Navigating procurement challenges with contingent workers

Contingent workers can be a valuable addition to a company's workforce, providing flexibility and cost savings. However, engaging and managing these workers comes with its own set of challenges, particularly when it comes to procurement.

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Procurement vs HR

Traditionally, procurement has been the "owner" of contingent workers, responsible for finding the hiring companies used to source them, while HR has been responsible for employees. However, in today's business landscape, where hybrid, flexible and agile working are all centre stage, the lines of responsibility have blurred. And without collaboration between the two departments, the outcomes can be disastrous: pricing errors, talent gaps, wasted resources, rogue hiring and chaos.

Overcoming procurement challenges

Procurement challenges typically arise when hiring managers circumvent procurement processes to hire the skills they need quickly, putting the organisation at risk. These risks include the statutory risk of misclassifying workers, overpaying for workers, security threats, competitive risk and more. Procurement's job is to ensure that contingent workers come into the organisation under an approved framework, where the engagement process is open and transparent, the contract terms are agreed with all stakeholders and boundaries exist from the worker's access to data to their last day in the business.

Two of the major procurement challenges and solutions in the engagement and management of contingent workers include the following:

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Challenge #1: Risk

In an environment where agility and speed are valued, hiring managers often bypass procurement processes to quickly secure the skills they need. However, this can expose the organisation to various risks, such as misclassification of workers, overpayment, security threats, and competitive risks.

Solution #1: Risk Solutions

To mitigate these risks, organisations must implement robust risk management strategies. This involves:

• Identifying and tracking rogue spending: Organisations need to identify the areas where unapproved spending on contingent workers is occurring. By tracking spending more precisely, businesses can gain visibility into unauthorized hiring and address it effectively.
• Centralising management with VMS technology: Utilising Vendor Management System (VMS) technology can streamline and centralise the management of contingent workers. A VMS provides transparency, control, and compliance, ensuring that all contingent worker engagements adhere to procurement processes and comply with regulations.
• Collaborative frameworks: Establishing collaborative frameworks that involve all stakeholders, including procurement, HR, and hiring managers, helps set clear boundaries and eliminates rogue hiring. This collaboration ensures that the engagement of contingent workers is aligned with business objectives and complies with established procurement processes.

Challenge #2: A disconnect between procurement and company departments

Effective procurement relies on collaboration and communication between procurement teams and other company departments. A lack of collaboration can lead to disruption and discord in the management of contingent workers.

Solution #2: Departmental disconnect solutions

To address this challenge, organisations should focus on facilitating meaningful collaboration between departments and procurement. This entails:

• Understanding departmental needs: Procurement should have a comprehensive understanding of the skills and talent requirements of each department. By identifying the departments' typical contingent worker needs, procurement can proactively establish relationships with suppliers who can cater to those requirements efficiently.
• Involving stakeholders in business strategy: Effective procurement involves treating each department as a valued stakeholder. Procurement should engage all stakeholders in discussions around contingent worker strategies, taking their input into account when developing procurement processes and guidelines.
• Aligning goals: To foster collaboration, all involved parties must be aligned with shared goals. By establishing clear objectives and performance metrics, departments can work together with procurement to optimize the engagement and management of contingent workers.

Key takeaways

In conclusion, with the right procurement and HR processes and systems in place, hiring managers can mitigate the risks associated with contingent workers. Procurement plays a critical role in ensuring that organisations comply with procurement and company processes for engaging and managing contingent talent. By working collaboratively and keeping all stakeholders aligned with the shared goals, the organisation can overcome procurement challenges associated with engaging and managing contingent workers.

Ready to navigate procurement challenges with confidence?

Contact CXC today to discover how our comprehensive workforce management solutions, including our advanced VMS technology, can help your business overcome procurement challenges and drive success. With CXC as your trusted partner, you can unlock the full potential of your contingent workforce and achieve your strategic objectives efficiently.

Contact CXC today to schedule a consultation with our expert team. Call us now at +65 6233 8376 or directly PM me to learn more.