Risky business and how to avoid it in your service spend - Risky business and how to avoid it in your service spend
RISKY BUSINESS AND HOW TO AVOID IT IN YOUR SERVICE SPEND
31st October 2016
Addressing risk has always been a key concern for procurement professionals. As Global Service Assurance Director for Hays Talent Solutions I am noticing it is increasingly appearing higher on the agenda for businesses outsourcing their resourcing. But what are the common risk factors you need to take into account across the globe and how can you avoid them? Well to start you can’t manage what you can’t see…
Having a detailed and managed process for hiring talent is key to mitigating risk
These processes need to be aligned across the business and your hiring managers need to be sufficiently educated and engaged. Hiring managers can often go ‘rogue’, contacting agencies that aren’t on the supply list or making offers to candidates directly without having the appropriate internal approvals in place. This causes issues with budgets and spend and can also result in a poor candidate experience. Candidates may have to wait for weeks (sometimes months) for the appropriate approvals to be in place to be able to get their offer through or they could have their offer withdrawn altogether, potentially having found another role in the interim.
Off contract spend is also a key issue for business. If you have an approved preferred supply list in place, rates outside of this will often be above market average and contractual documentation won’t be in place. Other agencies on the supply list may become disengaged if they know that canvassing hiring managers directly would put them in better stead than patiently waiting to be released a vacancy as they are contractually committed to do. With an outsourced provider in place, such as Hays Talent Solutions, we can manage this process for you, as well as managing the performance, billing and contractuals of your suppliers. By contracting directly with suppliers where legislation allows, we ensure they hold the correct licences, and insurances to conduct their business.
To be comfortable that you have sufficient governance in your business, you first need to have full visibility
Visibility is extremely important from a governance perspective in understanding who and what your workforce looks like. You need to understand what roles they are fulfilling and how much you are spending. We are speaking to more and more clients that really understand the benefits of having a holistic view of their total workforce, both contingent and permanent and everything in-between. How can you mitigate your risks in the responsibilities of hiring and monitoring contingent workers if you don’t know who they are? It is amazing how many organisations do not have this information readily to hand. Your outsourced provider will help you to achieve this visibility.
For example, if you don’t know where they’re based and how they’re paid, your contingent workers might be misclassified. In some European countries, such as Germany and Austria, it is very important to ensure contingent workers are classified correctly as either temps or contractors and the distinction must be clear. The consequences for failure to do this are serious, financially, personally and legally.
Elsewhere, in the UK for example, it is now imperative that you know which workers are over 25, as they will then be entitled to the national living wage, and failure to comply could lead to fines.
You also need to know what roles the contingent workers carry out, to ensure they are compliant with the agency workers directive (AWR). The AWR gives contingent workers an entitlement to the same basic employment and working conditions as if they had been recruited directly by the hirer, after they complete a qualifying period of 12 weeks in the same job, e.g. pay, benefits, access to facilities, annual leave, bonus payments, etc. Managing this process can be timely and very costly if you get it wrong but your outsourced provider can help manage and monitor these processes for you.
In Asia, countries such as China, India and Japan have a highly regulated employment environment. Japan has restrictions on the types of contingent workers (“dispatch workers”) that can be supplied to clients. They have also recently introduced laws that require dispatch workers to be treated and compensated equally when compared to permanent employees performing the same role. In China and Japan there are restrictions around the tenure for which a worker can be provided to a division within the client. Vendor management systems (VMS), such as the Hays propriety software, 3StorySoftware, can manage this for you by recording every detail from the requisition and approval through to the hire and timesheet management.
Sometimes the solutions lies outside your business
In Australia, the government is becoming much stricter on businesses by reviewing the payment, or more importantly the non-payment of payroll tax for contractors. If a contractor is deemed to be an employee, the client will be subject to payroll tax on payments made to the contractor. Factors that indicate a worker is deemed an employee include where the worker is subject to the direction of the business operator as to where, when and how work is to be performed and if the worker is required to perform the work personally. To eliminate the risk of a heavy fine, an outsourced recruitment supplier can manage this for you, by payrolling these contractors on a time and materials basis.
Working with an outsourced provider, such as Hays Talent Solutions, will mean we can manage this and all reporting functionality from within a VMS. It means you can get a handle on your recruitment spend and by utilising the system for online timesheets, even be able to be notified when your PO limit is about to burst.
We can also help to protect your business by managing your resourcing billing and invoicing processes and by making payment to contingent workers and suppliers on a timely basis. When we took over the contingent payrolling function for one of our clients recently, the transferring contractors praised us for not only the way in which we handled the migration but the fact that they now got paid on a weekly basis on the back of an approved online timesheet, rather than having to submit invoices and then wait for weeks sometimes months to be paid!
Global Service Assurance Director, Hays Talent Solutions
Joining Hays in 2005 as an onsite consultant for one of Hays Talent Solution’s local government accounts, Elly progressed her career to manage key accounts in the UK, including clients in the Financial, IT and Public Sectors, before taking the opportunity to move to Sydney in 2012.
Elly worked across Australia and New Zealand, and was responsible for the successful delivery of Hays Talent Solution’s accounts and the governance and compliance function as well as the project management of the implementation of expanded services to numerous clients.
Elly transferred back to the UK in 2014 where she is now responsible for ensuring we have the correct tools and processes in place globally to support ongoing governance and mitigate risk in the delivery of our services to both our client’s and candidates.