The Resourcing Mix Dilemma

Posted by : Jeff Nugent

Let’s face it; the way work gets completed today is drastically different then 10 years and even 5 years ago. The pace at which we all are working and the expectation of shortened time to completion has affected how organizations function and how we look at resourcing.

This fundamental change in the way we work and the trend towards work being organized in project tasks has forced organizations to get creative and use alternative resourcing mixes in order to keep pace and ensure that they have the right workers to complete the tasks at hand successfully.

What are the alternatives when looking at resourcing models? At a macro level there are three main alternatives:

1. Using full time staff
2. Using contractors
3. Outsourcing the work to a third party

The different sources of resources can be used exclusively or a mix of each type can be used to create the optimum-resourcing model to suit the situation.

Why would organizations use anything but full time staff? In a perfect world organizations would only hire full time staff and they would be able and willing to consistently complete tasks successfully in the time frames required and then be able and willing to move on to the next sometimes very different task. With the dynamics and economics of today’s business world for organizations, to use only full time resources is not realistic.

Shortened time timetables and work being broken down into specific project tasks have created a lack of tolerance for learning curves and forced a need for subject matter experts (SME). Most managers are looking for individuals who have the skills they require and can hit the ground running and complete tasks more productively. Often in most organizations, managers require that these SME move onto other teams or even let them go after the task is completed. This push to “situational” or “contingent” resourcing is allowing organizations to be more agile and is becoming more the norm rather than the exception.

Does this mean that we are all becoming contingent workers? Although the term is mainly used for contractors or temps that are brought in for a task and then let go afterwards, in theory all workers today no matter who they work for or their status as full time employees, contractors, etc. should consider themselves contingent workers. This means that we all possess skills that our organizations require for situations and once those situations change or the tasks are complete we will move on to other situations that require our skills or specific background. Organizations that organize their workforce in situational or contingent models are more agile and can adapt quicker to change.

How can organizations decide what mix of resources is right for them? As stated above the decision on the mix of resource alternatives to create the optimum resourcing model is situational. Depending on the various Influencing Factors, the optimum resourcing model or “Mix” in one situation does not mean that it will fit for the next.

The Influencing Factors typically are: Ability and Availability, Organizational Management Capability and Timing & Economics. Each factor or combination of factors will influence the decisions on resourcing models mix.

Ability and Availability

When looking at each situation, an organization must evaluate the make of up available resources to assess if they possess the proper skill sets and skill level to successfully complete the tasks assigned. Availability of able resources, will force organizations to decide on what resourcing alternative they may need to choose. If the company has a full compliment of able resource on staff full time then it may not need to look to outside resources. If not then the organization will need to look at using contractors or at outsource the work to a third party. In many cases where the tasks are high profile some organizations will engage with subject matter expert contractors or third party firms as an “insurance policy” to help ensure success even when they have a full compliment of resources on staff. These resources typically have completed similar projects in the past and can give insight into past “lessons learned” to help navigate the projects through any pitfalls.

Organizational Management

An organization’s Management abilities is a very important factor in determining if the tasks will be completed in house or outsourced. In situations were the organizations ability to manage the particular tasks is sound in both its ability and availability of resources then the projects should be managed in house. If the organization is limited in ability or availability of management resources the projects should probably be outsourced to a third party who will manage the projects and deliver the end results for the organization.

Timing & Economics

Budgets and business cases have a funny way of affecting the resourcing models. Budgets and time completion are often prioritized differently based on the situation and the weighting of those factors will have a heavy influence on the resourcing model.

In cases where time to market is not an issue, the use of the least expensive able resources are often recommended. This traditionally has been use of full time staff. In cases where time to market is extremely important and the cost of not getting to market quicker is great, then organizations will need to supplement their full time staff with outside resources to help reduce the time to completion. In some cases organizations will consider outsourcing the tasks to third parties that offer contractual obligations and guarantees of time to completion. This option gives a sense of assurance that the tasks will be completed when needed as along as the third party is capable of performing as promised.


Economics

Traditionally as a rule of thumb when looking at the economics of resource costing, the least expensive resources are full time staff, the next being outside contractors, and the most expensive being outsourced solutions.
When evaluating the various resourcing mixes, assessing the total cost of ownership is important. We must look past the pure salary vs. rate and look at the total cost of each type of resource to the organization.

When looking at the cost of full time resources to an organization, the cost of on boarding, termination, workspace and tools, Government payroll taxes, career development and benefits need to be factored into the equation. In some cases where the rates of contract resources are equivalent or a small premium over full time staff it may be advisable to use contractors. This choice generally offers the organization the flexibility to release the resource after the task is complete and well as the efficiency gained through reduced learning curve and a greater assurance of success.

The Final Word

Due to the fundamental shift in how company’s complete tasks, the need to include each category of resources into HR and talent management strategies is exceedingly apparent. Appreciating that an inclusive strategy is the new reality is the first step that Human Resource professionals must accept. From there creating programs to efficiently source, onboard and manage external resources and not just full time staff is essential. This brings to light the need for formalized Contingent Workforce programs that allow for efficient hiring, administration, tracking and reporting of contract resources. With formalized programs in place that help manage and track both full time and external resources, HR professionals are able to see the “Full Picture” of the talent they will use to drive their businesses forward now and into the future.

About the Author: Jeff Nugent is the Founder and Managing Director of Contingent Workforce Solutions Inc.. Headquartered in Toronto, Canada, CWS is one of the world’s leading vendor neutral advisory, program management and independent contractor payrolling firms. Jeff is an authority on contract workforce strategies and is a sought after speaker and consultant to many fortune 1000 companies. Jeff possesses a Honours Business Degree with a Minor in Organizational Behavior from Wilfrid Laurier University in Waterloo, Ontario, Canada and has over 15 years of contingent workforce industry experience. Before founding CWS Jeff spent over 12 years as an executive at one of Canada’s largest IT contract recruiting companies. During that time Jeff was responsible for the development and spin off of 2 of Canada’s leading vendor owned VMS/MSP solutions. Prior to that Jeff held progressive positions at Union Gas, United Parcel Service and Lexmark. His contact information is jeff.nugent@cwsolutions.ca