Contingent Labor Checkup – Now is the time to secure your policy.
The dynamics of the workforce have changed drastically in the last few years. As companies respond to the global recession, many once full-time positions are now being filled on a contractual basis. And what many experts point to is that the use of contingent labor is proving not to be a short-term solution of the economic downfall, but rather the new norm.
“My new research shows nearly 26 percent of the average workforce is considered contingent, temporary, or contract labor,” notes Chris Dwyer, senior research analyst, global supply management for Aberdeen Group. This sector has seen steady growth: 2009 reported 18 percent; 2010 showed 20 percent; and 2011 was 23 percent.
“Companies are continuing to rely on a contingent workforce,” says Dwyer. “It’s flexible. There is a need for specialized skill sets, and if you are looking for true expertise, more often than not, that person is going to be some type of consultant or contractor.”
Dwyer’s research finds that 60 percent of organizations cite contingent labor as a vital component of their businesses. As contingent workers become more relevant, organizations need to reevaluate—or evaluate, for that matter—how they want to screen them. HireRight’s 2011 Employment Screening Benchmark Report found that only 27 percent of respondents screen contingent workers.
“We’ve been having conversations around contingent labor screening for six or sevens years, but things have changed, and the awareness of contingent labor and screening policies has accelerated in the last couple of years,” notes Rob Pickell, chief marketing officer and senior vice president of strategy at HireRight.
Organizations are realizing the inherent risk involved if forgoing traditional background screens on temporary workers.
“It’s equally risky to have a contract vendor in your four walls as a full-time employee,” notes Bill Glenn, vice president of marketing and alliances for TalentWise. “Companies are looking at contingent as having the same responsibilities and same access to highly secure data as full-time employees. Why put your company and customers at risk by not incorporating the same level of screening into your contingent workforce?”
And Glenn warns not to do it on the cheap. Many companies view the use of temporary labor as a cost-saving mechanism and might not want to take away from the bottom line by executing a thorough background screen. “You can’t put a price on the cost of a bad or negligent hire. We recommend that clients apply the same screening policy or principle as you would for full-time employees,” he says.
A challenge facing contingent labor is who in the company—HR or procurement—establishes controls to manage the program. Contingent labor is a distributed workforce. “At an enterprise level, staffing decisions are typically made by department managers,” says Greg Dubecky, president of Corporate Screening Services. “They need to decide who is going to screen and take the initiative.”
Responsibility for the screen can fall into the lap of the company that is hiring or a third-party staffing agency that is supplying the worker. This is where it can get tricky, warns Dubecky. “If the employer owns it, it is often financially easier and smoother for compliance, too, since they dictate what will need to be done,” he says. “Background checks need to be done in a certain way. Employers can drill down to the finer details.”
Even further, some employers work with managed service program (MSP) providers to govern their contingent labor needs. MSPs manage staffing agencies and suppliers of contracted workers. “MSPs allow employers to reduce cost and can deliver consistency,” Dubecky says.
And they also play a role in the background screening process—an element that is often included as part of the contract. “The majority of our MSP clients do include screening as part of the pre-assignment protocol that staffing vendors are contractually obligated to follow,” notes Joan Davison, president and chief operating officer of Staff Management | SMX. “[It helps] ensure that the workforce meets the quality and compliance standards of the client organization.”
Davison explains that their audit and compliance department works with staffing vendors on all pre-assignment protocols, including background checks and drug screens. Clients typically measure how each staffing vendor is adhering to their standards through a service level agreement (SLA).
Eric Cotton, director of vendor compliance for Randstad Sourceright, recommends that employers clarify if screening requirements vary per job category and whether legal restrictions exist that might govern such screenings. He says the MSP provider will ensure that suppliers are contractually bound to these requirements for temporary workers. Even more, the MSP provider will validate that the suppliers have met the screening criteria, either during the on-boarding process or through scheduled supplier audits, which will help maintain levels of compliance and mitigate potential risk.
However contingent labor is screened, it should be transparent. “Make sure your program is consistent,” says Brandon Phillips, president and CEO of Global HR Research. “I recommend having a process that can be controlled and where the outcome can be easily processed.”
Article originally published by HRO Today Magazine June 2012
Magazine Issue: Vol. 11 No. 5 – June 2012
Topics: MSP/Contingent Labor,