Technology analysis

Keith Rogers says HR should have greater access to and involvement in
contractor management

With IT budgets under severe strain, it is surprising is that one of the
biggest potential areas for cost savings, contractor management, is escaping
the attention of so many organisations.

Managing the contingent workforce has never been easy, partly because it is
highly fragmented and extremely fluid.

Large organisations often struggle to control who is hired, where and at
what price. Even if the actual procurement of temporary staff is handled
centrally. Hiring decisions tend to be taken at a departmental level and are
justified on the basis of local need. Responsibility can rest with either
procurement, HR, or line managers – or some loosely defined combination of all
three.

At best, most contractor management practices are inefficient. At worst,
they are open to the kind of abuse that sees line managers using long-term
temporary staff to get around headcount restrictions.

From an IT perspective, part of the solution has historically been via
specialist recruitment or procurement applications. These help allocate
expenditure to cost centres, automate authorisation procedures so all spend has
to be signed off, and limit how much can be spent for a particular type of job.
They also enable firms to measure how well third-party service providers meet
expectations, providing powerful ammunition for contract negotiations.

There is a growing need for organisations to apply the same human capital
management principles to their contingent workforce as they do their employee
base. By gaining better insight into their contractors, organisations can
better understand and plan their overall workforce requirements.

Leading application vendors have started to build that capability into their
procurement systems, allowing users to profile each contractor, detailing their
skills and projects worked on and enforcing ‘no rehire’ policies.

It’s here that procurement clearly crosses into HR’s territory, and the IT
systems deployed must be able to cater for this cross-departmental need. At the
very least, HR will need access to this data in report form, allowing it to
drill down from summary data to specific underlying information. Better still,
the data will be sent to a central HR system, pooled with information about
employee skills and competencies to give a single perspective on the total
workforce.

Information flows are vital. This allows HR to make more informed
recruitment decisions – previous contractors may, for example, be potential
recruits – as well as to plan and manage seasonal fluctuations at a macro level.
This is reason enough for HR to be involved in the IT decision-making process:
if left to procurement, contractors will continue to be treated like
commodities.

Keith Rodgers is co-founder of Webster Buchanan Research, a research
company specialising in human capital management

Weblink www.websterb.com

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