How to Gain Control Over Your Consultant Population
For many years, it seemed like an easy solution to a perennial problem:
How do you deliver on increasing workloads, of increasing complexity, on shorter deadlines, whilst keeping headcount down?
The answer: bring in the consultants to deliver work via a Statement of Work.
The ease of this solution created a momentum of its own, and before many companies knew, the definition of ‘consultants’ morphed into something new.
At the top of the food chain, your strategy houses advise the C-suite, the global management consultancies help with complex projects and the technology integrators provide technical know-how. Yet further down the chain, at the bottom end of consultancy spend, a host of smaller, less scrutinised consultants started providing services under Statements of Work.
The logic for this creeping spend was not the high-profile need for strategic advice, it was to manage more mundane issues:
- A quick route to circumvent timely recruitment processes
- Avoiding of painful screening policies
- Maintaining off-record headcount during hiring freezes
There was only one problem…
Many of resources accessed this way were not true consultants and were not taking on the deliverable risk that a Statement of Work should transfer to the Service Provider. They were in fact ‘disguised headcount’ often indistinguishable from Limited Company Contractors in the way they worked and the skillsets they had.
Why should this be an issue?
The premium paid for consultancy work is supposed to be reward for a transfer of risk and access to an otherwise unobtainable talent pool. Yet whilst the Statement of Work music was playing everyone kept dancing, and the disguised contractors kept entering the business through the back door.
The music hasn’t stopped completely, but it is starting to play a different tune. Cost control and regulatory compliance are starting to override the imperative for lower headcount. Overpaying for services and weakened screening processes have started to worry executive leaders and the spotlight has moved onto services spend in general.
So how do you deal with this?
Understand the current scale of the problem and take remedial action using a conversion programme – where you offer the disguised contractors an option: go permanent, convert to traditional contingent headcount or leave the business.
This is traditionally accompanied by screening audits to bring them in-line with company standards, and a cost reduction carried by the consultancy provider not the individual person.
At Resource Solutions, conversion programmes we have completed for clients have resulted in over 50% of Statement of Work consultants being identified as belonging in the contingent workforce.
Converting these misclassified workers has provided cost-savings running into the millions, whilst improving compliance and pre-empting breaches in screening.
To make these conversion programmes a success there are several prerequisites:
- Senior client stakeholders with a mandate for change
- Effective communication to line managers
- Effective communication to relevant workers
- A smooth legal process for converting consultancy contracts
- A back-up plan for the loss of any consultants
With some basic processes and procedures in place a conversion program is a simple, logical step to take with some immediate benefits.
So, take a closer look at your Statement of Work spend, you might be surprised by what you find…