How To Pull Off an Intimate Customer Conference: Services Procurement with Consol/Volt (Part 2)

Please click here for Part 1 of this post.

During the Consol/Volt customer event, I took detailed notes from Dawn Lock of Volt UK/Europe. Dawn is a British attorney working for Volt in the UK, and she shared yet more (ref: McKimmy in the first post in this series) scary labor-related information. Much of these stories relate back to the UK Agency Workers Directive (AWD) covering 37 countries and 27 languages within the EU. The AWD is a pan-EU directive that covers benefits provided to temps along the lines of what is provided to perms. Much of it builds on a statutory framework, meaning it applies regardless of what is otherwise contracted.

After listing to Dawn's detailed presentation of these issues, I came away feeling that the convergence between VMS (vendor management systems -- often used by HR/IT for contingent workforce management and now SOW), SIM (supplier information management as used by procurement and supply chain) and contract management solutions is unavoidable. They are touching on so many common data points. This will also pull finance, HR and procurement closer together, a holy alliance which we believe is long overdue.

Curiously, Dawn pointed out that in the EU, temporary workers have a right to prevailing wage rates for their position, even if they haven't negotiated for it. In other words, if less pay is provided, adverse condition rights can kick in and then companies face all sorts of legal problems. Speaking of legal issues, the case track record in this area is unclear at this point since the directive is so recent, but by the end of 2012 the ground should have settled quite a bit.

In my opinion (which was seconded by Dawn), this is the result of a clear lobbying effort by the labor unions and their allies to flat out torpedo agency worker activities. As stated earlier, one outcome will be an explosive growth in SOW work, an area already fuelled by other statutory regulations in many EU countries. In a recent Spend Matters Compass series report, In Your Back Yard (and Mine): The Global Labor Challenge, we note that "in the UK, there are constant cases around whether someone is actually an employee rather than a contractor. Being a contractor avoids some tax for both contractor and employer ... Nor is it simply a blue-collar or mid-level white-collar issue ... some senior public sector folk (CEO of the student loans' company) were discovered to be defined as contractors --when clearly they weren't! Spend Matters filed this one under Stupid Sourcing Practices [an ongoing series of posts where we collect dumb sourcing happenings]."

In our research, we further note that the AWD "presents the opportunity to introduce some commercial capabilities in agency arrangements, and perhaps taking the opportunity to look at rationalizing what is often a highly dispersed spend picture in large organizations ... the Directive certainly should be helping procurement and VMS providers make the case for better contingent workforce management. You need to be able to show you have it under control. However, Spend Matters UK/Europe research suggests that as of spring 2012, it has not appeared to have much of an impact yet, but some organizations are restricting assignments to 12 weeks which seems to be increasing churn rather than driving an overall decline in the market." The law of unintended spend consequences, so to speak.

Even more curious and somewhat disturbing, under the general directive, companies have to disclose their current pay rate for similar positions to prospective workers! If they don't want to do that, there is a 'workaround' using the "Swedish derogative," which permits non-disclosure if you pay temps what amounts to a two-week "balloon payment" bonus at the end of engagements. All of this makes you wonder if the marketplace won't just absorb this expense in the form of a lower negotiated project pay rate with the bonus added in to make up a "normal" average rate. It's a convoluted approach in any case.

As a final and humorous (to North-American ears) aside, the British use of English came up during Dawn's presentation: anti-social hours. No, this is not when you get to undermine coworkers' efforts or steal office supplies. It is a term used about night work or other work that interferes with your social life.

How novel. How European.

Stay tuned and check in often on Spend Matters as these rules takes hold in the global contingent marketplace.

- Thomas Kase

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