Workforce.com

HR Departments Should Get Involved in Contingent Labor Management

There's a looming battle between HR and procurement over who “owns” contingent labor. And I'm cheering on HR, for the sake of both companies and contingent workers.

August 10, 2012

A corporate showdown could be in the making.

It's a looming battle between HR and procurement over who "owns" contingent labor. And I'm cheering on HR, for the sake of both companies and contingent workers.

For years, procurement departments have largely run the show with respect to temporary workers and independent contractors. Procurement, or purchasing, departments are the company officials responsible for buying the supplies a company needs to operate. These folks are great at pinching pennies. While in charge of contingents, they have put in software systems to cut costs and make it more efficient for managers to order up temporary workers through staffing agencies.

But there's a downside to letting the people who buy staplers and cubicle furniture also oversee the placement of workers into those cubes.

As John Healy, a vice president at staffing provider Kelly Services notes, managing the contingent workforce is both an art and a science. Procurement has the science down. But they don't have the art; they don't have the part down that understands how companies may have to be flexible relating to high-skilled contractors; and they don't have the part down that understands how to motivate temp workers so they'll give their best efforts and want to come back.

That art piece is the province of HR.

And that piece is increasingly important as organizations ramp up their use of contingents, and more and more workers—especially those with specialized talents—choose to be free agents. Companies have to pay more attention to the engagement of contingents in order to get the best ones and get better quality work from them.

HR needs to get involved in managing contingent labor, says Jay Lash, a vice president at MBO Enterprise Solutions, a firm that helps organizations manage independent contractors. What's more, Lash argues, HR officials should get involved soon, while the labor market still favors employers.

"If HR doesn't get their arms around it now, when talent isn't in as much demand, they'll always be playing catch up," Lash says.

HR folks putting their arms around the contingent labor issue will mean putting their arms around contingents to a greater extent. It will mean showing more love to people who often feel unwanted. After all, many of those workers wish someone would hire them for a permanent job. And it will mean giving more attention to workers who, even if they prefer life as a contractor or temp, are typically hungry for more feedback.

Ideally, there's a balance here—procurement and HR work things out. But such power-sharing is rarely smooth in real life. Departments set up fiefdoms and don't want to let go of their turf, so HR probably is going to have to fight to get a piece of the contingent action.

HR pros might be thinking: Why would I want to add something else to my full plate, especially when it means likely getting into an interoffice scrap?

The answer is: That's the price of leadership. You'll be battling for a noble cause, a victory that will both make contingents happier and boost your company's bottom line. So go ahead, HR. Tell procurement to put up its dukes.

Ed Frauenheim is Workforce Management's senior editor. Comment below or email editors@workforce.com.