MANY ORGANISATIONS are underestimating their workforce expenditure, particularly on contract labour, by as much as 300 per cent, a recent white paper has revealed.
MANY ORGANISATIONS are underestimating their workforce expenditure, particularly on contract labour, by as much as 300 per cent, a recent white paper has revealed.
Released by on-demand talent management solutions provider Taleo Research, the white paper examined the hidden return on investment of talent acquisition and mobility.
It suggested that contractor and temping activity was rarely monitored by organisations, while many don’t even know whether it is money well spent or even how much it is costing them.
“Many organisations are decentralised and they don’t have a great knowledge of how much they spend on contractors,” said Yves Lermusiaux, president of Taleo Research.
The report also raised questions as to whether organisations really knew where their general staff investments were being made and found significant gaps in their knowledge.
“They are simply not aware of how much they spend on it. They just think it’s decentralised across the business and don’t have a kind of corporate overview of how much they spend globally on it,” Lermusiaux said.
“Workforce related expenditures are the most significant portion of spend for most organisations so understanding where the investments are made, what form the investments take, the economics of their impact, and how to best optimise these resources are the keys to unlock hidden value,” the paper said.
The true cost of talent acquisition goes beyond the traditional HR costs and can be categorised in two ways: direct, labour costs measured in full-time employee (FTE) and indirect, expenses such as advertising, background checks, referral bonuses, and training.
Within the indirect costs, Taleo found, an organisation can uncover hidden process inefficiencies linked with expense inefficiencies. If not fully understood and recognised, they can adversely impact the overall cost of talent acquisition. These inefficiencies are linked to process leaks, which occur in activities between departments, inside HR, or with external providers.
In economies similar to Australia’s, such as the United States where 57 per cent of GDP is spent on workforce related expenditures, there are vast areas for improvement – particularly in capitalising on internal mobility.
“The first bit of advice you can give to organisations is to make sure first that you have a good grasp of who you have inside it,” Lermusiaux said.
