Human Resources vs. Procurement: Who Manages The Contingent Workforce?
For most organizations, human capital is often considered one of their biggest assets. With the rise of gig economy however, companies have been adopting a more flexible and fluid model and have begun to depend more on contingent workers and independent consultants. Now a functional dilemma arises before hiring this contingent workforce – considering the need is for a temporary resource, should it fall under procurement or does the human element make it the responsibility of the HR department?
Since the end of the 2001 recession, hiring contingent talent like freelancers, contract workers and consultants working under temporary agreements, has become an effective strategy for employers, especially during a period of sluggish recovery. Procurement is involved in obtaining quality goods and services for the company. It is the entity authorized to issue contracts, invitations to bid, requests for proposal and quotations in order to procure a certain commodity or service. It also specializes in contracting across the supply chain, managing vendor profiles by selecting them and then undertaking regular and frequent reviews using detailed evaluation methods. Companies usually invest in procurement to modernize the source-to-settle process. However, often the problem is that procurement has very little experience in managing and recruiting ‘people’ and tracking their activities, while HR is historically known to do this job more efficiently, utilizing tools designed for people management. HR professionals are responsible for hiring and administration of the overall workforce. There is a need for unidirectional efforts from both departments in order to make the entire contingent process more successful.
Collaborating and Creating Value
Creating value with temporary staffing is not as easy since it requires an effort in bringing both the Procurement & HR teams together to collaborate. The teams must set up a strong working relationship built with a foundation of mutual understanding that respects one another’s capabilities. Procurement and HR teams must interact with one another without one trying to dominate the other. Procurement should understand the requirements of HR, directing them towards temp-to-permanent employee hires or may even support them through strategically sourcing staff members; while, the HR team should learn from procurement on how to properly manage, suppliers, vendors and market intelligence when it comes to temp resources.
An iCIMS study shows that temporary workers significantly contribute to the productivity of the company as they can provide a quick fix for sudden turnover, long-term leaves, and special projects. With the ever-changing business scenario, a flexible working approach may further boost the efficiency of temporary employees; however, it brings with itself more challenges for those concerned with the management of contingent staff, as companies move towards non-traditional styles of working.
Companies should build a collaborative team that is responsive and utilizes the best of what both departments have to offer. It should make sure that both procurement and HR teams are involved in setting parameters and processes which are beneficial for the company. Let them do what they do best, Procurement Team should handle the management of the Staffing vendors and MSPs, while HR team could assist with developing strong and productive relationships with the Contingent staff, utilizing Contingent Workforce Management (CWM) and other tools that are at their disposal. Clear division of responsibilities will ensure that the relationship with staffing vendors and the contingent staff is managed in a productive and workable way, adding value to the firm and enabling smooth running of its operations.