Headcount Shell Game Part 2: How to fix the problem of grey spend

In my last post, I discussed the problem of rogue spend, or as I like to call it, grey spend. It’s that headcount shell game that exposes organizations not only to increased costs, but to regulatory risk, safety, access and onboarding backlash. Longer term, it can affect your company’s reputation for fairness and its ability to attract and retain quality workers.

Going from grey-sourcing temp workers to right-sourcing through the proper channels may feel like a lost cause for procurement or HR, but business leaders challenged with many higher priorities may see it as a merely a headache. Over the years, my colleagues and counterparts have shared similar experiences, getting caught in the same crazy cycle of bringing more data and getting little traction. Here, I share thoughts on how you bring this activity back into the fold.

But first, a few words of caution lest you create a turf battle for spend or control. As frustrating as it can be, avoid these actions, as they will create headaches for yourself and lead to people digging in their heals even further:

  • Don’t bring estimates that are easily dismissed; instead, bring hard data, clear case-study examples.
  • Don’t go it alone; instead, ask for outside help, such as from your MSP, industry colleagues and industry counterparts, or help in seeking out data to support the improvement journey.

So what can you do? Here are my thoughts that I hope will save you time and bring success.

Stopgap. A simple fix that other companies have found successful for minimizing grey spend is to hold managers accountable for financial budgets and employee headcount limits only. Track all external workers, but do not limit nonemployee headcount. This provides greater visibility to manage rates and tenure across what is now hidden workforce spend.

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A thorough effort. But for meaningful change, here are a few steps you can take that will provide immeasurable value.

  1. Spot check. Take a sample of SOW orders and assess them — manually, via a spreadsheet with macros and/or with an AI application before they are finalized.
  2. Get perspective. Talk with the line managers who are more prone to purchase workers outside of your program to understand the root causes. Also, talk with the service companies through which the rogue managers are working to gain insight into their perspective.
  3. Analyze. Take what you learn in the prior two steps to develop a working hypothesis to improve based on what behaviors, processes, communications, etc. need to change?
  4. Alignment. Once you have figured out a way forward, gain alignment at the working level with stakeholders — HR, legal, line managers, suppliers, etc.

Potential outcomes. You are likely to see the following outcomes as you undertake the above evaluation process.

  1. The business’s ability to write proper SOW will improve. You will continue to use service providers, but will actually see the premium value, guarantees, quality, and oversight that should come with services work.
  2. You will transition misbegotten temp workers into the CW program either through payroller or by onboarding the service company as a temp worker provider, leveling the playing field.

The value in conducting such reviews can be significant and the reduction in energy, effort, and frustration across the ecosystem — including suppliers, workers, business, and support teams. And the cultural value of showing the results of a cooperative effort is priceless.

Take Heart

Resourcing workers sounds simple, but so often is anything but. These guiding principles can help you accomplish the Ideal: getting the right person, with the right skills, (sourced) the right way, right now!

I encourage you to share your ideas between companies and together solutions will arise to put this age-old problem to rest. And it will allow us to take on new challenges! Please share your insights and add to the conversation!


Linc Markham

Linc Markham
Linc Markham is a contingent workforce consultant and former global HR and contingent workforce director for BP. Connect with him on LinkedIn.

Linc Markham

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