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In the Spotlight: It's Very Dynamic - CWS 30 June 2.11

Contingent Workforce Strategies 30





For the June issue, CWS 30 chatted with Jennifer Conley, contingent labor program manager at IHS, a leading global source of critical information and insight dedicated to providing the most complete and trusted information and expertise. The company's contingent workforce program in the United States, with around $12 million in spend, uses both a managed service provider (MSP) and a vendor management system (VMS). Conley discusses how she administers the program, the challenges that have arisen from expanding into the United Kingdom with regard to independent contractors and what her goals for the year are.

Q: Please describe your company's program briefly. How large is the spend?

A: Our program in the U.S. runs on a VMS platform with an on-site MSP. Our spend isn't very high right now because we've been tasked with stringent approvals on our requirements in an effort to reduce costs. Our spend is between $10 to $12 million.

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Q: What kind of workers do you use?

A: It runs the gamut. We have IT workers, admin/clerical and data analysts. We also have some highly skilled subject-matter experts across all our domains who work on a contingent basis. Sixty percent of our contingent workforce is payrolled.

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Q: And all this is managed in house?

A: Yes. We currently operate a VMS/MSP model in the U.S. We are in the process of rolling out our program in the U.K. Initially, we won't have an on-site dedicated MSP resource in the U.K. due to the volume, or lack thereof, but I'm confident the program will grow significantly once it's proven successful.

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Q: When you include global operations, what is your spend?

A: Approximately $20 million. Historically, we have relied heavily on pre-identified candidates to fill the contractual roles and do not utilize vendor sourced contractors nearly as much. This is true in the U.K. as well, so we expect to be able to mirror the program in most respects with the majority of the contingent workforce in the U.K. (with France to follow) to be sourced through our payroll partner. There are benefits to this model in that the mark-up is relatively low however it's difficult to set rates due to the lack of market data we have on some of these engagements.

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Q: Let's talk about goals for the year.

A: My goals for the year are to get the program rolled out in the U.K. and to have it mirror the U.S. process, establish a well-executed independent contractor compliance program to include limited companies in the U.K., and to benchmark data on the current rates we pay our subject-matter experts and try to leverage them across business units where possible.

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Q: When you say limited companies, what do you mean?

A: My understanding is that individuals can establish limited companies in the U.K. much like individuals in the U.S. can incorporate in order to operate as a sole proprietor/independent contractor.

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Q: So basically you want to make sure these limited companies, or ICs, as you would call them here, are in compliance.

A: Correct. We want to ensure we protect ourselves from possible misclassification on all fronts.

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Q: Have you implemented a system for managing these independent contractors or limited companies?

A: All requests to engage an independent contractor (limited company in the U.K.) start in the corporate office based in the U.S. Each individual will be tested through a third-party vendor; once the classification is determined, we will source the individual through our payroll provider based on the classification. This is a cultural shift, as I'm sure it is in many companies, and we are still in the process of educating on the importance of arm length relationships and proper classification but I'm confident we'll get there when all our processes are streamlined and communicated effectively throughout the organization.

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Q: Are you going to do this in-house, too? Or will you be managing this through a third-party service?

A: We'll be having a third-party vendor provide compliance testing and utilize our payroll partners in the U.S. and U.K. to source accordingly. We anticipate some resistance to moving independent contractors and LLCs through our payroll partners so any outliers will be managed in-house.

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Q: So that means you're going to be looking into independent contractor compliance and whether this person should be an IC or not.

A: Exactly. If a manager has a pre-identified candidate they want to engage as an independent contractor, the compliance testing is mandatory. If an individual passes the compliance testing and is correctly classified as an independent contractor, we are going to strongly suggest the person be engaged through our payroll vendor to establish the arms length relationship. However if there is strong resistance to third-party involvement, we require a documented business justification with budget manager and senior business leader approval. Our goal is effective change management, education and communication. I'm confident we will be successful in directing these engagements to our payroll provider but it will take some time.

Our legal and risk department are involved in vetting any independent contractor who will be directly contracting with the company and because we are in multiple countries we have to assess those risks on an individual basis.

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Q: What did you find when you first entered the contingent workforce arena?

A: I started at IHS as a contractor doing various project work and was hired as an FTE in January 2007.When I started working with the contractor data I found a couple spreadsheets with names -- some were associated with a vendor, most had individual SOWs and there were numerous independent contracts.

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Q: And what's it like today?

A: Today there is a process, a method to the madness, so to speak. We used to do statements of work for everything, including simple staff aug. assignments. There were multiple versions of contracts with individuals and vendors, multiple methods of extending engagements and little oversight to budgets on assignments. Contingent labor wasn't managed by a central point of contact. Now all of our contingent labor vendors in the U.S. are managed by our VMS. We have been able to effectively rationalize our vendor base, track our workers and can accurately track our spend. We have a lot more visibility now than three years ago. Implementing a VMS/MSP enabled us to gain control.

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Q: Where did you get the idea for that from?

A: We needed to have visibility to our spend and our contingent workforce. We needed control over our on-boarding and off-boarding processes. We needed control of our vendor base and the method used to engage vendors and ensure we get the biggest bang for our buck in the talent category. The solution that made the most sense was to implement a VMS/MSP program. We sought out experts in contingent labor management and partnered with them in order to put a program in place that could meet our corporate goals.

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Q: What do you like most about your job?

A: I like the challenges that come along with it and being able to provide very workable solutions to those challenges. There always seems to be something new and interesting coming down the pike. Because we're a global company, we have consultants all over the world, and that creates unique challenges and a rich environment for learning. Even though we have a process and program in place, it's still very dynamic because it seems each situation comes with a unique set of circumstances.

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Q: What don't you like about your job?

A: The importance of contingent workforce management is a relatively new concept. In order for a program to be successful its essential there is leadership buy-in and cross-functional team support. I don't think my program is unique in its challenges.

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Q: Outline something to me that saved your skin on the job.

A: I think being able to have one-on-one communication with managers as well as contractors has been really helpful. It is much easier for me to explain and tailor the message for individual audiences as opposed to a mass email describing the process. Being able to outline a win/win situation for all involved has helped the program gain creditability and if doing it on a one-on-one basis is the way to gain creditability, that's what I'm going to do, because I fully believe in what we're trying to accomplish with this program.

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Q: What advice would you give to other contingent workforce managers trying to do this?

A: Make sure there is strong executive support and definitely establish strong cross-functional teams with finance, procurement and legal.

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Q: How would you advise people to get that strong leadership support?

A: It's important to keep going after it. Be vocal and educate yourself so you can educate your leadership team on issues that could impact the bottom line. From the very beginning it's incredibly important to get the cross-functional teams on board so that everybody has a stake in the program. And together you can work to get the leadership buy-in that you need.

Our VMS is going on its third year. Now that independent contractor classification issues and IRS audits and lawsuits are in the news, the leadership team has taken a strong interest in the program and its success.

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Q: Any specific challenges that you faced in the last couple of years that you would like to talk about?

A: When we first rolled our VMS, the challenge was to get buy-in from hiring managers and just to get people to accept the change. Obviously, change is difficult, but once the program was established as a tool and viewed as being helpful rather than a hindrance, we have a pretty content customer base.

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Q: What is your opinion of contingent workforce management as a profession?

A: It's an emerging field and an exciting place to be.

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Q: Would you recommend someone enter it?

A: Yes I would.

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Q: Why?

A: There are so many changes and challenges in the workforce. Companies are going to start to realize the need to manage and leverage their contingent workforce. It's a very interesting field with tremendous growth potential.

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Q: What skills do you need to be a good contingent workforce manager?

A: You need to be a good communicator, have a thick skin, be a good negotiator and be able to be flexible to the demands of the business.

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Q: Why a thick skin?

A: It takes a while for companies to take this type of program seriously. So you have to be able to hear a lot of noes but remain persistent until you hear the yeses and the get support you need to be successful.

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Q: What do you do when you're not working?

A: I'm an avid cyclist, an intermediate yogi and spend a lot of time outside with my dogs.

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