When your workforce needs additional hands, the first step might be to use your staff augmentation module to secure hourly or daily workers. While staff augmentation offers a seemingly easy solution, it can create challenges such as uncontrolled spending and compliance risks.
To address these concerns, some companies shift towards hiring through a statement of work (SOW) or services procurement model. This approach grants greater control over projects by defining scope, deliverables, timelines, and costs upfront. However, a new challenge may then present itself: effectively managing a diverse temporary workforce.
One of the most effective solutions is to implement a vendor management system (VMS). Throughout this article, we’ll explore the role of a VMS and key considerations to elevate your extended workforce management.
SOW continues to be a focus area for VMS providers, with three-quarters of participants reporting SOW spend under management. SOW represents 33% of reported yearly spend under management | Source: SIA’s VMS Global Landscape Summary 2023
4 Benefits of Implementing a VMS for Managing Temporary Workers
Implementing a VMS to manage a contingent workforce brings multiple benefits:
1) Removal of Staff Augmentation Expenditure
Many organizations will source temporary workers through staff augmentation companies. These companies act as middlemen, adding another layer to the hiring process. A VMS streamlines the process, as you can source temporary workers directly from a pre-vetted pool within the VMS, eliminating the need for staff augmentation companies and their associated fees.
2) Greater Visibility of Non-Employee Spend
It can be more work-intensive to track temporary worker costs when using staff augmentation or direct hiring. Invoices might come from different sources, and in different formats, making it difficult to get a clear picture of overall spending.
With a VMS you can easily track costs associated with temporary workers, including hourly wages, benefits, and any agency fees. VectorVMS, for example, centralizes all contingent workforce financial information. This allows for better budgeting and cost control.
3) Reduce Rogue Spend By Defining Standards
SOW management can be inconsistent without a centralized system. This can lead to scope creep or unauthorized spending on temporary workers. A VMS enforces pre-defined workflows for SOW creation and approval. This ensures that all temporary worker engagements are compliant with company policies and budget limitations.
4) Improved Compliance With a Single Source of Record
Managing documentation for temporary workers can be difficult, especially when using multiple staffing agencies. This can lead to compliance issues regarding worker classification, onboarding, and safety protocols.
A VMS acts as a single source of truth for all temporary worker information. It stores worker profiles, contracts, onboarding documents, and timesheets. This simplifies compliance audits and ensures all necessary documentation is readily available. Plus, it becomes invaluable if you ever pursue automated co-employment solutions.
NEED HELP CHOOSING THE RIGHT VMS? READ THIS | ‘The Gen-1 Advantage: Maximizing Your Extended Workforce With VMS Technology’
4 Tips for Managing Your Independent/Freelance Workforce
Having a VMS in place is a great first step, but when it comes to independent contractors and freelancers, additional considerations are necessary. Here are some tips to ensure a smooth and compliant workflow:
1) Use a Dedicated Freelance Management Integration
The next step is to establish a plan specifically for managing your independent workers. This can be done within your VMS through a staff augmentation or service procurement module. However, you may want to consider if a dedicated freelance management platform integration (available with VectorVMS) might be a better fit. This can offer features specifically tailored to freelancer engagement, like project timelines, milestone tracking, and secure communication channels.
2) Ensure You Have Effective Security Protocols
Regardless of the sourcing method (VMS, freelance platform, etc.), prioritize security. Anyone accessing your facilities, data, or network needs to comply with your company’s protocols. VectorVMS’s approach is to offer you access control features to define permissions for all users, including freelancers.
3) Implement Proper Worker Classification
Independent contractor classification is crucial to avoid legal and financial repercussions. Consider using your VMS’s contractor management features or integrating with an independent contractor compliance organization or an IR35 organization (for UK-based businesses). These services can validate worker classification based on specific criteria, minimizing the risk of misclassification.
4) Strive for Full DEI Compliance
The growing importance of diversity, equity, and inclusion (DEI) compliance, driven by regulations like California’s SB 1162 and similar laws worldwide, makes solutions that track candidate diversity and compensation absolutely essential. You VMS should offer modules that significantly reduce your risk of falling behind in this area.
By implementing these recommendations and leveraging the capabilities of your VMS, you can build a robust system for managing your temporary workforce. This translates to smoother project execution, enhanced security, and improved compliance—all contributing to a successful and productive extended workforce program.
MORE ON DEI | ‘2 Reasons Why DE&I Should Lead Your Contingent Workforce Planning by 2024’
Looking for a VMS solution with all the functionalities discussed in this article? Look no further than VectorVMS! Contact us or request a demo to experience these capabilities firsthand.
Meet the Expert
Taylor Ramchandani – VP of Strategy
Taylor Ramchandani is responsible for the management and strategic planning of the VectorVMS vendor management system. Taylor is committed to client satisfaction and to ensuring VectorVMS technology meets the current and future needs of clients and managed service providers (MSPs). She uses market research and in-depth industry experience to create products and services that make extended workforce management efficient and intuitive. Taylor oversees product development, marketing, and business partnerships for VectorVMS and is responsible for driving innovation for contingent workforce management. Connect with her on LinkedIn.
