The chances are high that your organization is already utilizing a large external workforce. A recent SAP Fieldglass and Oxford Economics study of 800 executives found that nearly half of workforce pay—44 percent—went to labor outside of internal employees overall at the surveyed organizations.
Why are companies spending so much on external labor? Two-thirds of executives surveyed in that same study said that external workers are either important or very important to operating at full capacity and meeting market demands. This is especially true in industries such as utilities and oil and gas.
In short: Companies are spending lots on external workers because they are necessary to run the core components of their businesses. That reliance on non-payroll worker types such as contingent, freelance, and statement of work (SOW) contractors is not going away either. In fact, “outside help’s” share of the market is continuing to trend upwards.
Workplace Demographic Shifts
As workplace demographics tilt towards a younger generation of talent, the concept of the company lifer is going away. By either necessity or happenstance, Millennials and Generation Y job seekers are looking for more flexible working terms and conditions. Sometimes this happens because they lack an easy entry into their desired fields; other times it is a lifestyle decision and the ability to work non-standard hours. Businesses themselves may also be tending toward more external labor to simultaneously widen their talent pool options and reduce costs.
With some industries heavily reliant on external workforces, combined with more fluid career paths in general, the importance for organizations to be able to capture, track, and serve all laborer types is more critical than ever.
When SAP Fieldglass—the market-leading external workforce and vendor management company—initially meets with potential customers, it asks a series of simple questions: What is your headcount? Where are your workers located, what systems do they have access to and what are they supposed to be doing? How much are you paying them and for how long?
Many businesses struggle to answer these basic prompts. Most don’t know because they have no means of tracking external workers on a holistic scale. Individual departments may know, but beyond that, no one has a good grasp on organizational headcount and spend.
Fieldglass customers commonly find out that they have underestimated spend on external labor by one-third or even sometimes half. Some businesses are spending twice as much as they realize on external labor.
With that sort of underestimation, compliance becomes an issue. Laborers overstay contracts, people might not have the right training or certifications—these things happen when a company can’t accurately track external workers.
Gaining Visibility with Fieldglass
What Fieldglass does is bring that external worker data out of the dark at an organizational level. Doing that tends to bring an immediate return on investment in the first year—this is particularly true at larger organizations with great needs for contingent labor. The business case is easy to provide through cost avoidance and cost control alone.
Fieldglass gives a similar sort of visibility into external workers that a core HR system like SAP SuccessFactors Employee Central does for internal employees. The gold standard is combining those two sides of the coin to get a total view of a company’s workforce. SAP calls this Total Workforce Management.
There are currently three native integrations between Fieldglass and Employee Central that enable Total Workforce Management. First, open positions created in SuccessFactors can be matched with contingent labor procured in Fieldglass. Next, once the external worker is hired in Fieldglass, another integration allows them to be populated within the Contingent Worker component of Employee Central. The newly hired contingent worker can then be viewed along with their Work Order information in SuccessFactors People Profile. Further options for contingent labor include headcount reporting, Org Chart display and other module access for contingents are also possible.
Additionally, there is a Learning integration that allows curriculum on the SuccessFactors side to be assigned to a worker on the Fieldglass end. This integration is relatively new to the marketplace but does potentially provide a good opportunity to manage training for external workers.
Total Workforce Management Becomes Essential
Integration between a vendor management system like Fieldglass and an HR system like SuccessFactors allows for all workers to be seen in a single place. Having accurate data and information on all labor categories ensures compliance and leads to savings.
Going forward, SAP will take a prudent approach to ensure the Total Workforce integrations only happens where it makes sense. When it comes to performance management and compensation, there are risks of reclassification of an employee, so it’s likely those processes will remain separated in the proper systems.
Other possibilities remain, however, such as Fieldglass worker profiles and SOW workers integrated into Employee Central, providing another layer of the holistic view. Wherever the integrations happen next, one thing is for sure: With the changing landscape, it is essential for companies to gain visibility into their total workforces.