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Achieving 100% user adoption of your CWM strategy

On Thursday, June 21st, from 2:00 - 3:00 PM CDT, HotGigs is presenting a webinar featuring Elaine Taylor, a nationally known subject matter expert in the area of contingent workforce management (CWM). She will be presenting on the specific topic of minimizing your co-employment risks, a highly relevant topic to every company that makes use of contract workers. Registration is free.

Elaine has authored a number of guest posts for our HiringExchange blog, previously covering topics such as the ROI of soft cost management, hidden costs of contingent staffing, and identifying and mitigating workforce risk. In her current post, she addresses CWM success factors.

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Client companies that are just beginning to develop their CWM strategy often ask me:

What is the most critical element of a successful CWM program?

They generally expect me to respond with "reducing bill rates" or "mitigating risk" or "reengineering convoluted and costly business processes"; but invariably, my answer is:

Achieving 100% adoption of your program by the managers who engage contingent workers.

Why is adoption so critical? Because, if you stop to think about it, you can design and implement a strategy for reducing bill rates, for mitigating risk, for saving soft costs by streamlining business processes...but if very few managers comply with your program, your measurable results will be negligible.

For example, in order to achieve an executive mandate for "expense reduction", the Procurement Department of one of my clients undertook a year-long RFP project that resulted in the selection of five primary staffing suppliers who contracted for specific bill rates that the Procurement Department assured the CFO would result in a 23% cost savings over the next year. Needless to say, the executive sponsor was very enthusiastic. But a full eighteen months after the rollout of the five primary suppliers, only two percent of the company’s contingent staffing spend was going through these five suppliers. Only 2%! So after wasting a year (and many man-hours) on the RFP, they had achieved virtually no cost savings at all...and they were forced to start from square one with developing a strategy that would satisfy the executive mandate.

That's one example of the "why" of "achieving 100% user adoption".

The "how" involves two primary factors:

1. Design your program for adoptability and adaptability
2. Line up executive support

Design Your Program for Adoptability and Adaptability

In real estate, the mantra is “location, location, location.” In CWM it is, “adoption, adoption, adoption.” No matter how much tender loving care you invest in the design of your CWM strategy, your efforts will be a waste of time and resources if only a limited number of managers comply with the requirements of your CWM program.

And, of course, virtually every organization has its entrepreneurs who want to do things their own way and not be hampered by bureaucratic, meaningless processes. (Who can blame them?!) While the goal of CWM is first and foremost to save money and to protect the company, those end results will not be achieved if managers focus their time and energy on figuring out ways to bypass the program.

To achieve 100% adoption – and to avoid "management by exception" – you must design and implement a CWM program that meets your clients'  needs 100% of the time. (NOTE: This is not the same thing as “giving them everything they want".)

Here are the four strategies that I consistently recommend:

a) Simplify the user’s life. Reengineer and streamline business processes with the goal of reducing the manager’s administrative burden rather than complicating it with low-reward, convoluted processes.

b) First and foremost, consider the users’ needs. Choose a supplier model that ensures client satisfaction.

c) Use a "carrot and a stick" approach. Market the benefits of using corporate contracted suppliers; but put “teeth” in your program for those who will “resist out of principle." (Once they understand the risks and costs they personally assume by working outside the official guidelines, managers are likely to become enthusiastic supporters of a well-designed CWM program.)

d) Listen to what the users say. Incorporate a formal feedback loop that ensures the continual process improvements inherent in any successful program.

And even when you do all these things, don’t be surprised if you still encounter a hard- fought battle to “win the hearts and minds” of your user community. Achieving 100% user adoption is never easy!

Line Up Executive Support

The second-most important factor in the rapid, successful adoption of your new CWM program is executive-level sponsorship. You must enlist the support of not one executive...but of all the executives who are key stakeholders:

a) SVP, Human Resources
b) Assistant General Counsel
c) CFO
d) Chief Procurement Officer
e) CIO (very important because within most corporations, IT spends – by far – the greatest sum on contingent workers/contractors/professional services)

While most executives will put their clout behind cost-saving measures, few of them are fully up to speed on the potentially significant soft costs savings associated with risk mitigation (specifically, "misclassification of employees"), and with eliminating business process redundancies and inefficiencies. Make certain you are fully conversant on these issues; then make it a priority to educate your executive supporters.

A word of caution on executive support: In my experience, I’ve almost always found it easy to get an executive to commit their support after I’ve given a compelling presentation on all the reasons a comprehensive CWM strategy will benefit the corporation.  But receiving a verbal commitment is different than convincing an executive to put some “teeth” behind their words. Once the CWM program is rolled out and the business units begin listing their thousand creative reasons (as they invariably do!) why the new rules shouldn’t apply to them, your executive support begins to wobble … and then takes an uncontrolled face-plant right into the tank! And who can blame the executive: the business units are the revenue producers for the company. If the executives can be convinced by their subordinates that your CWM Program will – in any way – slow down or curtail production (and thereby, the generation of revenue), no one in their right mind would support it.

Which leads us back to the most important element of CWM program design:

You must design and implement a CWM program that meets your clients’ needs 100% of the time.

--Elaine

Elaine Taylor is a subject matter expert in the area of contingent workforce management (CWM). She consults with Fortune 500 companies to help them develop CWM strategies that effectively reduce the cost of their temporary labor resources (by as much as 22%), while minimizing "employee misclassification" risk and introducing business process best practices.  She has published broadly in the area of CWM, including co-authoring HR.com's Vendor Management System Buyer's Guide. Former and current clients include Charles Schwab & Co., Inc., Entergy Corporation, American Family Insurance, Ryder Transportation & Logistics, Northrop Grumman and Sutter Health.

ROI of Soft Cost Management

If you read my last post, I mentioned that when I ask company managers if they're interested in reducing expenses in this category, I often hear, "Not really." But as I've learned, they're usually saying that because they haven't taken time to understand what the term "soft cost" - as related to contingent workforce - really means. And they don't realize how much money bleeds out of the company's bottom line as a direct result of poor fiscal management in this area.

I said last time that a good cost management strategy for contingent staffing incorporates controls on all three categories of cost: hard costs, risk avoidance and soft costs. The first two are relatively easy to define. Soft costs, though, need some definition.

I classify soft costs as the difficult-to-quantify but nonetheless very real dollars spent in acquiring, administering and terminating a contingent workforce. This includes the often-overlooked costs inherent in dealing with contingent workers, such as the time managers spend in making sure new workers "learn the ropes" and are "brought up to speed." The process inefficiencies and redundancies associated with this are generally a significant corporate expense.

So...how do you understand the soft costs your company's incurring for its contingent workforce? When I start this exercise with clients I usually give them a spreadsheet with a list of 100 different "tasks" that their employees perform for each contingent worker who provides services to their company. The tasks are broken into categories relevant to the acquisition, administration and disposition of contingent workers:

• Profiling and sourcing
• Evaluation and matching
• Onboarding and orientation
• Timesheet and invoice authorization
• Assignment administration and budget management
• Offboarding and document archival
• Contracts management and compliance
• Maverick spend management
• Payment and reconciliation
• Staffing supplier relationship management and dispute resolution

For some companies, we do an analysis of actual costs, working with hiring managers to quantify the amount of time each employee spends on each task. From there, it's easy to calculate the actual cost to the company.

For most of my clients, though, it's not necessary. Simply seeing the list laid out in black and white convinces them of the great potential for wasting time and money. The list is also a great place to find "low-hanging fruit," i.e., obvious inefficiencies or redundancies that can be streamlined or even eliminated with relatively little pain but tremendous impact on the bottom line.

For example, I reviewed the list with one client, VP of a Global 2000 company, and we immediately saw inefficiencies in invoicing. She worked with the company's accounts payable department to establish a semi-monthly invoicing cycle. Instead of submitting individual invoices according to the staffing firms' schedules, suppliers began submitting aggregate invoices-based on pre-approved "billable time records") twice each month.

When she reviewed the results of the first payment cycle after the new procedure was rolled out, the VP was thrilled to discover that the newly streamlined process had saved her department 25 man-days. 25 man-days, and that was just on the first invoicing cycle!

"It was as if my overtaxed department finally got the two additional headcount I've been begging for forever!" she told me happily. And this, of course, was only a single component of a multi-faceted cost reduction strategy.

Automation can provide significant soft cost savings (and also reduce wear and tear on your employees). For example, HotGigs' StaffingCentral does as its name suggests: Consolidates all your dealings with all your suppliers into a centralized console. From there, you can compare bill rates, analyze the costs of different skills and understand what you're really paying for services from your preferred suppliers. It's definitely worth checking out.

Understanding these costs is the first step to containing them. Build a spreadsheet of your own, and you'll be surprised at how much these "negligible" expenses are costing you.

--Elaine

Elaine Taylor is a subject matter expert in the area of contingent workforce management (CWM). She consults with Fortune 500 companies to help them develop CWM strategies that effectively reduce the cost of their temporary labor resources (by as much as 22%), while minimizing "employee misclassification" risk and introducing business process best practices.  She has published broadly in the area of CWM, including co-authoring HR.com's Vendor Management System Buyer's Guide. Former and current clients include Charles Schwab & Co., Inc., Entergy Corporation, American Family Insurance, Ryder Transportation & Logistics, Northrop Grumman and Sutter Health.

Make your staffing firm a true business partner

In my last post, I talked about the importance (and cost-savings) of using staffing firms as business partners instead of disposable resources.

The benefits are obvious; almost any corporation would want to take advantage of a partnership that produced results like the ones I described, i.e., hard cost savings, greater efficiency and a far better chance that your contingent worker reqs will be filled with the right people at the right time.

But what does such a staffing supplier business partnership look like? Without question, it’s a two-way street, with responsibilities on both sides.

Client corporation’s responsibilities
Execute contracts with a short list of preferred suppliers. (But beware the “single-source” model. The most consequential result of “single source” is that you voluntarily forfeit your leverage and put yourself at the mercy of the supplier. (More on this in a future article!)

Institute a rate management strategy and stick to it (i.e., standardized negotiated rates, rate cards, managed margins, etc.)

Clearly establish expectations for how the staffing firms must consistently conduct business with your company. First, outline consistent processes for how the staffing firm will:

• Screen and submit candidates
• Manage its workers
• Complete required paperwork
• Ensure accuracy in the invoicing/payment/reconciliation cycle
• Then make sure that you enforce those policies consistently and fairly.

Make staffing suppliers aware of any/all corporate policies related to the use of contingent workers.

Develop a metrics reporting and monitoring system to continuously measure supplier performance. My colleagues at HotGigs, by the way, have developed a some great tools such as StaffingCentral, that can handle a lot of this for you.

Treat your hand-picked staffing suppliers with the same respect with which you treat other business partners.

What you should expect from your staffing firms
If you’re following the guidelines I’ve outlined, you have a right to expect appropriate behavior from your staffing firms in return, and you should make your expectations clear.

Always honor established rates. Limit and justify exceptions. Receive written permission for non-compliant charges.

Assign a dedicated client management team that will learn the client’s business and understand its resource needs. The key to continued good relations with the client is continuity and consistency in the delivery of services to the client.

Customize internal processes to ensure consistent compliance with all client-specific processes and policies.

Be accountable! Measure and monitor service satisfaction. Consistently deliver the highest standard of service to all client managers.

Without exception, conduct business in a professional manner that earns the client’s respect – and their business! (No more “sharks in a feeding frenzy”!)

I know, I know, it sounds pretty simple and basic on paper. What I’ve given you is comparable to saying there are four basic steps to building a house: Buy the land and hire an architect, design the house, hire a general contractor and tell him to get busy, then move in.

Obviously, it’s a lot more complicated than that and you should expect to need lots of involvement from all company stakeholders, lots of business process reengineering to eliminate redundancies and inefficiencies, and a commitment to measuring ongoing success. None of that is easy.

But here’s the good news: Your efforts will result in a surprisingly huge return on your investment.

--Elaine

Elaine Taylor is a subject matter expert in the area of contingent workforce management (CWM). She consults with Fortune 500 companies to help them develop CWM strategies that effectively reduce the cost of their temporary labor resources (by as much as 22%), while minimizing “employee misclassification” risk and introducing business process best practices.  She has published broadly in the area of CWM, including co-authoring HR.com’s Vendor Management System Buyer’s Guide. Former and current clients include Charles Schwab & Co., Inc., Entergy Corporation, American Family Insurance, Ryder Transportation & Logistics, Northrop Grumman and Sutter Health.

Why isn’t your staffing firm a business partner?

• Virtually all companies of any size use contingent workforce to augment full-time staff.
• Companies have lots of opportunities to find and acquire contingent workers—websites, personal contacts, professional referrals…but staffing firms are by far the most common and reliable source.

No manager I know would argue with either of the above statements; they’re common knowledge, no-brainers. But if they’re true, then why is it that so many companies regard (and treat) their staffing firms as anything less than professional business partners?

I’ve worked with a lot of corporations to develop and implement successful contingent workforce strategies, and I think there are two answers to this question:

1. Most corporate hiring managers have been badly burned at least once by a staffing firm feeding frenzy, i.e., firm(s) that act more like sharks than trusted business partners.
2. Corporations think of staffing firms as disposable and interchangeable (because they haven’t made the effort to cultivate a positive, meaningful business relationship with their suppliers).

But developing business partnerships with preferred staffing suppliers can result in many, many benefits to your company:

Hard cost savings. A trusted relationship with preferred staffing firms lets you negotiate and standardize rates across skill categories. The firm will most likely offer “preferred customer” rates, and you may also be able to negotiate volume and early pay discounts.

Soft cost savings. These are savings that aren’t really “real money” in the quantifiable sense, but still real and tangible benefits in other ways. For example, every day that you go without filling a critical spot is a day that products and services don’t get out the door, losing money and competitive advantage for your company. Developing a good relationship with a staffing firm almost always increases the chance that the right resources are delivered for your open reqs in a timely manner at the right price.

You’re more likely to have dedicated account managers who understand your business requirements and don’t inundate your company with inappropriate resumes and candidate. These waste your managers’ time, and that costs your company real productivity dollars.

In addition, you enjoy consistent fulfillment of contractual obligations such as background checks, candidate qualification verification, invoicing, payment and reconciliation accuracy, etc., because the firms know the rules. It costs your company money to chase paperwork and sort through a quagmire of screwed up staffing firm invoices.

You also reduce legal risks due to policy violations. Your firms will better understand your rules, and are less likely to do damage to your brand.

Finally, simply streamlining inefficient, redundant processes carries its own benefits. A lean, clean machine is a cost-effective machine.

There are lots of tools out there that can help you streamline and improve staffing firm relationships (and you’ll find several at HotGigs.com). But there’s no substitute for old-fashioned relationship-building.

In my next post I’ll offer some of my favorite ways to build staffing firm relationships. If you’re already doing it, I’d welcome hearing from you. What problems have you encountered? What benefits (or issues) have you seen when developing closer ties to preferred vendors?

--Elaine

Elaine Taylor is a subject matter expert in the area of contingent workforce management (CWM). She consults with Fortune 500 companies to help them develop CWM strategies that effectively reduce the cost of their temporary labor resources (by as much as 22%), while minimizing “employee misclassification” risk and introducing business process best practices.  She has published broadly in the area of CWM, including co-authoring HR.com’s Vendor Management System Buyer’s Guide. Former and current clients include Charles Schwab & Co., Inc., Entergy Corporation, American Family Insurance, Ryder Transportation & Logistics, Northrop Grumman and Sutter Health.