Technology can bring departments like HR, procurement together to increase extended workforce and solve problems
As the use of workers not categorized as traditional W-2 employees — aka the extended workforce — grows at a rapid pace, companies are often struggling to find, engage and keep those workers at competitive market rates. Traditional sourcing methods are no longer optimal in the global economy, which demands a wide search for the best talent, increasingly without regard for the geography of that talent.
While sourcing this extended workforce is often managed through procurement, there may be required input from legal, HR and finance. These departments often operate independently, with limited communication and siloed business practices, creating inefficiencies and slowing the process.
Outdated technology (if any) and manual processes associated with extended workforce procurement, management and oversight create even more potential issues.
To find out how companies can enhance procurement, use data better, break down barriers between departments and have procurement improve overall business value, we talked with Jens Audenaert, General Manager at WorkMarket, ADP’s freelance management system provider that helps businesses unlock the power of their extended workforce.
Spend Matters: Are there natural drivers of change for procurement departments or should those changes be propelled by leadership that’s focused on strategic business planning and operational efficiencies?
Jens Audenaert: Typically, when companies examine their extended workforce management systems and tools, they find their problems stem from a mix of overall leadership realizing the changed world of work and procurement fulfilling its mission. Procurement is often asked to provide the organization with cost-effective tools that help leaders achieve their objectives, while allowing the overall company to operate efficiently and compliantly. However, we are seeing HR departments become increasingly involved in the management of extended workforces, but in most cases, procurement is still in the driver’s seat.
What are some symptoms of companies with procurement problems? How can those problems be identified?
It’s often easy to identify some of the telltale signs of an inefficient people-sourcing process. A helpful start comes from asking, “How are assignments tracked?” If the answer is a spreadsheet, then digging deeper may uncover multiple spreadsheets and record-keeping formats used in a siloed fashion by different teams within and across departments. This is where technology can become the answer, automating record-keeping and making information available across departments.
Another useful question to ask is, “How does my company determine worker performance?” If this is tracked in a similar manner, there may be poor records tracking about which workers performed well and which did not. If that information is unavailable or hard to retrieve for future assignments, data-based decisions on who to rehire are tough to make. When hiring for similar assignments at a high frequency or large volume, the cracks become very apparent; potential mistakes amass quickly, becoming very costly.
Today’s complex supply chains can be another source of frustration for procurement teams. When companies don’t maintain their own systems to track talent pools for direct sourcing, they have to rely on staffing firms to source the right candidate for each assignment. Even in a best-case scenario, this can take more time than the organization can afford. There can be far too much back-and-forth with the staffing vendor and between the staffing vendor and the candidates.
Are there some typical problems that present themselves in most procurement situations?
One of the most frequent issues is the lack of well-documented and enforced processes, which when used properly can keep the organization running smoothly, reducing errors and risk. This becomes even more important if the wrong process is followed at high frequency or for niche resources that require specialized requirements like certifications, insurance and training. It is incredibly hard to ensure compliance with internal processes without having the right tools in place.
How can companies best identify their problems in procurement as they relate to the business overall?
It’s important to align goals across each department with the overall business strategy. This will allow the procurement department to meet the expectations of the business while also satisfying the needs of other departments like HR and legal. It is equally important for the procurement department to proactively seek input from its users and key stakeholders in other departments. This will allow procurement to identify the right solutions and processes for the organization. Finally, it’s important for the procurement department to communicate with the rest of the organization, changing the often-held view of procurement as a mandatory go-to process that enables the rest of the organization to operate efficiently and compliantly.
What steps can be taken to change practices so more departments are involved? How does data play a role?
Data-sharing among departments can greatly improve overall business outcomes. An important initial step is to ensure that available technologies allow all departments to communicate and understand each other. An easy-to-understand example is making sure do-not-rehire lists for W-2 employees (typically managed by HR) and the extended workforce (typically managed by procurement) are linked. The right tools can go even further, tracking data that is relevant among lines of business, procurement, HR, finance and legal.
What are the benefits of broadening procurement’s role, and how can overall business strategies change as a result?
When procurement’s role becomes proactive and clearly focused on added value — a department that supports and strengthens the work of other departments — then procurement will find itself with a mandate that has broader support across the organization. Other departments will seek to work with procurement leaders to find better ways to support the business and drive additional cost savings and efficiency gains.
How can procurement ensure a leadership role for themselves in this transition?
Procurement plays the unique role of connecting the inside and outside worlds. It is the bridge between vendors and internal-engagement owners, and often times legal, HR and finance. Procurement can also handle the direct sourcing of any resource, providing data about other similar sourcing experiences and strategically sourcing vendors. If procurement becomes the connector among the different departments for all of a company’s sourcing needs, they will be positioned as the company leader in sourcing and strategy.
For this to work, visibility is a core requirement. Technology that gives procurement and its stakeholders a centralized platform for creating assignments and tracking payments is key to enabling greater visibility throughout the organization.
This Brand Studio post was written with WorkMarket.