Hidden Costs of a Contingent Workforce

Although utilizing a contingent workforce provides businesses with flexibility and access to talent without the hefty cost of hiring and benefits associated with permanent employees, if you’re not paying attention, the hidden costs can end up being more than you planned.

For example, while you may be using a managed service provider (MSP) to oversee vendor mark-ups and provide process efficiencies and technology expertise, the invisible costs of unplanned turnover and retraining, unauthorized overtime or scope creep can add up quickly if you’re not managing them.

It’s time to bring the hidden costs of a flexible workforce out in the open. Here are some examples of expenditures that may be going unnoticed and our top tips for keeping them in check.

Scope Creep

In order to hire a contingent worker, line managers usually need to determine the major duties and tasks that need to be performed and submit a requisition that includes a job title and the corresponding pay and bill rate ranges for that position.

But occasionally, after a requisition has passed the approval process, a manager may request an exception to a higher job classification or title allowing him or her a wider wage band for the originally requested skills. Unfortunately, this gives managers the option to pay a worker more or allow for raises or bonuses down the road.

When the exception becomes the norm, the client ends up overpaying for the work being performed.

Generating exception reports and conducting regular procurement reviews can help program managers and staffing buyers spot patterns in requisitions that override the system.

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Sometimes managers just need a subtle reminder to follow the rules or perhaps the job descriptions and pay ranges in a specific category need to be updated to reflect changing market conditions. But bringing the issue into the open invites resolutions and heightened focus on oversight and compliance.

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