Contingent Workers Are Second Class Citizens…

….or so you might think, if you looked at many companies’ recruitment strategies.

Before I explain my thinking, allow me to explain why this matters. The REC‘s figures for 08/09 put the value of the UK recruitment industry at £22.491 billion. Of which £2.609 billion relates to perm recruitment and £19.882 billion relates to contingent recruitment. Now I fully understand that you can’t compare the two, perm recruitment figures are typically fees only and temp recruitment figures are typically salaries plus fees. It is also very difficult to calculate how much of the £19.882 billion relates to fees, but for the purpose of this it is enough to state that it is a very significant figure that probably isn’t a million miles away from the perm figure. Contingent bookings totalled 1,068,197 for the same period, perm placements were somewhat less at 582,803. Again it would be wrong to try and make a direct comparison between the two, but again contingent recruitment represents a significant proportion of a companies hiring activity.

OK, so if we accept that companies are spending a significant amount of money on contingent labour, if we accept that there a large number of contingent hires that need to be managed, if we broadly accept that when our stereotypical CEO says ‘our people are our best asset’ they should be referring to everyone that contributes towards their organisation, and if we broadly accept that we are moving towards a more flexible workforce (a debate for another time), do we see a significant difference in priority in the market between perm and contingent recruitment? Here a few example of why I think we do, in no particular order;

Experts – I cannot move in the market without falling over an expert prepared to share their views on all different aspects of permanent recruitment. As with anything, some of it is good advice, some of it is rubbish. However, look for similar advice in relation to contingent recruitment and it’s much harder to find. Some would argue that much of the advice they give can be applied to both. I would argue that whilst there are certainly many commonalities, there are just as many differences and even applying the common principles shouldn’t be done without due consideration of the differences.

Technology – Take a look at the market for permanent recruitment technology and there are a vast myriad of different solutions available. Take a look at the equivalent market for contingent recruitment technology and you will find it to be significantly smaller, which is odd if we look at the figures above that suggest the market need is broadly similar. You will also see that contingent recruitment technology is often very focussed on the financial aspects of the transaction. Nothing inherently wrong with that, but what about the importance of skills and cultural fit in relation to a contingent worker? I do acknowledge that things are starting to change slowly, some of the leading Applicant Tracking providers have released contingent modules and some of the leading Vendor Management providers have released recruitment modules, but there is still a huge disparity.

Suppliers - In terms of agency suppliers to the industry, there is no such disparity. There are many contingent recruitment suppliers out there, as there are many permanent recruitment suppliers out there. Given all the potential risks around co-employment, IR35, AWD and the various other relevant legislations, they arguably provide more value add than their permanent recruitment cousins. However, this is in itself an issue. Companies are spending large amounts of money and managing large numbers of transactions with large numbers of suppliers. Yes we see lots of initiatives by companies to try and rationalise this, and yes there are specialist RPO and Vendor Management providers that will work with the bigger companies to help them achieve this. However the majority of the initiatives, and many of the specialist providers service offerings, are based around rationalising rates and margins. Nothing inherently wrong with that and many of these companies provide a good service. However, companies should recognise that Contingent workers are human beings, not boxes of stationary, you cannot procure them in the same way. Ignore the importance of skill sets and cultural fit at your peril. If the supplier has sold the company a contingent labour procurement service, it is not the suppliers responsibility to address these related aspects, it is the companies responsibility to complement these services with the relevant systems and processes.

Having said all of the above, I do understand many of the reasons why we are where we are. Not least of which is that perm recruitment is typically ‘owned’ by HR and contingent recruitment is typically ‘owned’ by Procurement. Whilst there are many fine procurement departments that do a good job of managing the financial aspects of contingent recruitment (there are just as many who struggle), there is nobody to own the people aspects of contingent recruitment. HR don’t really want to own permanent recruitment in a lot of cases, and definitely don’t want contingent recruitment. Hence the vacuum, hence the issues.

So my plea to our business leaders is, take the best of the advice, systems and services that are on offer and continue to invest in you permanent recruitment strategies. But don’t ignore the valuable contribution that your contingent workforces make to your business and invest in ensuring you get the best contingent talent as well.

The answers are out there if you know where to look and I will try and dig deeper into some of the challenges and possible solutions in future posts.

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