Written by: John DeWeerd, SVP Workforce Management Solutions, HireGenics
Over the past 20 plus years, we have seen significant changes in the evolution of contingent workforce landscape. The one thing that has been established is that a defined Contingent Workforce Management (CWM) program (third-party MSP or internally run) combined with a leading VMS technology is the best practice for the management of all contingent labor (Staff Augmentation and SOW/Professional Services). It is undisputed that a dedicated CWM program has been the driver to providing visibility into the entire contingent workforce ecosystem by managing suppliers, streamlining processes, managing cost, creating compliance, and generating actionable data for decision making. These core attributes have remained consistent since the introduction of CWM, largely driven by MSP players more than 20 years ago; however, the struggle to build a more comprehensive talent acquisition process has gone largely unanswered.
Over the last two years, a tight talent market, cost containment mandates and increased visibility on Professional Services have led many enterprises to reach a breaking point with regards to the disconnected processes, strategy and sources of talent. And while the MSP or internal CWM program have been the foundation of the contingent workforce management solution, we have seen the gap widen in the ability of the people and talent acquisition strategy in most program teams to align with a broader, enterprise-wide talent strategy (often referred to as a “Total Talent Management” strategy).
What is different and what has stayed the same?
Many companies have evolved their approach and use of contingent labor to address their talent acquisition strategies. Finding necessary talent to meet business and project needs has become a significant part of the overall talent and business strategy. Using a mix of full-time talent and contingent talent to achieve these goals is now the norm; where, as recently as 10 years ago, many companies still viewed their contingent labor program as a necessary cost of doing business.
Why the change? Contingent workers fill a need where full-time workers are not an ideal fit to meet the short- and long-term business goals. Whether it is finding mission critical niche skills and talent or developing a solution to ramp up and down for cyclical talent demands, contract work has become a thoughtful component of the overall talent strategy versus how it was more commonly used in the past as a short term stop gap to help the business.
In the past, there was little planning and strategy around contract labor with regard to an overall talent acquisition strategy. Managers and business units would budget for use of contractors, typically based on year-over-year analysis and a forecast of future projects, but rarely was contract labor included in the talent acquisition strategy. Talent Acquisition leaders now see the value of the contract workforce and are asking for a seat at the table with contract labor program owners and key stakeholders. The majority of MSPs, staffing suppliers, and other contract workforce providers are not prepared for the shift from a purely procurement-driven process to a holistic talent acquisition strategy that leverages established Procurement processes and suppliers
How has the MSP evolved and where is it falling short?
For years the term “Total Talent Management” has been used but has fallen short of the goals and expectations of talent acquisition leaders. Why is this? Most MSPs and contingent workforce programs were owned and led by Procurement and/or HR. The majority of MSPs created operational and delivery models to satisfy these key stakeholders’ goals with a focus entirely on supply chain management, pricing and visibility. It was designed to focus on supplier performance rather than focusing on talent. Because of the increased use of MSPs, and the fact that many of the MSPs in the marketplace have not invested in broader talent acquisition strategies to help clients address the widening talent demand-supply gap, the MSP as it has been known over the past 15 years is becoming obsolete. Workers and companies are finding it more necessary to be agile and talent-focused to keep pace with evolving technology innovations, investment in process automation, digital transformation, and increased customer expectations.
Building out a contingent talent approach as part of a larger enterprise talent acquisition strategy requires a different skill set and approach than in the past for the MSP. The level of planning, solutioning, and supplier engagement is different. It requires more proactive critical thinking, changes to supply chain design, new worker talent acquisition strategies, and a new approach to the overall recruitment of key talent. All of these factors have created a shift from a traditional, transaction focused, vendor management workforce program to a more talent centric strategy for contract labor, leaving many MSPs and their clients struggling to address their talent needs.
Is your program ready for a talent driven MSP 4.0?
Many organizations are working on their overall talent acquisition strategy, and leading organizations have seen the positive impacts of a broader approach that aligns both fulltime and contingent talent. The MSP 4.0 solution has evolved to operate as a strategic partner to business leaders when considering: the right type of talent, where the talent should be sourced, how the work should be priced, and how the resources will be engaged. Finding and building talent communities, proactively building out talent pipelines, and working with business stakeholders on planning are critically important aspects of creating a broader talent strategy for contingent workers. Overall, client readiness is one of the most important factors when shifting from a purely procurement focused to a more talent focused contingent workforce program. The ability to build out talent acquisition playbooks for the Branded Staffing and Direct Sourcing solutions will enable the MSP to communicate a thoughtful talent acquisition strategy to staffing partners with a greater focus on talent metrics versus the historical supply chain and vendor management metrics found in the more transactional MSP vendor management services.
The shift from a philosophy focused purely on vendor management of contingent labor to a more talent-centric solution is a significant undertaking that will require change in how the MSP model operates, how suppliers partner with the MSP, and, ultimately a shift on how enterprises view their contingent workforce as part of a larger approach for engaging the right talent to achieve their business goals.