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What does risk mitigation mean when talking about your contingent and full-time workforce programs? From a high level, workforce risk mitigation involves putting the necessary processes in place to protect your organization—think remaining in compliance and having clear documentation of employee classifications.
As organizations evolve—especially in the wake of the COVID-19 pandemic—HR and Procurement teams are doing the same. For better or worse, the game has changed. Now, HR and Procurement teams are shuffling to ensure they’re meeting the demands of the new normal. This includes looking at the risks imposed by their contingent and full-time workforces. (Note: Risk mitigation has always been necessary, but as the employee-employer relationship evolves, it becomes more critical than ever.)
What, Exactly, Does Risk Mitigation Mean for Your Contingent and Full-Time Workforces?
Risk in the workplace can manifest itself in a lot of ways. The financial risk immediately springs to mind. What if employees find out that you pay men more than women or that you’re not complying with equal pay laws? These workplace risks are real and can have a detrimental impact on your employees, retention rates, employee morale, and of course, your bottom line.
So, how can you mitigate workforce risk? Start with instituting market-rate benchmarking, labor-rate validation, and a sound strategy to bring it all together.
Adopt Market-Rate Benchmarking
Market-rate benchmarking is paramount to mitigating the risk of your workforces. Market-rate benchmarking, also known as market pricing and labor rates, matches internal jobs and their descriptions to similar positions using market data and intelligence.
With market-rate benchmarking, you get accurate pay rates for every unique person and role. Because salaries come from market intelligence, you ensure compliant processes that align with equal pay laws. This also provides pay parity, which is excellent for your organization’s reputation, talent acquisition, and retention.
Beyond mitigating legal risks, market-rate benchmarking also helps with financial risk, i.e., eliminate labor cost inefficiencies and the risk of overpaying or underpaying employees. With accurate and actionable insights, you can create substantial labor-cost savings. It can also identify data discrepancies, which further mitigates risk.
HCM Strategies uses proprietary market-rate technology—Arch AI—to analyze millions of data points from thousands of sources, giving you access to the most comprehensive, accurate, and holistic rate intelligence available. This multi-source data validation alleviates the risk of data inaccuracies, discrepancies, scarcity, and variability.
Clearly Define All Job and Employee Classifications in Your Job Catalog
Defining and documenting all job and employee classifications is another way to mitigate your workforce programs’ risk. With both contingent and full-time workforces, you must have a clear definition of who employees are, what’s required of them, and what they’re paid, including their entire compensation packages.
For larger organizations, this can be challenging. It doesn’t have to be, though. Optimizing your job catalog is a great place to start. This process standardizes every aspect of the role across your contingent and full-time workforces, including their compensation package, which should be a direct reflection of your organization’s overall compensation strategy.
Just like market-rate benchmarking, clearly defining all job and employee classifications mitigates risk by ensuring your paying accurate labor rates, creating pay parity, and complying with equal pay laws.
Workforce Risk Mitigation: Helping You Become the Employer of Choice
Let’s be real: There’s a lot of competition vying for the same talent. As a result, you must do everything in your power to position your organization in the brightest light.
Doing this requires looking at contingent and full-time workforce programs and mitigating as much risk as possible. Not only does this remove financial risk because you won’t be overpaying or underpaying employees, but it protects your reputation, which will ripple down to talent acquisition and reduce costly attrition.