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Managing the Risks of Contingent Labor

By: Debbie McGrath

Tuesday, January 01, 2013
 

Posted to HR.com by Michael Kirsten, thought leadership and content marketing, Kelly Services, Inc.

Global companies are relying more heavily on contingent workers to control rising labor costs, bridge skills gaps and respond to fast-moving market conditions with greater agility. According to a 2012 Aberdeen Group survey, the average company’s workforce comprises 26 percent contingent workers. Experts speculate that for some global companies, the contingent workforce may represent an even higher percentage of the total workforce than traditional employees.

Yet, as companies increase their dependence on outsourcing and third-party labor, organizational limitations come into plain view. Internal processes and systems typically are not adequate to manage the inherent risks of a contingent labor force, not to mention extract maximum value from this resource.

Among the most common consequences of being ill-equipped to manage contingent labor:

• Regulatory and compliance risks. Multinationals have difficulty tracking third-party labor through a single ‘choke-point,’ and unwittingly take on high levels of compliance-related risk. A company that misclassifies workers may be subject to audits and penalties, which vary country-by-country.

• There appears to be growing interest in the United States to further regulate this area, based on a proposed bill to amend the Fair Labor Standards, as well as newly published rules on worker classification.

• Access and security. Many companies typically impose less-stringent security standards on contingent labor than on employed labor. A 2011 survey by HireRight found that only 48 percent of companies that use contingent labor conduct background checks on those workers. Further, only 22 percent conducted drug testing during the onboarding process, and just seven percent maintained ongoing drug testing.

• Visibility/analytics. Many companies cannot assess the amount of third-party labor supporting them, where those individuals are located (geographically and by job category) and what they have access to.

• Technology. Without an integrated solution to manage vendors and ‘on-board’ workers, and to track spending, organizations are ill-equipped to make the strategic decisions necessary to deploy contingent labor efficiently and safely.

The commitment among global organizations to solve the problem is growing. Forty-one percent of companies surveyed by Aberdeen Group believe they face increasing risk related to managing contingent labor. And, 56 percent reported that their top priority was to improve visibility into all facets of contingent workforce management.

Rethink Recognition: Do You Trust Your Employees?

Posted to HR.com by Derek Irvine, vice president, Globoforce

Recognize this: Peer-to-peer employee recognition does not equal zero-value awards. During the last few years, I’ve noticed that a growing number of human-resource professionals and employee-recognition program managers are equating peer-to-peer recognition with zero-value awards. In other words, employees are able to praise, appreciate and recognize each other through formal systems, but not assign any economic value to those awards.

Structuring a peer-to-peer program in this communicates three messages to employees:

1) We want employees to notice the good work of their colleagues.

We get it. We understand the importance of employees noticing and appreciating each other’s efforts and achievements. So please, pay attention to what your colleagues are doing and thank them for it.

While this is all good and appropriate, use this attitude as a strong starting point for a truly strategic and social recognition program that can change and drive your culture.

2) But we don’t trust you to give appropriate levels of recognition with economic value.

We want you to notice good behaviors, actions and achievements, but putting any skin in the game… well, we’ll leave that up to the managers. We need accountability, after all. And who’s to say you and your buddy won’t just engage in a “You give me one, I’ll give you one” free for all.

A properly structured recognition program must include an appropriate approval loop and real-time, easily viewed reporting. With these features in place (along with training and communications), there is no need to fear misuse of the system. Stop telling employees you want to recognize them out of one side of your mouth, while telling them you don’t trust them out of the other.

3) So we will undermine the program and ensure we don’t get the full benefits or bottom-line results by making peer-to-peer recognition only available as an eThanks.

It wouldn’t cost much to open recognition to all employees (and it would certainly cost less than programs proven to be a waste, such as Employee of the Month or Perfect Attendance), but we’re willing to sacrifice the added benefits of increased employee engagement, retention and performance—rather than trust our employees.

A primary reason for implementing a strategic, social employee-recognition program is to build a culture of appreciation. Kicking off a program designed and built on lack of trust undermines your efforts from the beginning.

What should you do instead? Implement a true everyone-to-everyone recognition program and structure it so all employees are encouraged to express the value they see in the achievements and actions of their colleagues. Include mechanisms to guide employees to the proper award level choice, and perhaps restrict management to providing the highest award levels. MF

 

Related Enterprise Zones: Management


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