The significance of insight into your external hiring in uncertain times: navigating the contingent workforce
The economic winds are blowing ever faster and more unpredictably. Further escalation of trade wars, increasing investments in defence, and a looming recession are just three current themes impacting today’s economy. In these turbulent times, it is crucial for businesses to be agile and adaptive. An essential aspect of this agility lies in the way you organise your staffing, and in particular, how you deal with your flexible workforce.
Having a clear and up-to-date understanding of your hiring is no longer a ‘nice-to-have’, but an absolute ‘must-have’ to be able to make strategic decisions that ensure the continuity and success of your organisation. Without this insight, you are essentially navigating blind on a rough sea, with all the risks that entails.
The need for flexibility: scaling up and down in a dynamic market
The volatility of the market demands a workforce that can move flexibly with changing demand. Whether it is being able to scale up quickly with a sudden increase in orders or efficiently scale down during economic headwinds, the ability to adjust your staffing is invaluable.
A well-thought-out flexible workforce offers a solution here. It allows you to quickly bring the necessary capacity and expertise on board without the long-term obligations that fixed contracts entail. Conversely, it offers the possibility to effectively reduce costs when demand decreases.
The strategic trade-off: permanent vs. flexible
The choice between using permanent employees or flexible workers is not a black and white story. It requires careful analysis per function, per team, and even per project. Where continuity, in-depth knowledge of the organisational culture, and long-term commitment are crucial (think of strategic leadership roles or functions with unique, company-specific expertise), the focus is often on permanent appointments.
For other roles, especially those where specific skills or know-how are only needed for a certain period, or where the work is project-based, the use of flexible professionals can provide an efficient and cost-effective solution. Think of IT specialists for an implementation project, marketing experts for a specific campaign, or project managers with experience in a niche area.
Different contexts, different considerations
It is essential to recognise that the trade-offs between permanent and flexible can differ significantly within your organisation.
- Strategic importance of roles: Functions that directly contribute to the core strategy and competitive advantage of your company often require a long-term commitment and deep integration into the organisation. Here, the choice for permanent employees who embody the culture and have an intrinsic motivation to contribute to the long-term goals often prevails.
- Availability and interchangeability of employees: For functions where a broad pool of qualified professionals is available and where the work is relatively easily transferable, a larger flexible workforce can be an attractive option. This offers the ability to switch quickly and optimise costs.
- Specific skills and know-how: When your organisation temporarily needs highly specialised knowledge or skills that are not available internally, hiring external experts through flexible contracts is often the most efficient and effective way to bring this expertise in when needed. This avoids the need to hire expensive permanent specialists for a temporary need.
The complexity of flexibility: forms and their implications
Within the flexible workforce, there are various contract forms, each with their own characteristics, advantages, and disadvantages. It is important to understand which form of flexibility is most appropriate for a specific need:
- Temporary agency work: Suitable for quickly absorbing peaks in workload or filling temporary vacancies. Offers flexibility in contract duration and is often administratively simple.
- Secondment: Often more focused on the deployment of professionals with specific expertise for a longer period. Offers more continuity and the possibility of deeper integration into the team.
- Self-employed: Ideal for hiring specialist knowledge and experience on a project basis. Requires careful assessment of the employment relationship to avoid bogus self-employment.
- Outsourcing via Statement of Work (SoW): Suitable for outsourcing complete projects or defined tasks with a clear result and scope. Transfers the responsibility for the execution and the result to the external party.
The choice for the right form of flexibility not only influences the costs and flexibility, but also the degree of integration, the knowledge transfer, and the potential risks (think of the current discussions about adjusting laws and regulations regarding employment relationships such as WttA and VBAR in the Netherlands).
Insight as key to manageability: a clear view of your hiring
The foundation for all these strategic trade-offs is insight. Without a clear and up-to-date overview of your total hiring, you are unable to make the right decisions and effectively manage your flexible workforce. This insight includes more than just the number of hired professionals and the associated costs. It is about:
- Who are you hiring? A detailed overview of the functions, skills, and expertise of your hired professionals.
- Why are you hiring? The reasons behind the hiring (peak workload, specific expertise, project-based work, etc.).
- Which forms of flexibility are you using? An overview of the different contract forms and the associated conditions.
- What are the costs? A transparent picture of the total costs of your flexible workforce, including rates, margins, and any additional costs.
- What are the risks? Insight into potential risks in the areas of compliance, bogus self-employment, and dependence on external parties.
- What is the performance? Insight into the productivity and the added value of your hired professionals.
The path to insight: tools and processes
Obtaining and maintaining this insight requires the implementation of the right tools and processes. Consider:
- A central registration system: A platform where all information about your hiring is clearly recorded and managed. Especially with larger volumes, we often see added value in using a suitable Vendor Management System (VMS).
- Clear hiring processes: Standardised procedures for requesting, approving, and contracting flexible labour.
- Regular reports and analyses: Periodic overviews and in-depth analyses of your hiring data to identify trends and substantiate strategic decisions.
- Close cooperation between HR and Procurement: An integrated approach with a process owner for the entire process in which HR is responsible for strategic workforce planning and Procurement for contracting and supplier management.
Manageability through Insight in uncertain times
In the current uncertain times, the ability to switch quickly and flexibly adjust your staffing is crucial. A well-thought-out flexible workforce can be a valuable tool here. However, the effectiveness of this flexible workforce stands or falls with the insight you have into your total hiring.
By investing in collecting, analysing, and interpreting the right data, you create a clear view of your flexible workforce. This enables you to make strategic decisions about the optimal mix of permanent and flexible employees, choose the most appropriate forms of flexibility, and effectively manage costs and risks.
In short, insight is the key to manageability. Make sure you have this key in hand to successfully guide your organisation through the uncertainties of today and tomorrow. Only with a clear view of your hiring can you determine the right course and keep your organisation agile and competitive.
