External workforce: external is internal

According to the SAP study "External Workforce Insights 2018", 65 per cent of managers say that external employees make an important contribution to the company's success.¹ Whereas in the past only ancillary services were outsourced to external parties, today core knowledge is often also brought in-house by external employees or important services are provided by external providers.

According to the SAP study, 44 per cent of personnel expenditure in companies is already attributable to external employees.² Such a trend is also emerging in Switzerland. This is shown by the Deloitte study "The workplace of the future". In Switzerland, 25 per cent of employees work on a project-based, temporary or additional basis. A further 25 per cent plan to do so in the future

Utilising synergies

This development is being driven by employees and employers alike. On the company side, a large number of external employees brings with it various challenges.

Do you know how many external employees and service providers work for your company? Can you quantify their costs? Do you know who has access to your company, your buildings or your systems? If you answered "no" to these questions, you are not alone: 75 per cent of management members do not have enough information about their external employees and service providers.

Digitization has arrived in this area in very few companies. There is a lack of transparency, compliance and standardised processes. At the same time, existing HR and purchasing systems are increasingly reaching their limits.

Employee Journeys by external and internal employees show many parallels (see figure below). However, process synergies between external and internal employees are rarely utilised. A so-called vendor management system (VMS) could promote such synergies. This will be illustrated using a fictitious example.

Onboarding & Offboarding made easy

"Roman needs a business analyst for his project. As this is a temporary role, the position is to be filled externally. Roman now enters all the necessary information about the position in the VMS and starts the budget and headcount approval process, which is stored in the system. As soon as this is confirmed, the recruitment process begins: the position is published on previously defined recruiting and matching platforms and activated for selected recruiters.

Suzanne works as a freelance business analyst and is supported by her recruiter in her search for a new job. After the recruiter receives Roman's job enquiry via the VMS, he forwards it to Suzanne. Suzanne finds the job exciting and tells the recruiter that the tasks and salary are suitable. Suzanne's profile is now presented to Roman via the VMS.

Roman receives this information in real time and looks at Suzanne's documents. He compares the various candidates, conducts interviews and enters all the information. In the end, he decides in favour of Suzanne because she has already worked for various departments in his company and there is very positive feedback about her in the VMS. With a click in the VMS, Roman informs the recruiter that he has accepted Suzanne's assignment. He automatically transmits all the contract information that was specified in the job advertisement. All that needs to be sent is a contract printout for signature.

Suzanne then starts the automatic onboarding process, which is handled via the VMS or an HR onboarding system. This includes background checks, entering the required information and preparing for her arrival. On her first day at work, Suzanne receives her badge and can immediately log into the systems. Online training for time recording and data protection is already available. To ensure that Suzanne receives her salary correctly at the end of the month, she is asked to record her working hours in the VMS from day one. The company policy stipulates that expenses within the budget are paid without additional authorisation. Expenses are reimbursed via the VMS as required and after approval by Roman.

At the end of the assignment, Roman must ensure the transfer of expertise to his colleagues or Suzanne's successor. In addition, Suzanne's recruiter asks Roman for feedback in order to create a reference at the end of the contract. Roman stores this in the VMS so that it is documented, as with Suzanne's previous assignments. Roman starts the offboarding process in the same way as onboarding via the VMS or HR system. This regulates which accesses are blocked and which work equipment Suzanne has to return. On the last working day, Suzanne returns her badge and Roman can finalise the offboarding process."

VMS as real support

Standardised external workforce management is important for every company, regardless of whether this is covered by a VMS, existing systems or another tool. Companies usually pursue the following objectives when introducing a VMS: Creating transparency, maintaining compliance, saving costs, standardising and digitalising systems.

When selecting a VMS, the most important objectives should be clearly defined. The implementation effort also plays a key role in the decision in favour of a system. After all, purchasing a VMS or developing one yourself is not worthwhile for every company. It requires a certain number of external employees. If you are pursuing a total workforce management approach, the VMS should also be able to be seamlessly integrated into the company's IT landscape.

Glossary

External workforce, total workforce management, VMS - many terms, no clear definitions.
The complexity of the topic begins with the use of terms: external workforce, total workforce management, external employees, service providers and vendor management systems. These terms must be differentiated from one another in order to create a standardised understanding.

An external workforce is made up of people who work in a company on a temporary or fixed-term basis. On the one hand, this includes external employees who are integrated into the Customer's organisation through authority to issue instructions and are employed by a staffing agency or by the company itself. On the other hand, it includes employees of service providers or freelancers with a service contract who work remotely or on site at the customer's premises and are personally relevant to the customer. This means, for example, that they require a badge, a time recording tool and access to IT systems.

Total workforce management is an umbrella term for the planning, management and control of an organisation's entire workforce. This includes permanent employees, external employees, service providers and, in future, robots. It is important that the corporate strategy or HR strategy is applied to the entire workforce and that all groups in the workforce are included in the corporate strategy or HR strategy. A lack of integration of external employees can have consequences, such as at Google last year when "gig workers" demanded equal treatment and earned the company negative press reports.⁴

A vendor management system (VMS) is usually a web-based or cloud solution that supports the procurement and management of external employees and service providers. It combines customers, suppliers or recruiters and external employees/service providers in one solution and maps the end-to-end process.

Sources

• ¹ SAP and Oxford Economics: External Workforce Insights 2018: The Forces Reshaping How Work Gets Done.
• ² SAP and Oxford Economics: External Workforce Insights 2018: The Forces Reshaping How Work Gets Done.
• deloitte: "The workplace of the future: How digital technology and the sharing economy are changing the Swiss workplace."
• ⁴ https://www.shrm.org/resourcesandtools/hr-topics/technology/pages/google-and-the-gig-workers-what-other-employers-can-learn-.aspx