Many business cycles have a “season.” In retail, the holiday season is a make-or-break occasion. 

In the world of accounting, tax season provides the heaviest workflow. Some business seasons follow the school calendar (travel and school supplies) and others the seasons of the year (construction or HVAC repair/sales).

The best part of seasonality in business is it is predictable.  

Other business cycles, however, may not be as predictable. Unexpected situations arise playing havoc with your scheduling, or demand for your services or products fluctuate significantly from week to week, creating an ebb and flow to your workflow and staffing needs. These business “cycles” are unpredictable.

Whether predictable or unpredictable, the increase (or decrease) of workflow must be properly planned and managed. Sound staffing strategies are an important component of this workflow planning and management, and utilization of contingent labor services is frequently deployed. However, without the implementation of sound Strategic Sourcing, the effectiveness of your staffing strategies will be sub-optimized.        

Below we will share some insights into how sound Strategic Sourcing execution can compliment your contingent labor business needs, support operational requirements and drive savings value.

1. Standardization. Common types of contingent labor staffing include office administration, light industrial or manufacturing, sales, customer service, light maintenance, janitorial, accounting, IT and HR; each of which may have varying levels of job skill requirements. If left unchecked, the uses of contingent labor services can easily default into a series of independent, local decisions that create spend fragmentation, non-standardization and limited leverage across the organization. What can your business standardize?

Job descriptions: Creating standard job descriptions for similar roles including the job functions, tasks, and duties will ensure a consistent pool of quality people no matter what location requires the work. Standardized job descriptions will also enable the organization to properly match contingent labor work requisitions with the business needs and requirements in a consistent manner across all locations. As with all strategic sourcing activities, the importance of working with the business and understanding the market is essential to effective standardization.

Hourly rates: Standardizing job descriptions will create consistent titles and pay grades ensuring those with the required qualifications are compensated correctly across all locations (according to the market). Although hourly rates will vary due to regional labor markets, normalizing the hourly rates by job description for both pay rates and bill rates will enable a full understanding of the labor costs by role type, feed accurate budget forecasting and improve leverage opportunities.

2. Cost Structure Transparency. Whether you consolidate to a single contingent labor supplier or implement a regional strategy utilizing more than one supplier, having a full understanding of the cost structure, pay rates, mark-up components and bill rates will provide a competitive advantage, drive improved negotiations and ultimately result in reduced costs.

Standardized job descriptions and cost structure transparency will enable your organization to properly assess and compare pricing proposals. Sound strategic sourcing would also include supplier capabilities, geographic footprint and ability for the potential suppliers to meet stated business requirements, as price is not the only deciding factor.

3. Leverage. Traditional sourcing basics emphasize the importance of leveraging spend to drive reduced costs and improved business value. Standardization of job descriptions, normalization of hourly rates and consolidation of supply base drive this leverage. When done properly, your organization can leverage the sourcing strategies and approaches utilized for contingent labor services with the strategic sourcing of specialized outsourced labor categories, like security guard services.

Although the business requirements for security guard services are specialized and can be very different from the common contingent labor staffing types, the approach of standardizing job descriptions and creating cost structure transparency can be mirrored and leveraged when negotiating and comparing hourly pay rates and bill rates. Leveraging strategies and approaches across similar categories are often an overlooked value creating opportunity within an organization.

4.  Relationship. By definition, contingent labor is about people; and having access to a consistent pool of quality people that is the right fit for your business needs depends heavily on having the right relationship with a contingent labor supplier. The supplier must understand your needs, especially as it pertains to geographic coverage, as local or regional support in providing the best-fit resources will impact service levels significantly. Good relationships and good execution are hand-in-glove.

Don’t wait to start planning for your next busy season or unexpected demand swing. Start standardizing your job descriptions and analyzing your compensation cost structures for contingent labor and outsourced labor categories now. If you have not recently started working closer with the business and strategically sourced these expense categories, now is the time to start. The tools and processes are both proven and readily available.

Visit Nitor's strategic sourcing case studies today to learn more and view the relevant case studies for contingent labor services and security guard services.  More at nitorpartners.com.

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Mark Dorow

Principal Consultant