By most accounts, contingent or temporary, workers now represent a quarter of the world’s total workforce and, more importantly, claim the title of the fastest-growing labour segment. These workers include everyone from temporary labour and independent contractors to project-based workers and statements of work (SOWs). This expansion of the role of contingent labour has created new business challenges, specifically in the form of risk. Organisations are undoubtedly confronting new risks separate from the conventional liability and retention issues employers have traditionally navigated.
Perhaps the clearest example of this risk is within the Australian resources and mining sector, where a significant labour shortage is causing a massive growth in the demand for contract workers. It is not news that this potentially dangerous industry operates with a heavy burden of health and safety risk. But, with a tight labour market, more and more companies are using contractors and SOWs to meet current demand, and traditional risk management processes that only apply to full-time employees are no longer sufficient.
These new risks are further enhanced by complexities brought on by the labour shortage. Higher worker demand forces companies to accelerate staffing processes and engage larger numbers of suppliers, meanwhile new legislation, including Queensland’s Work Health and Safety Act, has broadened health and safety regulations and stiffened penalties.
As a result, businesses are paying a higher price in both fines and reputation as they struggle to procure, on-board and manage contractors, not only in the resources and mining industry, but also in sectors like construction and engineering, manufacturing and trades. The good news is that these new risks are avoidable. But companies must improve processes for qualifying suppliers, on-boarding and off-boarding workers and managing suppliers to mitigate potential safety and security risks.
The first opportunity: Supplier qualification
Unlike the situation with labour itself, there is no shortage of potential suppliers of contingent workers. For many businesses, the process of qualifying suppliers is manual and arduous, as it takes time to verify and check health and safety certifications, legal requirements, policy compliance and incidence history. That said, spikes in market demand require businesses to hire quickly, forcing them to make a perilous choice: Skip qualification steps and hope suppliers are competent and worthy or turn down opportunities. No, business wants to risk worker safety or lose competitive advantage, but manual supplier qualification processes often force this result.
Fortunately, technology has an answer. Through an online supplier portal, businesses can share the qualification burden with their potential suppliers.
Standardising the vendor qualification process, a portal solution guides suppliers through the steps of documenting their credentials. The simplicity or complexity of the process will vary by company but might include questionnaires, forms, references and testimonials. Once vendors have completed the process, the company can approve or reject vendors for qualification or request more information within the system. Hiring managers can then access the qualified vendor list to select the right supplier for their staffing needs.
In addition to managing and optimising the vendor qualification process, the system also oversees vendor profile maintenance, auditing and performance management. For example, the portal can send alerts when key vendor qualification requirements are close to expiring or automatically revoke a vendor’s ‘qualified’ status when its qualifications are no longer valid, maintaining the integrity of the qualified vendor list. This system also serves as a master repository for vendor data, ensuring access to important details such as contact information and capabilities. In terms of performance management, data surrounding key performance indicators, such as time-to-fill, bill rates and even safety records, can be monitored across the day-to-day transactions and allow businesses to make the most informed supplier choices.
An automated supplier qualification solution simplifies and accelerates worker procurement while at the same time:
• reduces safety, health and legal risks by ensuring all suppliers have followed the appropriate qualification process and possess valid certifications and insurance
• eliminates the risk of improper candidate sourcing by providing immediate access to pre-qualified suppliers and an accelerated path to qualification for motivated vendors
• dually mitigates many of the safety, legal and security risks that come with utilising contingent workers as the risk of leveraging poorly qualified suppliers disappears
The second opportunity: On-boarding and off-boarding
Much like manual processes for qualifying vendors, on-boarding and off-boarding practices for contractors can be equally encumbered by paperwork, policies and safeguards. Automated on-boarding and off-boarding offers businesses a way to programme, centralise and enforce each contractor’s workplace introduction, education and exit.
Streamlining on-boarding and off-boarding requires a central repository or portal where checklists direct hiring managers, HR teams and suppliers through the processes, verifications and training required to bring a new contractor into the workplace. The workflows behind on-boarding and off-boarding checklists are calendar-driven, offering automated reminders of action items and escalating outstanding tasks through alerts. Downstream systems, such as gate pass systems, timesheet programmes and identity/asset management tools, are integrated to increase safety and security compliance.
The result is better risk mitigation on several key contingent workforce fronts, including:
Safety & Health – Many aspects of safety training and checks occur during the on-boarding process—from safety policy instruction to skill assessments and validation. Centralisation and automation ensure these practices are followed with each contractor.
Security – Centralising the management of security requirements related to work sites and infrastructure, such as office keys, access IDs and entry cards, improves a business’s ability to protect its people and property. Background checks are equally important in validating personal history, such as work experience and criminal record. A streamlined on-boarding process allows hiring managers to easily monitor security requirements while checking contractor profiles against uniform and streamlined hiring standards.
Efficiency – From workplace processes to specific job training and safety, there is a lot of information to communicate to contractors in order to ensure they can be productive on the job. A centralised on-boarding solution accelerates the processes while making it easy to identify when a new contractor is fully on-boarded and cleared for work.
Productivity – By automating reminders for worker and team evaluations, businesses stay ahead of the assessment process and informed of workforce performance. This automation improves a business’s ability and speed when it comes to identifying high-performing contractors and weeding out poor ones.
Vendor management systems: Where it all comes together
Supplier qualification and contractor on-boarding/off-boarding are both essential contingent workforce management processes that are most effective when coordinated under one system. A vendor management system (VMS) addresses the full life cycle of services procurement—starting with supplier qualification and ending with contractor off-boarding. This beginning-to-end arc guarantees a single source of contractor data and accountability. It also extends risk mitigation efforts across the entire contingent worker lifecycle as all processes are transparent, monitored, kept current and subject to the company’s highest standards of quality.
When it comes to securing services, businesses that leave risk mitigation to their vendors are increasing the risk of workplace safety and security problems as well as the fines, litigation and intellectual property losses that can come with them. The global marketplace is complex and volatile and the need for skilled, flexible workers is widespread. Leaving the critical job of workforce risk mitigation to the suppliers is no safer than rolling dice. It is the businesses that infuse and automate risk mitigation into the lifecycle of services procurement—starting with vendor selection, continuing to worker on-boarding and concluding with off-boarding—that are doing the important work of aligning contractors to the knowledge and training levels of the full-time employee base. It’s the refusal to risk workforce risk that allows greater efficiency, performance and confidence in the services procurement programmes.
Toni Jackson is APAC region director for Fieldglass, which provides SaaS platform to procure and manage contingent workers, services such as Statement of Work projects, independent contractors, and specialised talent pools.