Typical Pricing Models of a Contingent Workforce Management Solution

Your stakeholders have complete buy-in, and senior management has green-lighted a contingent workforce management solution. Now, it’s a matter of reviewing pricing and completing due diligence on potential suppliers.

With numerous pricing models in the marketplace, the process can be confusing, so you may have a bit of work ahead of you. To gain a better understanding, pricing structures are generally comprised of four components:

  • Implementation and change management fees. These charges are sometimes paid up front but can be absorbed into the ongoing fee.
  • Fees for the managed service provider (MSP). Generally, these fees are paid by the client. There have been instances when these charges have been paid through the supply panel though this is a trend that has been declining. If it is the case, compensation will be tied to very definitive cost reduction standards.
  • Fees for the vendor management systems (VMS). The fees for the software management system that drives the solution vary greatly and require a good deal of consideration. If an MSP has technology competencies, as is the case with Hudson RPO, these fees can be waived.
  • Fees for the supply panel in placing the contractors, payrolling and so on.

Though it seems there are layers of fees to consider, the MSP is usually tied to very specific performance goals and risk-reward models. Reducing costs is a prime benefit of retaining a contingent workforce management solution and will be aligned with expense avoidance goals as well as other measures associated with improving service and contractor retention and quality.

Putting a Contingent Workforce Management Solution in Place

The process begins when an executive team member is assigned ownership of the issue, usually by the procurement department or HR. The project scope is determined: will it include temporary labor and independent contractors, or will you work up to that over time?

Conducting a contingent workforce audit can help define parameters of a best-in-class solution. The fee for this audit is often reimbursed if the potential supplier producing the survey is ultimately hired to implement the workforce solution.

Even though some clients attempt to manage their contingent workforce process in-house, there is a great deal of specialized knowledge required. To gain maximum efficiency and cost benefits, you will want to partner with a technically competent provider that is culturally aligned with your organization and shares the same values. If there are issues down the road, you want to know that the vendor has a real passion and commitment to putting the client first.

To make it a success, agree to clearly defined performance measures and a risk-reward pricing structure that aligns everyone around common goals. And review the process regularly with an aim to continuously improve the solution over time.

Learn more about contingent workforce management solutions. Contact us today.

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