Discover the importance of Vendor Management Systems for HR professionals and how they can give visibility to your total workforce, manage compliance, streamline processes, and improve efficiency.
Vendor Management Systems (VMS) are essential for HR professionals because they allow you to gain visibility into your total workforce, not just your employees. With a VMS, you can track and manage all the contractors, temps, freelancers, gig-workers, consultants and other contingent workers that your organization increasingly relies on.
This comprehensive view of your workforce allows you to better understand your talent pools and make strategic decisions about workforce planning and resource allocation. In recent years several studies have estimated the non employee workforce to be roughly 50/50 with FTE. These individuals often work in critical and core roles for the business and are no longer just augmentation for peak work. Below one of the first really comprehensive studies performed by SAP Fieldglass and Oxford Economics in 2018.
By having visibility into your total workforce, you can identify skill gaps, assess the performance of your contingent workers, and ensure that your organization has the right mix of talent to meet its goals. This holistic approach to workforce management can lead to better business outcomes and increased operational efficiency. We will return in a later blog to elaborate on the value of managing your total workforce.
Co-employment risk and misclassification risk are significant concerns for HR professionals. Co-employment occurs when a worker is considered an employee based on how the worker was engaged and managed during their tenure as a contingent worker.
Ultimately - if asked - a court when it looks at the different criteria surrounding the engagement and management thinks that the contingent work "smells like and looks like" an FTE this can lead to further legal and financial liabilities as the contingent worker get deemed to be an employee.
In 2008 the high court in the UK looked at this in the Dragonfly case and there has been a number of moving parts around classifications since especially around the interpretation if IR35
Vendor Management Systems help HR professionals manage away co-employment risk and other misclassification risk by providing tools and processes to ensure compliance with labor laws and regulations. These systems can help track worker classification, monitor tenure, contract terms, and ensure that workers are engaged and managed in a way that mitigates legal and financial risk. When pondering how to engage a resource there are different types of decision form that help the Hiring Manager/HR to choose the right type of engagement type.
By using a VMS, HR professionals can have peace of mind knowing that their organization is in compliance with labor laws and regulations, reducing the risk of costly legal disputes and penalties.
One of the key benefits of Vendor Management Systems for HR professionals is the ability to access pools of niche talent that they couldn't hire for directly. These systems often have extensive networks of pre-qualified contractors and freelancers with specialized skills and expertise.
By leveraging a VMS, HR professionals can tap into these pools of niche talent to fill temporary or project-based roles that require specific knowledge or experience. This can be especially valuable for organisation's that have fluctuating staffing needs or require expertise in niche areas that may be hard to find in the traditional job market. You might be working for a high profile Financial Services organisation or a Life Sciences company on the forefront of new drug discovery, but you will still find it hard to hire machine learning engineers or data scientist as they don't picture themselves working for your organisation
Having access to pools of niche talent through a VMS can give HR professionals a competitive edge by allowing them to quickly and easily source qualified candidates for specialized roles, ultimately improving the overall effectiveness and efficiency of their workforce.
This becomes even more critical for midmarket companies who might struggle to compete with the bigger firms in the UK around certain in demand skillsets - Data scientist, Machine Learning engineers, Prompt Engineers, Digital Marketeers to name a few
Vendor Management Systems offer HR professionals the opportunity to try out talent as contractors before making the decision to hire them as full-time employees. This 'try before you buy' approach can be beneficial for both the organization and the talent.
By engaging talent as contractors first, HR professionals can assess their skills, work ethic, and cultural fit within the organization before making a long-term commitment. This reduces the risk of making a bad hiring decision and allows for a more informed hiring process. In the UK this has become a best practise in many industries for example in the Lifesciences industry
For talent, being able to showcase their skills and work on specific projects through a VMS can be a valuable stepping stone towards securing permanent employment. It allows them to gain experience, build relationships within the organization, and prove their value before being offered a full-time position.
Overall, the 'try before you buy' feature of Vendor Management Systems provides HR professionals with a flexible and efficient way to evaluate potential talent and make informed hiring decisions, while also giving talent the opportunity to demonstrate their capabilities and secure long-term employment.
On- and offboarding processes are critical for HR professionals to ensure a smooth transition for workers entering and leaving the organization. Vendor Management Systems play a crucial role in ensuring process compliance around on- and offboarding.
These systems provide HR professionals with the tools and workflows to streamline the onboarding and offboarding processes for contingent workers. From background checks and document collection to training and exit interviews, a VMS can automate and standardize these processes, reducing manual errors and ensuring compliance with company policies and legal requirements.
By using a VMS for on- and offboarding, HR professionals can save time, improve efficiency, and maintain accurate records of worker information. This not only enhances the employee experience but also helps mitigate risks associated with non-compliance and data security.
In conclusion, Vendor Management Systems are essential for HR professionals as they enable efficient and compliant on- and offboarding processes, leading to a better overall workforce management experience.
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