Next-Gen VMS Guide

In the operation of indirect sourcing procurements for the contingent workforce market, VMS platforms have become commonplace. Most Fortune 500 organizations today either operate their own or partner with a third-party who operate a VMS on their behalf.

The first generation of VMS solutions were Software-as-a-Service (SaaS) platforms designed to serve all customers with one solution. In an era of Total Talent Management and Talent Ecosystems, this technology architecture hampers the ability of VMS vendors to respond to innovation, customization and integration requests.

When they arrived on the market, the role of the VMS was to normalize indirect channels and achieve early-stage economies by enforcing terms and conditions across suppliers, reduce operating costs through automation of workflows, speed up payments, and cut out duplication of effort and steps in workforce selection and management processes.

Systems were expected to take care of the publishing of job opportunities, manage and aggregate vendor responses, simplify scheduling of interviews, background check processing, make sure time sheets and expenses were dealt with in a timely and accurate way, automate the purchase to pay process, and manage payroll so workers, and vendors are paid the right amount at the right times.

How are Gen-2 solutions different?

Research conducted by BCG on 11 markets indicates that the IT sector is most affected, where gig work is the primary source of income for 9% of workers, while 24% see it as an additional income source. From our experience, all industries are now taking their strategies towards an on-demand workforce seriously, with most adopting a Total Talent Management (TTM) ethos in the way they source workers.

Whilst general perceptions of the subject are that gig work is only for manual or low-skilled jobs such as delivery, this isn’t backed up by hiring trends. It’s every bit as likely you’re going to find top-talent and hard-to-reach job skills (like scientific, technical and professional candidates) in the gig economy—as it enables them to achieve higher rates of pay and an improved work-life balance. Adoption of gig workers is across the board.

Re-thinking how work gets done

As time moves forward, we’re seeing work packages becoming more fragmented into smaller and smaller packages. Consider:

1. Job Role Descriptions

Aggregating a series of activities into a job role description is the most common way people have traditionally been hired. The benefit of this is the hiring manager is able to flex the activities within the scope of the role, and it gives the employee an indication of what’s expected of them.

They may be commonly used, however, job descriptions have downsides:

• They hide the potential of individuals. You can be sure that when someone applies to be an Accounts Payable Clerk, that’s not the only thing they’ve done in their life, or the only experience and skill they have. Much of the potential of a workforce gets lost in multi-layered hierarchical management structures and job descriptions that mean talent is bound tightly to departmental needs; prevented from being leveraged by the rest of the organization.

• They blur contributor performance because it’s not clear how contributors are fulfilling their time, and how well they’re being managed.

2. Discipline or Activity-Led Hiring Briefs

Another form of job description, but with an important nuance: When hiring managers look to hire temp or contingent workers, they will focus contractual requirements (in the form of a job description), more on the fulfilment of a specific discipline or activity, less on ‘and everything else’ departmental needs.

This makes it easier for the company, hiring manager, and contractor to measure their performance. It also means the contractor is able to focus on the type of work they want to do.

3. Statement of Work (SOW)

A SOW is a type of contract that allows a hiring manager to articulate work packages based on project milestones and outcomes. Aligning contractor payment rewards with project outcomes makes a lot of sense. It means workers are incentivised to deliver outcomes, not just to turn up. They are also immensely valuable to workers because it ensures they’re not asked to work outside the scope of what they agreed to.  SOW are proving a great way to make sure businesses get the quality of work they demand from freelancers and contractors they work with.

4. Work Tasks

In the gig economy, one of the fastest growing forms of work packages are work tasks. These are normally published on a marketplace portal of tasks that contractors can bid for. This means departmental managers can segment work into tiny packages and pay for results—think of it as a version of a SOW.

Of course, robots are getting much faster at working through tasks than humans. We can therefore expect more and more work to be distilled into tiny ‘noughts and ones’ tasks in the future, with robots fulfilling more of them than humans.

Smarter resourcing of work at departmental level

Most work allocation happens at a departmental level within an organization and it’s important therefore to re-educate departmental managers on the viability of the various ways of getting a job done; equipping them with the encouragement and knowledge to question ‘norms of behavior’ that may not be in the best interests of the organization (or the payroll budget!).

Ask most CxE’s today, and most believe that the majority of their work activities are performed by full-time employees. In reality, an increasing amount of jobs are being fulfilled by AI (computers, software robots, algorithms, chatbots, etc.) and a significant proportion of remaining work tasks are fulfilled by outsourcing firms and external workforces. Knowledge portals and crowdsourcing platforms also win their fair share of work.

When jobs need to be performed, department heads have various options to consider. This is causing HR and recruitment professionals to encourage a joined-up Total Talent Management approach to sourcing work, starting with a thoughtful triage approach that questions hiring norms of behavior such as the outmoded belief that permanent workers are always the best solution.

Total Talent Portals: Tech for the gig economy

Changing attitudes and behaviors can be ‘enabled’ by an effective Total Talent Management ecosystem. This takes the form of an integrated portal (such as Simplify TTM) that equips recruitment teams to collaborate with procurement and IT to adopt the best approach to getting work done.

These are the central factors to a successful TTM approach:

Re-educating your internal audience

Departmental managers who hold a significant influence over how work is packaged and fulfilled need to be educated on all task delivery options at their disposal.

Defining work packages in a smarter way

Total Talent Management has to be seen as part of the solution to equipping organizations with all of the sensible choices of work delivery that exist today, framed by well-designed work packages.

Creating a tailored triage engine that provides outcome recommendations

Core to any effective work-fulfilment engine is a thoughtfully designed triage approach, that today probably includes AI-enabled technology to sift through the available packaging options.