdeviatefromagreed-toratecardsormasterservicesagreements.However,Pacesettersstillhaveroomtoimprove,astheyremainsusceptibletodigitalsecuritybreaches.
Pacesetters rise above the silosPacesettersexhibitbettercross-functionalcollaborationintheirmanagementofcontingentworkers.
Fig. 13: Pacesetters experience fewer issues with contingent workers
Fig. 14: Pacesetters exhibit stronger collaboration
OthersPacesetters
Digital security breaches(e.g., confidential
data or information)
Overcharges andduplicate payments
Compliance issues (e.g., certifications, workers
exceeding tenure)
Unauthorized spend withoutapproval of Procurement
Rates that deviate from an agreed-to rate card
or master services agreement
34%48%
7%41%
6%46%
4%45%
1%42%
OthersPacesettersWorkforceplanning
Sourcing Governance Spendmanagement
Performancemanagement
96%
77%88%
54%
83%
63%76%
66%76%
66%
How often does your organization experience the following with regard to its non-payroll workers?
“Sometimes,” “Frequently,” and “Nearly every engagement” responses
How effective is cross-functional collaboration (between Procurement, HR, IT and lines of business) with regard to your non-payroll workers?
“Effective” and “Highly effective” responses
22Pacesetters lead the way
Pacesetters realize better performance from their contingent workersPacesettersreportsubstantiallybetterperformanceregardingtheirnon-payrollworkers.Theyaremorethantwiceaslikelytosaythat90+%oftheirnon-payrollworkersmeetstatedgoalsandobjectives(88%Pacesettersvs.37%ofotherrespondents).
Fig. 15: Pacesetters’ contingent workers are more likely to meet stated goals and objectives
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% o
f res
pond
ents
70% or less
20% 19%24%
37%
88%
8%2%2%
71-80% 81-90% 91-100%
% of non-payroll workers
OthersPacesetters
Approximately what percentage of non-payroll workers at your organization meet their stated goals and objectives?
23
Conclusion
ThePacesettersteachusthatorganizationsmustviewandmanagenon-payrollworkersasanextensionoftheirworkforce.Yetmanyorganizationshavedifferentfunctionsmanagingemployees,contingentworkersandservicesprovidersindependently,eachusingtheirownsolutions.Toovercomethis,companiesmustbreakdowntheseorganizationalandtechnologysilosandembracetotalworkforcemanagement.Organizations should holistically view and manage their entire workforce – including employees, contingent workers and services providers.
Totalworkforcemanagementenablesorganizationstocreateholistictalentstrategiesthattrulysupporttheirbusinesspriorities.MartinThomas,HeadofTotalWorkforceManagementatPhilips,outlineswhattotalworkforcemanagementlookslikeathiscompany:“Wealwaysstartbylookingatthebusinessneed,thenwetalkwiththerelevantstakeholderstodecidethebestapproachtofulfillthatneedtogetworkdone.Itmightbehiringanemployee,bringinginacontractororengagingaservicesprovider.Toguidedecision-making,wegivethebusinessrichinsightintotheavailabilityofthedesiredskillorcapabilityandthecostofacquiringthatskillviadifferentchannels.Forexample,wehavehelpedthecompanydecidewherebesttosetupglobalservicesoroperations.Ultimately,wehelpthebusinessgettherightskillintherightplacethroughtherightchannelattherightcost.”
Toachievetotalworkforcemanagement,organizationsshouldconsidercreatingapositionforaseniorpersontooverseetheexternalworkforce.31%ofexecutivessaytheirorganizationhasanexecutivesponsorwhoreportstotheC-suiteregardingthestrategyandoperationsoftheirexternalworkforce.Othercompaniesshouldfollowtheirlead.
Anotherrecommendationisthatorganizationsusetechnologytoguideuserstothepropersourcingchannelfortheirneed,includingemployees,non-payrollworkersandservicesproviders.Only16%ofexecutivesinoursurveystronglyagreedtheirtechnologywasabletodothat.
AkeylessonfromthePacesettersistheimportanceofgreatervisibilityinhelpingexecutivesrealizebetterbusinessoutcomesfromtheircontingentworkersandmitigaterisk.Visibilityisvitaltoeffectivemanagement.
Further,theresultsfromthePacesettersshowthatmanagingcontingentworkerswithrigorpaysoff.Pacesettersreportfewermanagementchallengesandincidentsaswellasbetterperformancefromtheirnon-payrollworkers.
BecomingaPacesetterinvolvesachangemanagementjourneyandestablishmentofanexternalworkforcemanagementprogramwithstronggovernanceandexecutivesponsorship.Technologyisakeypartofthesolution,butit’snotasilverbullet.Byreplacingad-hocapproachestomanagingcontingentworkerswiththerigorusedtomanageemployees,organizationscanreapfargreaterrewardsfromtheseengagements.Given the potential value to be gained by better managing contingent workers, we believe the topic should be on the C-suite agenda.
The value of total workforce management
Conclusion
24
Here’s how to get started
Gain visibilityofyournon-payrollworkerstodrivebetterbusinessoutcomesandmitigaterisk.
Manage your contingent workers with the same rigoryouuseinmanagingyouremployees.
Improve cross-functional collaborationbetweenProcurement,HR,IT,Operationsandthelinesofbusinessinmanagingnon-payrollworkers.
Ensure your leadership has visibilityintothescope,impactandspendoncontingentworkers.
Get the support you needtomanagenon-payrollworkerseffectively,includingpurpose-builttechnology,executivesponsorshipandaprogramwithstronggovernance.
To capture more value from your contingent workers, follow these steps:
Conclusion25
“We always start by looking at the business need, then we talk with the relevant stakeholders to decide the best approach to fulfill that need to get work done. It might be hiring an employee, bringing in a contractor or engaging a services provider.”Martin ThomasHead of Total Workforce Management, Philips
“
SAPFieldglasscollaboratedwithOxfordEconomicstofieldandanalyzeresponsesfromasurveyof1,050seniorexecutivesabouttheiruseandmanagementoftheexternalworkforce.
OxfordEconomicsalsoconductedqualitativeinterviewswithexecutivesinthefield:
• The Allstate Corporation:CynthiaMoore,SourcingLeadConsultant&ProcurementSolutions,andRonTate,DirectorofSourcingManagement
• Medtronic:LisaZak,DirectorofStrategicSourcing• Novartis International:DavidSwift,HeadofGlobal
CorporateProcurement,andErikaThier,CategoryManagementforExternalWorkforceManagement
• Royal Philips:MartinThomas,HeadofTotalWorkforceManagement
• Swisscom:JPStadelmann,HeadofPurchasingfortheExternalWorkforce
• Telstra Corporation:SashaSamac,HeadofOperations,ProcurementandSupplyChain
Geographical reachRespondentscomefrom21countriesinfiveregions:• Asia Pacific:Australia,Japan• Europe:Belgium,Denmark,Finland,France,
Germany,Italy,Luxembourg,Netherlands,Norway,Spain,Sweden,UnitedKingdom
• Middle East:Israel,SaudiArabia,UnitedArabEmirates
• Latin America: Brazil,Mexico• North America:Canada,UnitedStates
Industry reachRespondentsrepresentabroadrangeofB2BandB2Csectors:aerospaceanddefense,automotivesuppliers,automotivemanufacturers,banking,capitalmarkets,chemicals,construction&engineering,consumergoods,healthcare,hightech,industrialmanufacturing,insurance,lifesciences,logistics,media&entertainment,oil&gasdownstream,oil&gasupstream,professionalservices,publicservice,rail,retail,telecom,travel&transportation,andutilities&waste.
Company sizeArangeofcompanysizesarerepresentedinthesurvey(figuresindicateannualrevenue):• 10%$500m−$1bn• 35%$1bn−$5bn• 40%$5bn−$20bn• 15%over$20bn
Wescreenedoutrespondentswithfewerthan500employeesorfewerthan500non-payrollworkers.
Executive profile Respondentsare:• 33%C-levels• 34%DirectreportstotheC-level• 33%Directors
Functionsrepresentedare:• 50%Procurement• 25%HR• 15%IT• 5%Finance• 5%Operations
About the research
SAPFieldglass,alongstandingleaderinexternaltalentmanagementandservicesprocurement,isusedbyorganizationsaroundtheworldtofind,engageandmanagealltypesofflexibleresources.Ourcloud-based,openplatformhasbeendeployedinmorethan180countriesandhelpscompaniestransformhowworkgetsdone,increaseoperationalagilityandacceleratebusinessoutcomesinthedigitaleconomy.BackedbytheresourcesofSAP,ourcustomersbenefitfromaroadmapdrivenbyacontinuousinvestmentininnovation.
About SAP Fieldglass
About the research 26
Our multi-year investigation of the evolving workforce kicked off with last year’s report, External Workforce Insights 2018: The Forces Reshaping How Work Gets Done. The report identified four key themes:• The multi-channel workforce is on the rise:
Organizations are using a broad and growing range of channels to engage the external workforce.
• It’s about the core: The external workforce is essential to core operations.
• Cost is not the whole story: Cost is no longer the primary driver for using an external workforce.
• Visibility is everything: Visibility is key to managing the external workforce effectively and maximizing its value.
Continuing the story: An ongoing research program
27
www.fieldglass.com
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