How Standardised are your processes for the external workforce?

In today's dynamic business landscape, the external workforce plays an increasingly crucial role in organisational success. As companies rely more heavily on contingent workers, freelancers, and contractors, the need for standardised processes becomes paramount. We look to explore the current state of external workforce management, highlighting areas of success, challenges, and opportunities for improvement.

Onboarding Success and Offboarding Challenges

One of the most encouraging aspects of external workforce management is the success of onboarding processes. An impressive 85% of external workers report satisfaction with their onboarding experiences. This high satisfaction rate indicates that companies are investing effectively in welcoming new hires, providing proper introductions to company culture, setting clear expectations, and outlining job responsibilities.

However, the picture is not as rosy when it comes to offboarding. Nearly 58% of organisations report lacking a structured approach to offboarding external workers. This gap in process standardisation leads to several risks:

1. Security vulnerabilities due to delayed revocation of IT system access

2. Potential unauthorised physical access to company premises

3. Inefficiencies in resource allocation and knowledge transfer

The stark contrast between onboarding and offboarding processes highlights a critical area for improvement in external workforce management.

Strategic Workforce Planning and Forecasting

Companies are increasingly developing comprehensive strategic workforce plans that aim to:

1. Align external talent with long-term business objectives

2. Identify and address skill gaps

3. Optimise the balance between internal and external resources

4. Account for market trends and economic factors

However, challenges persist in accurately forecasting service demand for contingent workers. While many organisations can predict about 70% of their service needs, there's still room for improvement through enhanced forecasting tools and better cross-departmental communication.

Spend Management Challenges

One of the most significant challenges in external workforce management is controlling maverick buying and rogue spend. On average, businesses experience between 10-20% in savings leakage due to purchases made outside official procurement channels. This highlights the need for:

1. Improved spend visibility

2. Implementation of e-procurement solutions

3. Enhanced procurement policies and training

Accurate categorization of external workforce expenses is another crucial aspect of effective management. Organisations are leveraging advancements in AI and procurement technologies to:

1. Improve spend classification

2. Reduce errors in allocation

3. Enhance budget forecasting

4. Identify cost-saving opportunities

Compliance and Risk Management

With evolving regulations across different regions, maintaining compliance is a moving target for organisations managing external workforces. Key areas of focus include:

1. Data protection regulations, such as the new EU rules effective January 1, 2025

2. Updates to worker classification guidelines, particularly in the United States

3. Tax regulations for foreign workers in the Asia-Pacific region

To address these challenges, companies are investing in specialised tools to streamline workforce management and ensure compliance.

The Path to Standardization

While significant progress has been made in standardising certain aspects of external workforce management, particularly in onboarding, there's still considerable room for improvement. The disparity between onboarding and offboarding processes, challenges in spend management, and the evolving regulatory landscape all point to the need for more robust, standardised approaches.

To achieve greater standardisation, organisations should:

1. Develop comprehensive, end-to-end processes for the entire lifecycle of external workforce engagement

2. Invest in technology solutions that provide better visibility and control over spend and compliance

3. Foster closer collaboration between different departments involved in external workforce management

4. Regularly review and update policies to align with changing business needs and regulatory requirements

Standardising processes for external workforce management is a complex but necessary endeavour. By focusing on improving offboarding procedures, enhancing forecasting capabilities, tightening spend management, and staying ahead of compliance requirements, companies can create more efficient, cost-effective, and compliant processes for managing their external workforce.

As the business world continues to evolve, those organisations that can effectively standardise and optimise their external workforce processes will be better positioned to leverage this crucial resource, driving greater value and maintaining a competitive edge in the market.