CWS 3.0: November 12, 2014

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Performance improvement plans for a contingent worker could mean big savings

Employee turnover is expensive. If you were to speak with any person involved with the hiring and retention of their organization’s full-time employees, they would all agree with a resounding “YES.” The actual cost and loss in productivity may vary in the discussion, but the amount will be unacceptably expensive.

When you think about all of the time, effort and real dollars spent associated with vetting, onboarding and assimilating an employee, it does add up. Expenses include posting the position, screening and interviewing of the candidates (recruiters and hiring managers), background checks, acquiring their tools, setting them up in the organization’s systems, and time and training. Organizations are willing to make this upfront investment because they expect a productive, long-term employee. So it’s easy to see when an employee resigns, especially within the first year, it can be very costly.

Organizations that take turnover seriously invest a lot of time and effort researching what they can do differently to reduce their turnover numbers. So, with much of the same time, effort and cost involved with engaging a contingent worker, why do CW program offices allow engagement managers to request replacement resources so easily — often with feedback limited to “they’re not working out." Could an employee be terminated for that same inadequate reason? Probably not, which is why documentation and performance metrics are usually required along with a timeframe in which performance improvement must be made.

CW program managers have a tough job; they want to provide excellent service to their internal clients, deliver quality talent through their program, offer opportunities that contingent workers seek and are usually asked to do this in the most cost-effective manner — or better yet, while delivering cost savings. Could cost savings be enhanced by reducing the turnover? Could working with a contingent worker and their employer (staffing company) on a performance improvement plan be a benefit? Providing the same opportunity for improvement as we would a permanent employee could work in your favor in terms of productivity gains and cost avoidance.

The positives are pretty easy to identify if it works: retain the investment made, no lost time on sourcing a replacement and you have a dedicated, appreciative and probably even a very loyal contingent worker. Not bad for requiring a little extra effort from your engagement manager, the contingent worker and his or her employer. Everyone wins in this scenario.

Obviously, this is not something that we would consider in some circumstances, such as with a statement-of-work resource or an independent contractor, as the expectation when using these resources is they have defined deliverables and services that are agreed to by both parties. Interesting enough, in many cases, a project performance review naturally takes place in these engagements anyway, as the quality of the service performed and the deliverables rendered can specifically determine whether payment will be made or not. And of course, the risk perceptions of co-employment will limit an organization’s considerations of remedial performance improvement plan (PIP) engagements.

More often than not, contingent work is being engaged strategically on a longer-term basis, especially with the re-emergence of skills shortages in certain employment sectors. So CW turnover may rise as a consequence and dealing with the contingent worker as you would a broken part may not be the best course of action. Some CW programs are now even adding “relationship management” personnel experts as part of their program’s management team.

If a PIP engagement doesn't work, doing the right thing and showing the contingent worker that you were willing to try gives your brand and your organization important rewards, especially if that contingent worker is also a customer.