Review Your Contingent Workforce Budget This Year

Managing a contingent workforce involves more than selecting the right candidates and keeping them productive. Ensuring that your costs are under control is also critical.

If you aren’t proactively reviewing and managing your budget, your personnel-related expenses can quickly get out of hand. Should that happen, you may be unable to move forward with various projects, infrastructure improvements, or other plans you had in place.

Luckily, the process of reviewing your contingent workforce budget doesn’t have to be cumbersome. If you want to make sure yours is in order, here are some tips.

Examine Your Vendor Rates

Many companies use more than one vendor for their contingent workforce needs. If you fall into that category, it’s important to take a moment and examine your current vendor rates. Your goal should be for the cost to be consistent, with each provider’s pricing aligning with the others. When this occurs, you don’t have to worry about differences that could harm your budget.

If you have used specific vendors for a long time and have a fairly large volume, you may also want to negotiate discounts. Many providers will reduce their fees based on quantity, tenure, overtime usage, and conversion rates.

Analyze Your Overtime Usage

Overtime pay can quickly add up. Since it usually involves paying employees time and a half, regularly relying on overtime to meet your production goals isn’t cost-efficient.

Use your VMS to analyze overtime. Identify trends and use those details to create a proactive plan for reducing or eliminating overtime, such as bolstering your contingent workforce during periods of high demand.

Centralize Your Budget Tracking

When you work with several vendors, your financial data might exist in several places, depending on the mechanisms each uses. This reduces your level of oversight into your contingent workforce program, as you can’t easily review your total costs and how much remains in your budget.

By consolidating the data into a single location, you are increasing program transparency. This makes it simpler to keep your spending aligned with your budget.

Review Your Conversion

When you have a top talent as a member of your contingent workforce, you may be tempted to convert them fast. Bringing them on as a permanent member of your team can boost retention and morale, so it is often a worthwhile venture.

However, this can also lead to conversion fees. As you review your budget, collect data about your conversion costs and the frequency at which you convert early. This allows you to determine at which point conversions are most cost-effective, have the information you can use to negotiate fees and create a plan for managing the impact of this expense.

Spend Time Forecasting

In many cases, your contingent workforce fluctuates during the year. By reviewing data from previous years, you can anticipate your usage for the coming year. This allows you to estimate your future spending with greater accuracy. Additionally, you can allocate a portion of your budget for these needs and get an overview of what you have remaining for slower periods during the year.

Ultimately, the tips above can help you review your contingent workforce budget and make smart financial choices. If you would like more information, the skilled team at Apogee Managed Solutions can help. Contact us to speak with one of our contingent workforce management specialists today and see how our budgeting expertise can benefit you.

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