Indirect spend management – part two

Taking control

Though improving governance is a labour intensive task, the effort is worthwhile as with some effective management spend can be significantly reduced.

CPO’s must take responsibility for spend across all local level users, even if guidelines are breached. Training and communication are vital tools for ensuring hiring managers understand how to not only monitor their spend, but also to realise how important the cost of their temporary workforce is.

Outsourcing through an electronic system

Outsourcing doesn’t have to mean relinquishing control. Though not strictly outsourcing, using an electronic system can do quite the opposite, especially where indirect spend is so hard to monitor.

An electronic system ensures CPO’s can track spend on a weekly basis. Not only that but it allows for preferred panels of agencies to be created so that hiring managers can be safe in the knowledge that they have a list agencies that can provide the right staff at short notice.

Electronic management systems also allow procurement officers access to key management information, allowing them to forecast spend more effectively and predict peaks and troughs in usage which may heavily impact on spend.

Secondary costs can also be reduced too, using a system to manage both temporary agency labour spend and the physical recruiting and payment of temps will instantly make the process quicker, reduce admin and almost eliminate paperwork.

Indirect spend management – part one

Controlling indirect spend in any category is a notoriously difficult. Within a typical large organisation employing thousands of staff there could be hundreds of people with the capability to approve external spend making monitoring and managing outgoings complex. However, because it is so complicated it offers CPO’s the chance to make huge savings.

Management problems with contingent workforces

Spend on temporary agency workers can easily spiral out of control. Whilst guidelines are easy to put in place, it’s more difficult to ensure they are enforced. Often those who are dealing with the hiring agencies do so as part of a much wider remit and have other targets and objectives that they prioritize.

When a situation arises and a depot or warehouse manger is short staffed and in desperate need of workers, contracts and costs are at the very bottom of the list, perhaps rightly so. The reasons for this can be two-fold:

1. As stated previously, often managers have a plethora of targets and priorities to meet. These may clash, inevitably resulting in one coming second or it may simply be the case that a lack of training or understanding means the manager simply doesn’t understand the consequences of not making something a priority.
2. The manager may not be getting the support needed to recruit temporary staff correctly. Whilst they may understand the ins and outs of how the depot or warehouse works and managing staff on a day-to-day basis, they may never previously have come into contact with recruiting temporary agency labour. Whilst many supplying agencies would be more than happy to help in such a situation, there are some unscrupulous ones who may take advantage of such a weakness, further increasing spend.

Tomorrow we’ll bring you our thoughts on how you can take control of indirect spend.

Looking after your temporary labour suppliers – are they number one?

With contingent workforces becoming an increasing area of spend for procurement professionals, it’s more important than ever that relationships with suppliers are the best they can be.

There has been a lot of press interest in recent weeks about supermarkets relationships with there suppliers. Some of the UK’s top retailers have implemented charges for suppliers who are late with deliveries. Whilst this clearly has an impact on profit and is an irritating problem how does one differentiate between a supplier who has had a genuine traffic problem and those that are tardy or not as conscientious as others.

The same goes for the supply of temporary agency labour; due to it’s very nature things can go wrong, but it is down to HR and procurement professionals to determine what is a genuine supply problem and perhaps human error or simply down to the individual temp.

Take a look at these simple steps to ensure supplier smiles –

1. Make contact – don’t just be a faceless client to your recruitment agencies. Make sure you know the names and faces of a few key contacts at each agency and make sure they know you. It’s harder to be unprofessional to someone you know!
2. Ensure your suppliers understand your business – the agency you work with may supply drivers to hundreds of clients, but each driving job will be different. Whilst no one will know your company like you, giving them a good insight will help them to supply the right temps, first time.
3. Voice problems – if there is a problem, not matter how small, don’t bury it in the sand. A good supplier will listen to your issues and do the best to rectify them.
4. Allow for little mistakes – no body is perfect, and whilst it can be infuriating sometimes the issue may be completely out of the suppliers hands.

Following these simple steps will allow you to quickly understand which suppliers are the ones you can rely on completely, without having to put into place rules and fines which can jeopardise relationships.

What if all of the UK’s workforce were temporary agency workers?

It’s a hypothetical situation, which is unlikely ever to happen, but just what would change if the whole of the UK’s workforce were employed as temporary agency workers?

A temporary workforce is one of the most flexible ways of working; this has been proven across many industries during recent economic instabilities. Particularly suited to industries where peaks and troughs can be difficult to forecast – such as construction and logistics – it has been a valuable tool for companies to ride out the recession. As the number one procurer of temporary agency labour we have seen a consistent rise in the use of flexible workforces over the past few years.

The nature of contracts mean should the worst happen companies do not have to worry so much about redundancy packages (dependant on contract terms). Workforces can be quickly tailored to meet fluctuations in demand, which reduces the chances of redundancies and their associated costs. Research by the CIPD has revealed that 2.7million people have been made redundant since the start of the recession at a whopping cost of £28.6billion.

The implementation of the Agency Workers Regulations last year means that there is now less of a stigma attached to agency work. Previously the opinion of temporary agency workers was that they were over worked and underpaid (whether that assumption was actually correct is a different matter). Now, workers are entitled to ‘Day one rights’ as well as equivalent pay and benefits after a qualifying period, changing the outward perception.

The skills and knowledge each worker would gain from being employed in a series of temporary positions would be second to none, by experiencing different environments and ways of doing things temporary workers would bring significant understanding to their next position.

There are of course a few negatives; agency workers can prove expensive for hiring companies unless the supplying agencies are not correctly managed. Although redundancies costs could be reduced it also goes that workers can provide little notice of leaving a position – despite contractual obligations the lure of a different contract could mean they leave you high and dry.

What do you think? Could it ever happen?

Adapting workforces in the retail sector to optimise internet sales

UK retail sales have suffered their biggest fall in 9 months – down 0.8% in February. But it’s not all bad news, the figures for internet shopping are looking positive with online purchases now accounting for over 10% of retail.

With little in yesterdays budget to assist the retail sector, or to counter the latest round of austerity measures due to come into effect from April 1^st, the high streets recovery is likely to be a difficult one. Add to that well-known chains such as GAME Group and Peacocks entering administration and the forecast is poor.

So, does the retail sector need to adapt to reduce overheads and become a slick online business?

The answer is debatable, some businesses are likely to be more suited to online sales than others. Those that do decide to focus on internet business must adapt their workforce accordingly, but whilst in a period of new pastures and water testing it’s difficult to justify huge outgoings.

Temporary agency labour is perfectly suited to warehousing and logistics and is already widely used. The flexibility of an agency workforce is ideal to cope with demand fluctuations – whereas this is also an issue on the high street unlike a shop that can cope with one member of staff off sick, if one of your drivers calls in sick that could delay 100’s of orders.

Through the correct management of recruitment agencies and the availability of key data to ensure accurate spend analysis, a flexible workforce can be an inexpensive option.

Contingent workforces – time for a re-brand? Part two

Read the first part of this blog post here.

Some workers are ‘career temps’, (in fact, it is becoming so what of a trend) wanting constantly changing roles and workplaces. The digital age having an effect on attention spans is true when it comes to employment too…after all variety is the spice of life!

However, whilst much as this sounds like a negative trait and hiring managers have been conditioned into avoiding any prospective employee with multiple short-term positions on their CV, it should be looked upon favourably. The nature of many of short-term contracts is just that, they are ‘short term’. Unlike workers who routinely go through permanent positions at a rate of knots, temporary agency workers have fulfilled their duties and seen the task through. Often the contract is necessary because of skills shortage or peaks in demand – meaning the pressures of the role are significant.

The other benefit for hiring managers is that these workers are ‘job ready’. Rather than taking job seekers allowance when made redundant or moving between jobs, they have continued to work, expanded their experience and will be up-to-date with industry trends.

So, is it time to start thinking of temporary agency workers as more of a long-term option? Obviously it may not be right for every role or every company, but it should certainly be seen as a viable option for most.

The final point to consider is how to go about attracting temporary agency labour. Dependent on the sector and job role they will have different expectations of the contract, but, just like permanent recruitment, there are things that you can do to make sure you attract the best candidates.

1. Appoint the right recruitment agencies – the best candidates will go to the best agencies, by engaging with these you can be secure in the knowledge that the agency has access to the best quality staff and is at the cutting edge of talent acquisition.
2. Re-evaluate your employee brand – temporary agency workers should feel as valued as permanent staff. With the implementation of the Agency Workers Regulations, temporary staff are entitled to equivalent pay and working conditions after a 12-week qualifying period; but, why wait? Making your temporary staff feel appreciated from the offset will ensure high staff moral and increase the changes of longer-term engagement.

The trick is to make your workplace as appealing as possible, to both the full-time and contingent worker. Temps often have the option to choose from multiple contracts, make sure yours is the one they take.

Cutting Costs on Temporary Agency Labour – Quids in, Quality out?

With the threat of a “double-dip recession”, organisations are having to seize an even tighter control of their spend than in previous years. One of the departments within a company that has been hardest hit with these cut-backs is HR and the associated costs with recruitment.

Findings from a survey conducted by XpertHR have shown that only 5.1% of employers in the past 12 months have not taken any measures to reduce their expenditure on recruitment.

We have seen the increase in use of temporary agency labour over recent years as companies strive to reduce costs whilst also maintaining productivity. However, with the focus being on reducing recruitment expenditure, employers run the risk of paying the price in terms of quality.

de Poel provides companies with a solution to the obstacles faced by having a temporary agency workforce. This is achieved through a combination of 4 key components:

• Standardised pay and charge matrix
• Standardised service level agreement with key performance indicators
• A reduced panel of agency suppliers
• Dedicated account management team

Not only can we assist with reducing and managing costs, de Poel works closely with supplying agencies to ensure that quality prevails.

Whilst reducing costs is understandably a required measure to survive the current recruitment environment, de Poel argues that this does not necessarily have to impact on the quality of your temporary agency workforce. Understanding and having visibility of your temporary agency usage and spend alongside an effective management system, can ensure that costs are reduced but productivity and quality service remains.

Going for green – eco friendly procurement

Whilst sustainable procurement has previously largely been relevant in the public sector, it is becoming more imperative in the private sector as companies look to incorporate their procurement strategies into their CSR.

When it comes to temporary agceny labour recruitment going green can be difficult – you can hardly judge workers on their environmental impact or sustainability! But, using an electronic management system can significantly reduce paper, saving costs and the environment.

Managing recruitment agencies and your temporary agency workers is a lengthy and difficult process, often the central procurement team will have minimal control over spend, as the actual process of recruitment is left to hiring managers at individual sites. Through the use of technology procurement managers are able to keep costs under control and work out how they can be streamlined to improve savings year on year.

Not only is the management information they provide essential, the savings can be boosted in other ways. Although initial investment can sometimes be prohibitive, cost reductions achieved through reduced administration and use of paper can easily recoup this. Handling multiple time sheets and the collation, reconciliation and payment of invoices adds about 12% to agency costs. It also requires significant administration and storage costs in house – the Chartered Institute of Purchasing and Supply calculates that the processing of each invoice equates to £50.06. Add to that an average error rate of 15% and it becomes clear that an electronic system is essential.

de Poel’s electronic, timesheet and invoice processing system, e-tips® gives a complete overview of all temporary agency labour within your company. Different levels of administration are provided to ensure that central procurement can see the vital management information needed to achieve targets, but so that hiring managers and agencies at local levels can use the system for effective management of temporary agency staff.

On top of these features e-tips® can provide Agency Workers Regulations data, Right to Work documents and checks, driving license information and unique candidate tracking amongst other things.

To find out more about how e-tips® could help your green procurement policy, visit our website – www.depoel.co.uk

Communicating with your temporary agency workers

It’s a standard process that new permanent staff are fully inducted into a company, but what processes do you have in place for your temporary agency workforce?

Often it isn’t feasible to administer the same process as a permanent equivalent, if the contract is short-term an extended induction period would not be feasible.  In this case communication is a key factor, ensuring temporary agency workers not only have the right tools and qualifications to carry out the job, but that they are aware of all health and safety regulations and company policies.

A recent, well-publicised, case highlighted the need for clear communication of boundaries to staff. A security guard lost his job at a HMV store after chasing a shoplifter who had stolen £200-worth of DVDs. According to People Management:

“Charles Oloro was reportedly sacked because his employer said he had broken its health and safety policy by leaving the premises and confronting the thief, something the retailer’s guards are not allowed to do. In an interview with the Daily Mail, he justified his actions by saying that 20 DVDs was worth £200 to the shop and he had given chase because that was “too much to lose”.

A succinct and clear communication plan between the company, recruitment agency and temporary agency worker will ensure temps are able to fulfil their roles; but also mitigate the risk of legal exposure through tribunals or health and safety investigations.

Another key factor to consider is who is responsible for ensuring temporary agency staff have the correct training and qualifications to carry out their job safely and efficiently.

Compliance features in de Poel’s e-tips® system allows hiring agencies to search for candidates by criteria – such as which class driving license they hold – and also upload details of any relevant qualifications, giving employers piece of mind that their temporary agency workforce is compliant.

The hidden costs of indirect recruitment

Most organisations have an idea of their “cost per hire” when it comes to permanent staff, but many have little idea when it comes to temporary agency labour – despite it often being seen as a cost effective alternative.

Sieving through piles of agency paperwork and invoices is often the only way to work out such costs, but what about the less obvious costs? Typically a company using a temporary agency workforce will manage recruitment agencies at a local level, often using a number of them, all with different terms. The conventional means of handling multiple time sheets and the collation, reconciliation and payment of invoices typically adds around 12% to agency service costs. It also requires significant administration and storage costs in house. In fact, the Chartered Institute of Purchasing and Supply calculates that the processing of each invoice equates to £50.06 for the receiving company.

On top of that the room for mistakes is significant, with average error rate at 15%.

The overall process and inherent costs could mean that a temporary workforce is costing you more than taking on permanent staff.

de Poel’s electronic timesheet and invoice processing system, e-tips®, helps to streamline administration by producing one consolidated accurate weekly invoice removing the administrative cost and burdens. Not only that but e-tips® can provide key management information and reports ensure costs are clearly visible and easily accessible.