Shortlist: Lion MSP transition hits right mix of TA/procurement drivers.

November 22, 2017

This article is reproduced with permission from Shortlist, which publishes news, analysis and insights for recruitment and talent acquisition leaders.

Lion's transition to a total contingent workforce model has worked well particularly because TA has taken the reins, according to its project leader.

The beverages giant embarked on a gradual transition towards an MSP model two years ago, says Lion contingent workforce TA leader Julian Banks.

"We should reflect on the fact that talent acquisition leading the process works, versus a procurement-led initiative, but ultimately, it's so very, very important to have your procurement partner in the room as well," he told last week's ATC contingent workforce conference.

Banks notes Lion has 6,788 total staff across 31 sites and $4.5 billion in annual turnover, and has generated almost $1 million in savings so far from just 100 white collar workers contracted through the program.

The business opted for the low-hanging fruit in its initial rollout, he says, "and for us that was IT", with 80% of that workforce based in Sydney, totalling 60–70 contractors and a spend of $10–12 million.

It has also introduced a consolidated invoicing program, drastically reducing its invoices per week.

To cement its business case for the changes, Banks's team worked through a combination of research into market best practice and internal exploration of the company's hidden risks, finding its workforce visibility was poor.

"We didn't have [information on] tenure, pay rates; we didn't know anything."

Analysing its costs, Lion saw "rogue" behaviour among its recruitment suppliers, and had patchy knowledge of its recruitment spend.

Adding to its ignorance around temp pay rates was that it didn't know what margins agencies were actually charging.

Lion also struggled with a decentralised talent process, with no singular approach to hiring contingent labour, panel leakage, and untapped talent pools, says Banks.

"There were loads of different suppliers being used... and we had people working in some parts of our business that might be suitable for other roles in the broader office, but none of that was being reviewed or looked at."

Supplier relations improved

One specific upshot from introducing the new contingent model was more positive supplier engagement, Banks says.

Although some suppliers made noises about having to compete to fill positions, he says, they're also receiving work from Lion they previously wouldn't have.

Lion now has a TA team comprising 16 people working on permanent and fixed-term recruitment across the company, and the MSP "bolted on and branded as Lion" means the company can now address any talent need, Banks says.

It partnered with SAP Fieldglass and Randstad Sourceright for its respective VMS and MSP needs, although choosing an MSP was a difficult decision – Lion contemplated an in-house option, but decided an external MSP has more market expertise, says Banks. "I was worried about falling a bit stagnant if we were going to do it inhouse."

Echoing broader market sentiment, statement of work is a great opportunity for the business, he says.

"When we started this program, I thought that contingent workers were really [only from] temp agencies, but there's so many independent contractors going on statement of work, sole traders, and we've got to find a solution for that. We haven't got that."

What hasn't worked so smoothly is the phased approach to implementation, with Banks noting, "it's been great on one hand, but there's been a bit of 'implementation fatigue.'"

Concern about the impact of a growing contingent workforce on overall culture and engagement is also an issue, says Banks. At the outset of the project, the company's workforce mix was about 85% perm and 15% contingent, and "if we're going to move up to 25%, 30% contingent, that's going to have an impact."

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