1.
Contingent Workforce
Management Benchmark Report
Presented by Jenni Nelson, HCMS
Originally present at:
August 2013
Sponsored by:

2.
Why a Contingent Workforce Management
Benchmarking Survey?
According to the ABS, November 2012,
there are:
11.5 Million workers in Australia of
which 3.15 Million are either:
• Workers with no paid leave
entitlements; or
• Independent Contractors
This represents 28% of the total
workforce
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With paid
leave
entitlements
63%
Without paid
leave
entitlements
19%
Independent
contractors
9%
Other
business
operators
9%
Forms of Employment
November 2012

3.
What does best practice in Contingent Workforce
Management look like?
Presentation Name
Month – 201X
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Cost Management
• Visibility of overall spend
• Consistent pay rates and margins
• Reporting capability
• Reduced administration costs
Risk Management
• Low risk engagement contracts
• Compliance with OH&S, legislative and internal policies
• Robust 3rd party suppliers
Productivity and Optimised
Workforce Utilisation
• Measure time to productivity
• % of contingent workers that meet stated goals and
objectives, and that fulfil their contract
• Reuse of contractors for other assignments
Supply Chain Efficiency
• Time to hire
• Quality of hire
• % of compliance to agreed processes

4.
Who responded?
110 respondents, 53 completed
Top 5 industries:
• Government / Defence
• Banking and Finance
• HR Recruitment
• Mining, Gas & Oil
• Transport and Logistics
33% of companies with > $1billion
turnover
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33%
32%
4%
5%
26%
Respondents by Job Classification
Human Resources Director / Manager
Recruitment Manager
Procurement Manager
Chief Financial Officer
Other

5.
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uplift
FINDINGS

6.
Key Themes
Contingent Workforce Management is:
• An emerging discipline
• Mostly fragmented and inefficient
• Typically, there is no one function accountable for it
• The current activity is focusing mostly on cost and
efficiencies, with less focus on quality and competitive
advantage
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7.
Structures and Enablers
Presentation Name
Month – 201X
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• No one function is accountable for Contingent Workforce Management
• Technology tends to be disparate
• Without a comprehensive lens, organisations are exposing themselves to potential risks and higher costs
0%
5%
10%
15%
20%
25%
Technology
0%
10%
20%
30%
40%
50%
60%
70%
Structures

8.
Reasons For Using Contingent Workers
Presentation Name
Month – 201X
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Top 3 reasons respondents use Contingent Workers:
1. Short term projects and/or project centric work
2. To replace a staff member on leave
3. Greater Flexibility than permanent

9.
Average tenure of contingent workers: Top 3 for
each category
Presentation Name
Month – 201X
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• Many respondents do not know the average tenure of their Contingent Workers
• Most respondents are using Contingent Workers for more than 7 months, across all labour categories
• This runs contrary to the top 3 reasons for engaging Contingent Workers

10.
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efficiency
SUPPLY CHAIN EFFICIENCY

11.
How contingent workers are recruited…
Presentation Name
Month – 201X
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• The supply chain for Contingent Workers tends to be governed to some extent
• Some use of MSP and/or RPO, and high use of preferred supplier panels
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Professional Staff
(e.g. Engineering,
Finance, HR)
Office/Admin Staff
(e.g. Call Centre,
Admin, Customer
Service, Retail)
Technical & Trade
Staff (e.g. Mechanics,
Electricians)
Industrial Labour
(e.g. Drivers,
Cleaners, Hospitality)
Contingent staff directly sourced and hired
through referrals
Hiring Managers must go through
Outsourced Recruitment Provider
Hiring Managers deal directly with ANY
recruitment agencies of their choosing
Hiring Managers must go through a Managed
Service Provider to engage with approved
agencies
Hiring Managers must go through
HR/Recruitment to engage with approved
agencies
Hiring Managers deal directly with
APPROVED recruitment agencies
Contingent staff sourced directly by the
HR/Recruitment Team

12.
Time to Fill
Presentation Name
Month – 201X
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It appears that time to fill data for contingent workers is
somewhat tracked:
• 20% indicated they do not know Time to Fill for one or
more labour category of contingent workers
• 92% indicated Time to Fill for one or more labour category
of contingent workers
• 7% did not know Time to Fill for any labour category of
contingent worker
If one of the top 3 reasons for using Contingent Workers is
“Greater Flexibility”, then Time to Fill is Critical

13.
How do you Measure Quality of Hire of
Contingent Workers?
• Most organisations are measuring Quality of Hire at some level, but not
necessarily formally or consistently
• Quality of Hire should be captured to measure the effectiveness of your
supply chain
25% of respondents either don’t measure quality of hire, or don’t know how
it is measured
• How do you know which sourcing channels are providing you the best contingent staff?
70% of respondents measure Quality of Hire through informal and/or formal
feedback from Hiring Managers
20% of respondents use Hiring Manager Surveys to measure Quality of Hire
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14.
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horizons
Productivity and Optimised
Workforce Utilisation

15.
Tracking Productivity
• 31% do not know whether their Contingent Workers meet stated goals or
objectives
• 21% do not manage Contingent Workforce performance
• 52% manage Contingent Workforce performance at the Business Unit
Level based on documented procedures
• 65% of respondents reported that most of their contractors fulfil or
complete their contracts. 15% of respondents don’t know.
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Contingent Workers’ Performance and Productivity is not tracked consistently
• Opportunity to achieve greater workforce utilisation and productivity

16.
Contingent workers: contract extensions
Presentation Name
Month – 201X
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• 42% of organisations extend more than 50% of their contingent workers beyond their first
engagement
• Opportunity for Cost Savings through better governance and infrastructure around raising
requisitions and extensions
15%
27%
16%
18%
11%
13%
What percentage of Contingent Workers
are extended beyond their first
engagement?
75-100% 50-75% 25-50% 10-25% <10% Don't know
Inferences:
• Initial requirements are not properly
estimated
• Line managers are taking the “path
of least resistance” by extending
existing contingent workers
• Some line managers may use
contingent workers to avoid FTE
constraints
• Risk increases in relation to
employer / employee relationship
issues, as tenure increases

17.
Contingent Workforce Utilisation
Presentation Name
Month – 201X
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• 26% of respondents re-assign more than 75% of their contingent workers
• Opportunity to improve contingent workforce utilisation
• Time to productivity is a significant
benefit of re-assigning contractors
• To achieve greater re-use of
contingent workers, organisations
need better visibility of their
contingent workers’ skills and
availability
2%
24%
20%
9%
26%
19%
What percentage of CWs are Re-
engaged for other assignments
within your organisation?
75-100% 50-75% 25-50% 10-25% <10% Don't know

18.
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uplift
COST MANAGEMENT

19.
Contingent Workforce Cost Tracking
• 53% have centralised reports of overall spend against budget (real-time
and/or regular)
• Tighter reporting is the first step to achieving better cost management
• 36% of respondents do not know whether their Contingent Workforce
Spend is within budget
• 25% did not know their total spend on their Contingent Workforce
• Who in the organisation has overall accountability for Contingent
Workforce budget?
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Typically, cost tracking of contingent workforce spend is poor, representing
opportunities for improved cost efficiencies

20.
Contingent workforce pay management
Presentation Name
Month – 201X
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Organisations are starting to standardise contingent workforce pay rates, however there is still a
long way to go.
The pay component, represents 80-100% of the rate and a large proportion of the
overall cost opportunity
• Defining and implementing consistent pay rates based on skill types and
levels, improves cost efficiencies.
65%
Use pre-defined and consistent
Contingent Worker pay rate ranges for
at least one category of work
44%
Reported “pay rates are negotiated
at time of hire” for at least one
category of work
13%
Did not know how pay rates were
negotiated for Contingent Workers
in at least one category of work

21.
Managing margins with 3rd party suppliers
Presentation Name
Month – 201X
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Negotiating margins with 3rd party suppliers of Contingent Workers appears to be somewhat ad
hoc and inconsistent.
• For organisations looking for an ROI to implement an MSP, RPO and/or CMO
model, improved margin control presents an opportunity to achieve cost
efficiencies.
47%
25%
20%
Have negotiated consistent margins with 3rd
party providers, for at least one category of
work
Negotiate margins at time of hire, for at
least one category of work
Have no visibility into 3rd party margins,
for at least one category of work

22.
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efficiency
RISK MANAGEMENT

23.
Frameworks for Engaging Contingent Workers
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The decision to utilise a contingent worker appears to be predominantly informal
• Tighter controls through a formal decision framework will reduce risks associated
with employee/employer relationships
0%
10%
20%
30%
40%
50%
60%
The decision to engage
a Contingent Worker is
made at offer stage,
based on the needs of
the preferred candidate
A formal decision
framework is used prior
to commencement of
recruitment, to deem the
role as Contingent or
Permanent
Most roles are
designated as either
permanent or contingent
prior to recruitment,
based on an informal
discussion with key
stakeholders
Don't know Other
Typically, how does your organisation make decisions to engage contingent
workers versus permanent employees?

24.
Contingent workforce pay management
Presentation Name
Month – 201X
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• Organisations are using multiple types of contracts for engaging contingent workers
• High use of direct contractors in all work categories, which is the greatest area of risk
0%
10%
20%
30%
40%
50%
60%
Professional Staff Office/Admin Staff Technical & Trade
Staff
Industrial Labour
What types of engagement contracts do you use for engaging
Contingent Workers?
Direct contract with individual
Fixed term employment
Direct contract with incorporated company
(independent contractor)
Consultancy agreement (Statement of work)
Contract with via 3rd party intermediary (e.g.
agency. RPO, MSP, CMO)

25.
Managing margins with 3rd party suppliers
Presentation Name
Month – 201X
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35% of respondents reported that less than 50% of their contingent workers are engaged under
their organisation's standard contracts
• Non-standard engagement contracts represent risk exposure
Risks associated with non-standard
contracts can include:
• Financial risk regarding entitlements
such as superannuation or annual
leave
• Payroll tax liabilities
• Unpaid income tax
• Workcover claims
35%
27%
6%
6%
13%
13%
What percentage of your Contingent Workers
are engaged under your organisation's
standard contracts?
90-100% 75-90% 50-75% 25-50% <25% Don't know

26.
Governance frameworks
Presentation Name
Month – 201X
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• 55% of respondents use their Contractual Framework (amongst other mechanisms) to
ensure their 3rd party providers are meeting their financial, legislative and corporate
governance requirements
• 17% reported having no framework in place
0%
10%
20%
30%
40%
50%
60%
Contractual
framework
Reporting SLA Management Surveys Audits No framework in
place
Don't know Other
What governance frameworks are in place to ensure your 3rd PARTY PROVIDERS of Contingent
Workers meet your organisation's Financial, Legislative and Corporate Governance Requirements?

27.
Governance frameworks
Presentation Name
Month – 201X
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• 28% of respondents do not have centralised accountability to ensure worker entitlements
and relevant taxes are paid regarding their contingent workforce. They rely on the business
unit or 3rd party agencies to manage this.
• 8% don’t manage it at all
0%
10%
20%
30%
40%
50%
60%
Contractual
framework
Reporting SLA Management Surveys Audits No framework in
place
Don't know Other
What governance frameworks are in place to ensure your 3rd PARTY PROVIDERS of Contingent
Workers meet your organisation's Financial, Legislative and Corporate Governance Requirements?

28.
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doing what you love
RECOMMENDATIONS

29.
First steps: Visibility, Cost & Risk
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• Centralise accountability for Contingent
Workforce management
• Identify all current Contingent Workers, their
rates, length of tenure and nature of
engagement contract
Visibility
• Implement centralised and regular reporting
to track costs and other metrics
Cost
• Identify all ‘high risk’ engagement contracts
(e.g. direct contractors; non-standard
contracts)
• Identify long term Contingent Workers at risk
of being deemed ‘employees’
• Develop a prioritised plan to mitigate risk
Risk
Solutions and Enablers:
Consulting:
• Contingent Workforce Audit
Technology:
• Vendor Management System
Contingent Workforce
Management Providers:
• Recruitment Process
Outsourcer;
• Contractor Management
Outsourcer

30.
THANK YOU FOR YOUR TIME!
Presented by Jenni Nelson, HCMS
Originally present at:
August 2013
Sponsored by: