In today’s dynamic business environment, organisations increasingly rely on external workers such as freelancers, contractors, and contingent labour to stay agile and competitive. However, managing this workforce effectively requires alignment between two key functions: Human Resources (HR) and Procurement. By working together, HR and Procurement can optimise external workforce strategies, reduce risks, and maximise value. Here are three ways to align these functions for better outcomes.
1. Develop a Unified External Workforce Strategy
Why It Matters
HR and Procurement often have distinct priorities. HR focuses on talent quality, engagement, and compliance, while Procurement emphasises cost control and vendor management. A unified strategy ensures both priorities are addressed.
How to Do It
- Collaborate on Workforce Planning: Jointly identify the organisation’s short- and long-term external workforce needs.
- Set Shared Goals: Define KPIs that align with business objectives, such as cost efficiency, workforce quality, and compliance.
- Create a Governance Framework: Establish clear roles and responsibilities for managing external workers, ensuring alignment between HR and Procurement policies.
Example
A technology company developed a unified external workforce strategy by integrating HR’s focus on talent quality with Procurement’s vendor management expertise. This approach led to improved talent sourcing and a 15% reduction in costs.
2. Leverage Technology for Centralised Management
Why It Matters
Siloed systems and processes often result in inconsistent data and inefficient management of external workers. Using a centralised platform provides visibility and streamlines collaboration between HR and Procurement.
How to Do It
- Adopt Vendor Management Systems (VMS): Use a VMS to track, manage, and optimise contingent workforce operations.
- Integrate Systems: Connect the VMS with HR systems (e.g., Human Capital Management platforms) to centralise data and ensure consistency.
- Provide Real-Time Insights: Use analytics to give both HR and Procurement visibility into spend, workforce performance, and compliance.
Example
A healthcare provider implemented an integrated VMS and HR platform, enabling real-time tracking of external workers and vendors. This reduced duplicate efforts and enhanced workforce visibility across departments.
3. Align on Risk and Compliance Management
Why It Matters
External workers introduce unique risks, including misclassification, regulatory non-compliance, and security concerns. Alignment between HR and Procurement ensures these risks are managed effectively.
How to Do It
- Standardise Contracts and Policies: Create unified policies for vendor agreements, worker classifications, and compliance monitoring.
- Jointly Monitor Compliance: Collaborate on audits to ensure all external workers adhere to labour laws and company policies.
- Train Teams on Risks: Provide cross-functional training to HR and Procurement teams on compliance requirements and risk mitigation strategies.
Example
A financial services company aligned HR and Procurement on worker classification standards, reducing regulatory risk and avoiding potential fines during an audit.
Bullet Points: Benefits of HR-Procurement Alignment on External Workforce
- Enhanced Efficiency: Streamlined processes reduce redundancies and improve workforce management.
- Better Talent Quality: Collaboration ensures access to high-quality external talent.
- Improved Visibility: Centralised data provides insights into costs, performance, and compliance.
- Reduced Risks: Unified risk management minimises legal and regulatory exposure.
- Optimised Costs: Joint strategies ensure cost-effective use of external resources.
Conclusion
Aligning HR and Procurement on managing the external workforce is essential for optimising talent strategies, improving efficiency, and mitigating risks. By developing a unified strategy, leveraging technology, and collaborating on risk management, organisations can maximise the value of their external workforce.