Thursday, March 14, 2019
Procurement’s job is to acquire assets and control costs. HR’s role is to attract, develop and manage the workforce. The two functions, naturally motivated by different goals and focused on their own KPIs, don’t always consider joining forces when it comes to talent management. But when sourcing talent, arguably the most critical asset of every organization, the two departments need to align – and fast — particularly in today’s tight labor market.
Organizations are seeing the benefits of hiring in an on-demand capacity as short-term and contractual positions offer greater flexibility and speed the time to fill specific project needs. These alternative roles are becoming even more important as options for candidates are increasingly limited – in the near zero unemployment U.S. labor market, organizations are battling for the same resources and need to find ways to expand the talent pool.
The power dynamics are changing: the best labor is often now only available through a gig relationship; people are leveraging the tight labor pool to hire themselves out as “hired guns” to the highest bidder. That’s why contingent labor gigs are quickly rising in popularity. But buyer beware: they are also much more difficult to hire for than traditional full-time positions because alternative roles come with more employment regulations and management considerations.
While more than 40 percent of U.S. workers are currently in alternative work arrangements, only 16 percent of employees say their companies have well-defined strategies for managing contractors, freelancers and gig workers. This means organizations need to quickly figure out how to hire and manage contingent labor as part of their total workforce so that they remain in compliance – and in good standing with their entire workforce.
The first step: aligning efforts between procurement and HR.
The motivating factors: Corporate money saver meets company matchmaker.
Procurement teams’ primary goal is to protect the bottom-line, which includes managing risk, year-over-year cost savings, spend under management and contract compliance. The function tends to view contingent labor as a more effective and less expensive option than a traditional workforce, since short-term contracts allow the business to reduce overall labor and workforce costs while boosting productivity.
HR is concerned with employee engagement and retention, talent skill development and improving diversity. The department views continent labor as a method for opening the talent pool and giving the organization access to the candidates they need for the job – especially those with niche or specialized skillsets.
Both viewpoints have merit, and success starts when they combine for a total view of the workforce. The bottom line is that contingent labor positions can provide a critical edge for organizations, but they also bring higher levels of complexity in sourcing and overall HR management. These positions are often built on a statement of work and come with pre-determined expectations and deliverables, which means procurement’s supplier management, contract and budgeting expertise each play a critical role in effective contingent labor management. Coupled with HR’s employment policies, recruiting and performance management knowledge, the two departments together are an unstoppable team for addressing the intricacies and extracting the most value out of alternative workforce hiring.
Let’s say HR enlists an outside recruiting firm to help hire an IT specialist to oversee an upcoming technology implementation. HR works with this firm to find a highly-qualified candidate, creates a requisition outlining compensation and expected project deliverables and makes an employment offer, all without consulting the procurement team. Turns out, the organization already had a relationship with a preferred vendor that could have offered the same recruiting service at a significant, pre-arranged discount. If HR and procurement had worked together from the outset, the organization could have acquired the same quality candidate at a much lower cost, leaving room in the budget for future strategic hires. Collaboration also would have saved the HR team time because they wouldn’t have had to take on the extensive process of finding and vetting a recruiting firm.
How to make collaboration work.
Achieving each department’s objectives –finding the best candidates at the right cost – is possible when HR and procurement have a strong working relationship and a mutual understanding of the other function’s viewpoints and competencies.
Breaking down siloes between the departments requires understanding what drives and motivates the other function. Knowing each function’s objectives and connecting their priorities to each specific team, encourages both sides to work toward a common goal and leads to mutual success. With talent a critical organizational asset, it’s also important to articulate how these joint goals play into the larger business picture and prioritize them accordingly.
While a smart strategy is to collaborate based on core expertise – procurement’s being contracts and suppliers, while HR’s is talent and retention – there are also inevitably terms or practices that each side uses that are unfamiliar to the other. Industry lingo like ‘spend under management’ will likely fall flat with HR teams, and same goes for procurement with concepts like the ‘future of work.’ A good first step is to take a little time to decipher and define each department’s language, so the two sides can effectively communicate and share information and best practices. This benefits HR by giving them a better understanding of supplier management, a critical component of contingent labor hiring, while procurement gains deeper insight into what HR needs to be successful – and is therefore better equipped to help them find the best talent at the right cost.
Talent is what keeps a business in business – without the right people, it’s impossible to sell, market and run the organization effectively. Procurement and HR may think differently and have their own mandates, but they each bring valuable knowledge to the table and splicing together their respective expertise is what leads to effective talent acquisition.