Controlling the Cost of Temp and Contract Labor - … · Controlling the Cost of Temp and Contract...
Transcript of Controlling the Cost of Temp and Contract Labor - … · Controlling the Cost of Temp and Contract...
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 1 1
Controlling the Cost of
Temp and Contract Labor
Key Strategies for Finance Departments
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 2 2
ABOUT THE PRESENTER
Bill Inman
President, Emergent
17 years management and entrepreneurial
experience with the contingent workforce as:
• Employer of Record Executive
• Managed Services Program and
Vendor Management System Executive
• Applicant Tracking System Founder
• Former Staffing Company Owner
• Industry Media Producer
LINKEDIN.COM/IN/BILLINMAN
ABOUT
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
3 3 3
Emergent employs the contingent workforce.
ABOUT EMERGENT
The Emergent family of companies:
Emergent
Innovative
Corporate
Contingent Labor
Solution
Entertainment
Partners
World Leader in
Production
Employment
Central
Casting
World Leader in
Extras Casting
Founded 1976
ABOUT
2013
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
4 4 4
The contingent workforce continues to become a critical component of
the U.S. labor force and is expanding more rapidly than ever.
However, with increased usage comes increased risk.
PRESENTATION OVERVIEW
The presentation explores:
- How to reduce the overall cost of your flexible workforce by 20-40%
- Negotiate better rates with staffing vendors by revealing
their hidden profit centers
- Lessen the financial impact of compliance issues on your business
ABOUT
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
5 5 5
Nothing on this presentation is intended to create any contractual or
other legal relationship between the presentation viewer, Emergent or
any of Emergent’s staff, and should not be construed as legal advice or
professional opinion for handling a specific factual situation.
Emergent cannot guarantee or warrant the accuracy or completeness
of information in this presentation any way.
Presentation participants and readers should not act upon any
information from this presentation without consulting with the
appropriate legal, financial, or other business professional for guidance
and advice.
DISCLAIMER
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
6 6 6
The Contingent Workforce
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
7 7 7
‘Temps’ Contractors
Freelancers Statement of Work
Staff
Augmentation
CONTINGENT WORKFORCE SEGMENTS
CONTINGENT WORKFORCE
Project
Outsourcing
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
8 8 8
The contingent workforce is one of the fastest
growing segments of the U.S. workforce.
CONTINGENT WORKFORCE GROWTH (U.S.)
$17 billion 990K Workers
$124 billion
3M+ Workers
$164 billion 6M Workers
1999
2013
2018
Source: American Staffing Association and Staffing Industry Analysts CONTINGENT WORKFORCE
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
9 9 9
INCREASED CONTINGENT WORKFORCE UTILIZATION
36%
40%
42%
2012 2013 2014
Source: Careerbuilder CONTINGENT WORKFORCE
Percentage of U.S. Companies Engaging Contingent Workers
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 0 1 0 1 0
Reasons for Contingent
Workforce Growth
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 1 1 1 1 1
REASONS FOR CONTINGENT WORKFORCE GROWTH
• Cost Savings
• Cost Restructuring
• Worker Evaluation
• Improve Quality
• Increase Productivity
• Risk Management
• Specialized Knowledge
GROWTH REASONS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 2 1 2 1 2
CONTINGENT WORKFORCE COST SAVINGS
Median Savings
Over Direct Hire
Companies that Believe Using
Flexible Labor Saves Money
Source: Staffing Industry Analysts GROWTH REASONS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 3 1 3 1 3
• Reduced hiring costs
• Lower training costs
• Reduced statutory employer burden
• Reduced administrative HR tasks
• Reduces need for severance pay
SAVINGS OVER DIRECT HIRE
GROWTH REASONS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 4 1 4 1 4
COST RESTRUCTURING
Use contingent labor
because of pressure to
reduce headcount
Say that contingent
workforce flexibility keeps
company nimble
GROWTH REASONS Sources: Baseline and Harvard Business Review
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 5 1 5 1 5
COST RESTRUCTURING CONTINUED
Sources: Harvard Business Review
• “Companies are increasingly
focused on…the core 20% of
people who…generate the 70%
to 80% of enterprise value and
are rethinking their relationship
with the rest.” Harvard Business Review
• Procurement departments have
become more strategic about
spend on services
GROWTH REASONS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 6 1 6 1 6
INCREASE PRODUCTIVITY
Increase in organizational
efficiency for “Best in
Class” contingent
workforce users
Organizational output is
managed or driven
by contract talent
GROWTH REASONS Sources: Aberdeen
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 7 1 7 1 7
RISK MANAGEMENT
Sources: CFO Magazine Global Business Outlook Survey and Dept of Labor
59% of CFOs have increased their flexible workforce because of
uncertainty around the economy, ACA & other compliance issues.
GROWTH REASONS
Rise in Jobs Provided By The Temporary Staffing Industry
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 8 1 8 1 8
Contingent Workforce Costs
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
1 9 1 9 1 9
Staffing Suppliers
Contract Workers
Indep. Contractor /
1099
Outsourcing Service
Providers
SOW
Project-Based
Workers
‘Self-Sourcing’
Internal Resources
Alumni & Previously
Used Workers
Referrals
CONTINGENT WORKER SOURCING METHODS & COSTS
Milestone
Payments
~25% Markup
*Markups are generally charged on the pay rate of each worker
40% Markup
10% Markup
WORKFORCE COSTS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 0 2 0 2 0
Self-Sourcing
Workers
STRATEGY 1
STRATEGY 2
STRATEGY 3
Fixed Rates for
Worker Recruitment
STRATEGIES FOR CUTTING COST
Transparent Statutory
Employer Costs
WORKFORCE COSTS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 1 2 1 2 1
SELF-SOURCING
WORKFORCE COSTS
• Leverage Existing Recruiting Resources
• Utilize Company Alumni or Previously
Used Resources
• Ask for Internal Referrals
• Engage Project Based Recruiters
• Create Your Own Talent Community for
Contingent Workers
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 2 2 2 2 2
Unemployment
Tax Limit*
Maximum
Rate**
Federal $7,000 0.6%
AZ $7,000 6.38%
CA $7,000 6.20%
CO $11,700 5.40%
DC $9,000 7.00%
FL $8,000 5.40%
GA $9,500 8.10%
IL $12,960 9.45%
NY $10,300 8.90%
OH $9,000 9.10%
PA $8,750 10.58%
TX $9,000 7.58%
TRANSPARENT STATUTORY EMPLOYER COSTS
Most staffing suppliers do not lower their
rates when a W-2 worker hits their
Federal and State unemployment tax
limits.
Example for Federal UI Tax Limit
• $10 Hour = 700 Hours / 17.5 Weeks
• $25 Hour = 280 Hours / 7 Weeks
• $50 Hour = 140 Hours / 3.5 Weeks
• $100 Hour = 70 Hours / ~2 Weeks
* Tax limit based on payroll of worker
** 2013 Rate WORKFORCE COSTS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 3 2 3 2 3
Traditionally staffing is bundled, unbundling allows for cost savings
FIXED RATES FOR WORKER RECRUITMENT
Traditional Temp
Staffing
40%
Unbundle
Recruiting
10%
Employment
25%
35%
• Limit Recruiting Fee Hours
• No Direct Hire Conversion Fees
WORKFORCE COSTS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 4 2 4 2 4
Contingent Workforce Risks
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 5 2 5 2 5
• Co-Employment
• Compliance & Regulations
• Worker Safety
• Worker Misclassification
• Intellectual Property
WORKFORCE RISKS
WORKFORCE RISKS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 6 2 6 2 6
CONTINGENT WORKFORCE LITIGATION ON THE RISE
WORKFORCE RISKS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 7 2 7 2 7
CONTINGENT WORKER CO-EMPLOYMENT
Co-employment could mean that
the client company may be held
liable for the decisions and
mistakes of the staffing supplier –
and vice versa…
“It is common to see both clients and providers
of temporary staffing both identified as defendants.”
-Staffing Industry Analysts
WORKFORCE RISKS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 8 2 8 2 8
EMPLOYMENT COMPLEXITIES
WORKFORCE RISKS
Can your suppliers
(AKA co-employer)
effectively handle
employment complexities?
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
2 9 2 9 2 9
STRATEGIES TO LIMIT RISK
• Supplier Qualification - ensure staffing suppliers are
financially stable & compliant
• Supplier Agreement - clarify roles, responsibilities, &
indemnification
• Internal Policies - ensure managers understand key
contingent workforce policies
• Sourcing & Selection - make sure suppliers take proper
steps before selecting the worker
WORKFORCE RISKS
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
3 0 3 0 3 0
SUMMARY
• The contingent workforce is
expanding rapidly and can help your
company save money and be more
flexible.
• With proper management companies
can save 20-40% on contingent
workforce costs.
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
3 1 3 1 3 1
Q & A
.
Bill Inman
T H E R I S E A N D R I S K S O F T H E C O N T I N G E N T W O R K F O R C E
3 2 3 2 3 2
THANK YOU!
.