With economic uncertainties still casting shadows over budgets for new corporate initiatives, many companies have increased their use of hiring temporary and contract workers to accomplish projects. The strategy often seems more attractive than increasing a corporation’s fixed-costs base by hiring employees, training them, and providing career paths.
But using a contingent workforce can have negative impacts to the bottom line unless companies establish an effective management process. The trend toward outsourcing this process is growing and so is the value proposition offered by the outsourcers.
University of Pittsburgh Medical Center (UPMC), for example, has 20 separate hospital facilities and must fill mission-critical staffing gaps on eight shifts per day for dozens of nursing units per facility, each with specific skill-set needs. Even though UPMC has been recognized as one of the “Best of the Best” hospitals for the fifth consecutive year by U.S. News & World Report, Mark Raketich, director of Temporary Services, says UPMC was still challenged with staffing inefficiencies. “Not only were we using 20-25 staffing companies to fill those needs,” he recalls, “but our own facilities were competing against each other for skilled nurses. Some were even paying different rates for the same types of skilled workers.” Each facility was also inundated with dozens of paper invoices from the staffing companies, which then had to be processed manually.
Other companies have found their HR departments have lost sight of the fact that they have contract workers who have been on board for several years, thus risking violations of co-employment and length-of-stay restrictions.
Enforcing policies, measuring spend, ensuring regulatory and procurement process compliance, reducing costs – these are difficult issues facing corporations with large contingent workforces. The challenge has grown to a proportion that has caused accounts payable, recruiting, and service procurement departments to converge in a focus on improving contingent workforce management.
Some have found a flexible solution that delivers significant bottom-line value. Along with UPMC, Northrop Grumman, Sony Electronics, and Shell Oil Products US are turning to IQNavigator Inc.’s end-to-end solution for human capital supply chain management for Global 2000 companies. So are the outsourcing providers, like Exult, Inc., the Irvine, California-headquartered company that provides integrated HR Business Process Outsourcing to Global 500 companies.
Win-Win-Win Solution – Not Just a Concept
Based in Denver Colorado, IQNavigator (IQN) offers three delivery models for its suite of applications and outsourcing solutions that optimize each aspect of procuring contract or full-time labor.
Under the direct plan, large companies use IQN’s application and solution directly, and an IQN employee is often onsite at the customer location to help run the process.
The flex staffing plan comes into play with companies like Exult, which accesses the IQN solution on an ASP basis but operates the solution itself for its HR clients. Bruce Ferguson, vice president, Talent Acquisition Solutions at Exult, says they are currently implementing the solution with a fourth Global 500 client and anticipate two to five additional such implementations in 2004 in Canada, US, and Europe. The solution enhances the value proposition and commitments Exult has made to its clients. It streamlines those clients’ requisition, approval, tracking, and invoicing processes for temporary workers and improves visibility into overall costs.
In the third model, IQN partners with staffing companies; the company and its clients both access the IQN application suite on a self-service ASP basis. For example, ICON Consulting, based in Houston, Texas, is a staffing provider in the Shell Oil marketplace. Shell’s requisitions for contract and temporary workers go to ICON (and other staffing suppliers). ICON and Shell use the IQN solution to manage the supply, reporting, and payment functions between them. The pricing model is a percentage of the enterprise spend, with no upfront license, technology, or implementation costs.
Pamela O’Rourke, president of ICON Consultants, says the solution helps her company as much as her customers. IQN audits the mark-ups the various staffing companies are charging their customers and produces an online matrix monitoring vendors’ speed of response to staffing requisitions; both of these functions target where ICON might need to change its processes to remain competitive. The online system for timekeeping and approval of hours helps to stop duplicate time cards. The solution’s skills set tracking function also remembers ICON’s workers and lets O’Rourke know, for example, that a customer is looking for “someone just like your ‘John Doe’.”
Contract workers report their time worked into the automated system, which generates email to the hiring manager for approval. IQN creates the invoice on behalf of ICON and sends it to ICON’s customers.
Working with IQN has had a dramatic impact on ICON’s revenue growth. Some of its customers have numerous business divisions that are implementing the IQN solution, which will mean new business for ICON. “I started working with IQN last year,” says O’Rourke. “By the end of this year, my business will double (at a minimum). And IQN is knocking on those customers’ doors, not me!”
UPMC, which uses IQN on an ASP basis, has cut its staffing vendor list in half and cut its numerous invoices for the 20 facilities down to one invoice. “But the biggest benefit,” reports Raketich, “is that it gives us an opportunity to really understand our spend. We can track it by facility or by shift, uncover trends, and identify what our needs are so that we can proactively manage our workforce. It also gives us an objective way to measure the performance of staffing vendors.”
All Solutions Are Not Equal
The benefits are similar, regardless of the delivery model; yet, IQN customizes the solution for its clients. John F. Martin, senior vice president of Corporate and Product Strategy at IQNavigator, says, “We continue to expand our list of 50+ standard reports for compliance reporting and analysis of spending, supplier performance, and human capital trends.” The company’s usage has increased fivefold in the last six months, he reports. So they have invested in tuning the application suite and augmenting the production environments to handle the volume; notably, during the same six-month timeframe, they also have managed to reduce average response times.
It’s one demonstration that Exult’s evaluation of IQN was correct. “We selected them because they offered a commitment to continue to expand capabilities based on the needs of our target client base,” states Ferguson. “We felt their management team and ambitions would keep them as #1 or #2 in the market.”
Lessons from the Outsourcing Journal:
- Effectively managing a contingent workforce requires integration of accounting, recruiting/HR, and procurement functions.
- An effective contingent workforce management solution can uncover trends and identify needs so that a company can proactively manage its workforce.
- An effective contingent workforce management solution will include functionality to objectively measure the performance of staffing vendors.
- Automating the timekeeping, approval, and invoicing functions can reduce duplicate timecards and billing discrepancies, speeding the payment process.