Building and Managing a Contingent Workforce
Resourcing Model
Sonia Tammaro – National Resourcing Manager, Origin Energy

...
Origin Energy Snapshot
ASX Top 20 by
market
capitalisation

Wind
development
portfolio

5,200+ employees

Origin Energy
is...
About Alexander Mann Solutions
As a talent management company AMS is
passionate about delivering adaptable, world
class, t...
Origin Group Resourcing Overview
Origin Group Resourcing Overview
• We deliver and manage the following services:
• Permanent and contingent recruitment
• ...
Origin Group Resourcing Overview
The key skill sets we recruit include:
• Engineers (mechanical, technical, electrical,
co...
Origin Group Resourcing Journey
Objectives:
Reduce costs, create efficiencies, manage risk, improve
quality of hire, impro...
Why did Origin need a contractor resourcing model?
Rationale for Reviewing Contractor Resourcing

Lack of Visibility
Contract governance
Decentralised
infrastructure
Potenti...
What Models Did We Consider?

1. Insource
All

2.
Outsource
All

3. Insource
Strategy &
Outsource
delivery
Outsource
the e...
What Was The Solution?

ORIGIN RESOURCING

• Strategic Focus
• Own Talent Pool
• Governance
(manage SLAs)

Origin Resourci...
Scope of the Contractor Resourcing Model
In Scope
•

Contractor - A person who is supplied to
Origin via a 3rd party i.e. ...
Benefits of This Model
Tangible Benefits

Intangible Benefits

•

Lower overall contingent recruitment costs

•

Reduction...
Implementing and Operating the Contractor Resourcing Model
AMS and CXC Responsibilities

Role qualification
End to end recruitment process
management including direct sourcing
Contr...
Implementation

Discovery
4 weeks
• Process and policy
• Invoicing and
payment
• Third party
suppliers
• Hiring managers
•...
Implementation Challenges

Due Diligence

Working
Arrangements
with
Permanent
RPO

Using Existing
Technology
Infrastructur...
Results - How the Model has Made A Difference

Wasted line management time
Contract management overhead
Invoice processing...
Results

19

Building and Managing Origin’s Contingent Workforce Model
Results
•

Savings in excess of $6.5 million

o Reduced reliance on agency channels
o Reduced cost of payrolling
•

•

Con...
Continuing the Origin Group Resourcing Journey
Objectives:
Reduce costs, create efficiencies, manage risk, improve
quality...
Evolving the Operating Model
ORIGIN RESOURCING
(Group Leadership, Agency Management, Candidate Attraction Strategies, Metr...
Lessons Learnt
Lessons Learnt

Procure to Pay Process

Comms & Change Management

• Focus equal effort or Exec team, Finance, Procurement...
Building and Managing Origin’s Contingent Workforce Model
The Steps to Success

Step 1

Create a compelling business case

Step 2

Influence and secure stakeholder buy in

Step 3

...
Thank you
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Contingent: The Flexible Workforce Conference - Building and Managing a Contingent Workforce Resourcing Model - ATC Events

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Sonia Tammaro and Tara Knobel present at the 2013 Flexible Workforce Conference. Sonia is National Resource Manager at Origin Energy and Tara Knobel is Client Relationship Director at Alexander Mann Solutions. They jointly delivered this presentation on how to build and manage a contingent workforce resourcing model. Find out more about ATC Events and our conferences at www.atcevent.com

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  • FuelOrigin's Exploration and Production (Upstream) business targets gas resources close to markets.Origin is a leading producer of gas in Australia and through Australia Pacific LNG, holds a share in the country's largest Proved plus probable (2P) CSG reserves. Together with its domestic operations, Origin is working with ConocoPhillips and Sinopec in the Australia Pacific LNG joint venture to develop one of Australia’s largest CSG to LNG export projects. To Origin, fuel may also take the form of wind, geothermal, hydro and solar resources.GenerationOrigin has one of Australia’s largest and most flexible power generation portfolios with 5,900 MW of owned and contracted capacity. Origin is the largest owner and developer of gas-fired electricity generation in Australia and among its assets is the highly efficient combined cycle Darling Downs Power Station. Fuelled by CSG, Darling Downs emits less than half of the greenhouse gas emissions of a typical coal-fired power station. Origin has also developed a substantial portfolio of renewable energy opportunities.RetailOrigin is Australia's leading energy retailer with 4.3 million electricity, natural gas and LPG customers. Origin is one of Australia’s largest installers of rooftop solar systems and is also the market leader in green energy sales with more than half a million GreenPower and green gas customers. Origin also continues to develop new products and business lines to give customers different and more efficient ways of using energy, including smart home products and business-2-business solutions.Contact EnergyOrigin is a major shareholder in Contact, one of New Zealand's largest integrated energy companies and listed on the New Zealand Exchange. Contact has an integrated position, including an extensive portfolio of gas supply arrangements, gas storage, a diverse and flexible generation portfolio. It has a strong retail position with electricity, gas and LPG customers across both the North and South islands.
  • 3 x on-site Account Management (soon to be 4)1 x Engagement Manager12 x Ops/Service Delivery (4 of which may not always be 100% on Origin, but certainly 50%+) 
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  • Risk / Lack of Governance No central repository / lack of visibility of Origin Energy’s contractors, costs, and marginsPotential for contractors contracts expiring No central infrastructure to support contingent recruitment Lack of visibility of contractors engagement structure - potential for ATO / State taxes and penalties, co - employment riskCostInconsistent and diverse agency margins variances in statutory charges Limited reporting of agency use, pay rate ranges and overall costs Contractors engaged at consulting rates No consistency in internal policies or processes for contingent recruitment No consistency in approval to hire process for contingent workersNo consistent ‘on boarding’ proceduresLack of support for Hiring Managers No talent pooling / re-use of contractors
  • In source Strategy:strategic elements such as attraction and branding, workforce planning, agency management, talent pooling and CRM, technology and reporting Outsource delivery – retention of overall strategy, technology and commercial management of downstream suppliers and outsourcing of:End to end recruitment processPayrolling and contractor management
  • We are expanding Origin’s resourcing capability to include Contractors, this will be managed by AMS (Alexander Mann Solutions), however the strategy and ownership of candidates will remain responsibility of Origin. AMS will source and engage all contractors for hiring managersAll contractor management and payrolling will be handled by CXC Global, this will keep contractors at an arms length, minimising our current regulatory risks e.g. Co-employment. CXC Global will manage and payroll all contractors, provide Professional indemnity and workers compensation insurances, the correct tax rates will be applied and contractors will receive end of year statements Contractors will receive access to CXC Global’s Employee Assistance Program, salary packaging options, and loyalty card (discounts) Existing contractors will transition to CXC Global over a 6 month period commencing 21st November 2011.
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  • There are many layers to the hidden costs of CWM.Procurement based layers of vendor margins, wage or fee rates + social taxation cost calculations and contract management overheadFinance Layers of invoice processing, invoice reconciliation, PO generation and managementHR Layers of wasted HR time and wasted hiring manager timeBEWARE …… some of these layers carry a very high fat content !!!!!!Vendor margins up to 5%Worker fees & wages up to 5% Social taxation calculations 2 – 3%Invoice Calculation Errors, in our real world due diligence up to 1% of total invoice value is invoice by staffing agencies to end user clients…. If your spend $100 million on a contingent workforce of 1500 workers ….. Your probably paying $1 million too much before you get out of bed and start your exercises for the day !Invoice processing costs ……………… if 52,000 invoices per annum can be consolidated to 12 and reversed to tax receipted self billing then there is about 51,988% fat in this activity )))))
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  • Contingent: The Flexible Workforce Conference - Building and Managing a Contingent Workforce Resourcing Model - ATC Events

    1. 1. Building and Managing a Contingent Workforce Resourcing Model Sonia Tammaro – National Resourcing Manager, Origin Energy Tara Knobel – Client Relationship Director, Alexander Mann Solutions 27 August 2013 © This information is the property of ATC Events and may not be reproduced or used without attribution
    2. 2. Origin Energy Snapshot ASX Top 20 by market capitalisation Wind development portfolio 5,200+ employees Origin Energy is Australasia's leading integrated energy company focused on gas & oil exploration and production, power generation and energy retailing 5,900 MW owner or contracted generation capacity Market leading green energy retailer 150,000+ shareholders With a 37.5 per cent interest in Australia Pacific LNG, Origin is developing one of Australia's largest coal seam gas (CSG) to liquefied natural gas (LNG) projects 4.5 million Gas, electricity and LPG customers across Australia 52.8% interest in Contact Energy
    3. 3. About Alexander Mann Solutions As a talent management company AMS is passionate about delivering adaptable, world class, talent solutions in partnership with our clients; believing people are the foundation of success. We blend powerful insight & great people, measurable innovation & operational rigor, to deliver impactful business outcomes.  Unique blend of services and consulting propositions  Working with world-class brands across the full talent lifecycle  Over 1,800 specialist staff, with delivery into over 75 countries in 30 languages  Five global shared services centres allow 24/7 delivery  …highly values driven
    4. 4. Origin Group Resourcing Overview
    5. 5. Origin Group Resourcing Overview • We deliver and manage the following services: • Permanent and contingent recruitment • Contractor payrolling and management (CXC) • Graduation and vacation recruitment • Volume recruitment for Contact Centre and Greenhands • Redeployment services • Agency management • Our team consists of: • Supported by a small team of 5 Origin resourcing specialists that provides oversight and governance. • Outsourced recruitment model via Alexander Mann Solutions - 60 specialists (on and off site) • Contractor management and payrolling via CXC - 16 dedicated CXC specialists working • We deliver around 2000 permanent hires per annum and have over 1100 contractors. We manage approx. 1200 contract hires per annum and 950 extensions.
    6. 6. Origin Group Resourcing Overview The key skill sets we recruit include: • Engineers (mechanical, technical, electrical, construction, chemical, petroleum) • Drilling and Completions specialists • Commissioning specialists • Health, Safety and Environment (HSE) • Land access specialists / community liaisons • Professional (Finance, IT, Marketing, HR) • Contact Centre
    7. 7. Origin Group Resourcing Journey Objectives: Reduce costs, create efficiencies, manage risk, improve quality of hire, improve candidate experience Pre 2009 HM Driven / Talent 2 Trial 2010 Hudson Perm RPO 2011 AMS/CXC Contingent RPO/CMO De-centralised Centralised Agency Direct Ad hoc processes Manual Process Driven Automated
    8. 8. Why did Origin need a contractor resourcing model?
    9. 9. Rationale for Reviewing Contractor Resourcing Lack of Visibility Contract governance Decentralised infrastructure Potential tax / coemployment liabilities Health and Safety Inconsistent / high margins Poor cost management Uncontrolled pay rates Contractors engaged on consulting rates Inconsistent approval processes Lack of talent pooling Inconsistent onboarding procedures Lack of HM support
    10. 10. What Models Did We Consider? 1. Insource All 2. Outsource All 3. Insource Strategy & Outsource delivery Outsource the end to end recruitment, sourcing, screening and selection to an RPO Page 10 Outsource payrolling and contractor management to a CMO
    11. 11. What Was The Solution? ORIGIN RESOURCING • Strategic Focus • Own Talent Pool • Governance (manage SLAs) Origin Resourcing Team Permanent Resourcing Team (Hudson) Contractor Resourcing Team (AMS) SOURCING Direct sourcing/ Talent Pools/ Referrals/ Approved Agencies Contractor Management Team (CXC Global) Manages /Payrolls contractors ABN /PAYG/Sole Trader/ Pty Ltd /Trust/
    12. 12. Scope of the Contractor Resourcing Model In Scope • Contractor - A person who is supplied to Origin via a 3rd party i.e. recruitment agency, pay rolling company or consulting firm. Typically they stay at Origin for 3 months + • Independent Contractor - A self-employed contractor who operates through a company with a unique ABN that has a contract directly with Origin. Typically they stay at Origin for 3 months + • Temporary - A person who is supplied to Origin via a 3rd party i.e. recruitment agency. Typically they work at Origin is short intervals of less than 3 months Page 12 Out of scope • Consultants – Professional specialists engaged for the specific purpose of producing/ providing a fixed piece of work for a fixed price, or set daily rate (daily rate Contractors to be moved into scope after 6 months of implementation) • EPCM Contractors Engineering, Procurement, Construction Management. Contractors working for a Consulting (Engineering) firm engaged to deliver a specific project to Origin. • Contractor Workforce payrolled by Origin Fixed Term Employee / Casuals
    13. 13. Benefits of This Model Tangible Benefits Intangible Benefits • Lower overall contingent recruitment costs • Reduction of legal risks • Reduction in margins • Visibility and management of the total contingent workforce • Improvements in safety compliance • Increased competitive intelligence • Faster time to contractor productivity • Streamlining on boarding and exiting o Lowering rates o Substituting pay rolling • Reduction in payroll charges • Reduction in taxes and charges e.g. workers compensation payroll tax • Elimination of errors over charging • Transfers between permanent and contract • Reduction of administration effort • Improvements in productivity both contractors and hiring managers • Reduced reliance on recruitment agencies • More accurate and faster reporting • Reduction in contractor/temp numbers • Scalable contingent recruitment to support growth • Elimination of time sheet theft • Improve hiring manager and candidate experience • Reduction in asset theft
    14. 14. Implementing and Operating the Contractor Resourcing Model
    15. 15. AMS and CXC Responsibilities Role qualification End to end recruitment process management including direct sourcing Contractor talent pooling Agency liaison and management Candidate verification Extension and termination management Management of CMO 15 Contractual engagement of workers Payrolling of direct and agency workers Management of tax payments and statutory contributions Risk mitigation including insurances and HSE management Performance management and disengagements Billing agent for RPO and agencies Contractor services including financial advice, salary packaging, EAP and tax
    16. 16. Implementation Discovery 4 weeks • Process and policy • Invoicing and payment • Third party suppliers • Hiring managers • MI/reporting • Risk & compliance • Sourcing channels • Branding • Recruitment system 16 | Design 2 weeks • Process design and mapping end to end processes • System configuration specification Building and Managing Origin’s Contingent Workforce Model Deploy 6 weeks • Team resourcing • Operations manual • Governance manual • Systems configuration and reporting build • Performance management framework – SLA’s and surveys • Training design and development • Communications roll-out Team Mobilisation and Training 2 weeks • Team onboards • Process and technology training • Origin specific induction and training • WIP transition
    17. 17. Implementation Challenges Due Diligence Working Arrangements with Permanent RPO Using Existing Technology Infrastructure 17 Building and Managing Origin’s Contingent Workforce Model Low Touch Change Management Parachute Solutions
    18. 18. Results - How the Model has Made A Difference Wasted line management time Contract management overhead Invoice processing costs Worker fees or wages Employment costs + Social taxes Vendor Margins Invoice calculation errors Contract production and maintenance Wasted HR/ Procurement Time Origin has now created efficiencies and managed risk at every layer
    19. 19. Results 19 Building and Managing Origin’s Contingent Workforce Model
    20. 20. Results • Savings in excess of $6.5 million o Reduced reliance on agency channels o Reduced cost of payrolling • • Consolidated spend management – visibility of all cost inputs • Over 80% compliance to the model • Implementation of Origin-specific contractor rate card • Reduced hiring manager time spent on contractor resourcing • Improved process efficiency – purchase order creation and receipting support, enhanced admin processes • 20 Calendar YTD model cost expressed as a % total contractor spend = 9.49% (Agency, AMS, CXC, WC, PI+PL fees – excludes payroll tax) Strong partnering between RPO and CMO to deliver seamless service to Origin business Building and Managing Origin’s Contingent Workforce Model
    21. 21. Continuing the Origin Group Resourcing Journey Objectives: Reduce costs, create efficiencies, manage risk, improve quality of hire, improve candidate experience Pre 2009 HM Driven / Talent 2 Trial 2010 Hudson Perm RPO 2011 AMS/ CXC Contingent RPO/CMO 2013 AMS Perm & Contingent RPO De-centralised Centralised Agency Direct Ad hoc processes Manual Process Driven Automated
    22. 22. Evolving the Operating Model ORIGIN RESOURCING (Group Leadership, Agency Management, Candidate Attraction Strategies, Metrics and Reporting) • Single RPO provider Client and Candidate Engagement Team • Segmentation of roles and responsibilities (Permanent and Contingent) Sourcing Team (Permanent and Contingent) Admin Team (Permanent) 22 | Admin Team (Contingent) Contractor Management Team (CXC Global)
    23. 23. Lessons Learnt
    24. 24. Lessons Learnt Procure to Pay Process Comms & Change Management • Focus equal effort or Exec team, Finance, Procurement and Legal as well as HR, Hiring Managers and Contractors Technology • Streamline systems / ensure they are “fit for purpose” • Design manual workarounds & a plan to migrate away from them • Seriously consider a VMS Alignment of Partnerships • Ensure outsourced vendors and internal functions are aligned and work cohesively • Processes need to work in with Finance and HR and Business Units with unique needs Contractor Experience 24 • Ensure internal processes are robust and fast enough to meet the requirements of a “pay when paid” model • Walk through the process as if you were a contractor • What and how much information do you get and from who? Building and Managing Origin’s Contingent Workforce Model
    25. 25. Building and Managing Origin’s Contingent Workforce Model
    26. 26. The Steps to Success Step 1 Create a compelling business case Step 2 Influence and secure stakeholder buy in Step 3 Design a relevant model, fit for needs Step 4 Operate as an integrated and engaged team Step 5 Listen, measure, review and optimise Building and Managing Origin’s Contingent Workforce Model
    27. 27. Thank you

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