E-procurement of Temp Labor

Hosted systems can cut the cost of finding and hiring contingent staff.

Avis Group Holdings Inc. likes to market itself as the car rental giant that tries harder, and apparently its true. The Garden City, N.Y., company, in fact, tries so hard that its staff of 23,000 full-time employees cant always generate all the extra effort needed to repair cars and serve customers. So each year, Avis brings in thousands of temporary employees to help out.

Thats good news for Avis customers as well as for Avis managers, who can use temporary, or contingent, workers to contend with seasonal spikes in business levels. Until recently, however, it wasnt such good news for Debra Leff, Avis human resources manager, and her staff. They were spending more and more time and money finding, hiring and managing temps. Companywide, each of Avis local hiring managers was working with dozens of separate temp staffing agencies, coordinating hires and filing paper requisitions. For each temp hired, hiring managers spent anywhere from a half-hour to "many hours," according to Leff.

So, in late 1999, Leff decided to test-drive an e-procurement system for temp worker hiring and management to see if the Internet could streamline the process and help Avis save money.

The result? After a recently completed 10-month pilot at the companys headquarters, Avis realized an across-the-board savings of 20 percent on temp worker procurement spending. Not only that, but Leff said e-procuring temps has enabled Avis to find a pool of contingent workers who are better qualified to meet the companys needs and has freed her local hiring managers to spend more time finding skilled permanent workers.

Avis, of course, isnt alone in its increasing reliance on temporary workers. According to Boston-based research company Aberdeen Group Inc., there are now some 10.8 million contingent workers in the United States, a number that includes traditional clerical temps, high-tech consultants, and even lawyers and scientists. Over the last several years, that figure has grown by 25 percent each year. This year, at large companies like Avis, the number of contingent workers employed could double, Aberdeen officials predict.

Why are companies like Avis increasingly relying on temporary workers? There are several reasons, experts say. With unemployment in the United States still hovering below 5 percent, its become much harder to find qualified people to fill every job. Thats particularly true of IT jobs. In addition, according to Aberdeen, more workers are opting to work as free agents to retain control of their schedules and take advantage of better opportunities when they come along.

At companies such as Avis, however, more temp workers has meant more HR headaches and costs.

"Previously, we did everything manually," Leff explained. But the avalanche of paperwork required to requisition and pay temp workers, check credentials such as drivers license validity, and keep track of time sheets wasnt the only problem. Hiring managers at various Avis locations were also wasting time wading through sales pitches from numerous temp agencies and wasting money hiring temps who sometimes showed up for work lacking the specific skills needed for the job, Leff said. In addition, the need for temps often comes up suddenly—which doesnt always give Avis hiring managers enough time to procure workers the old-fashioned way, through phone calls and faxed requisition forms, she said.

"It will be Friday at 2 p.m., and well realize we need 10 additional clerical people for a critical job on Monday morning," Leff said. "It can be very hard, and time-consuming, to get people with the right skills on such short notice."

Last March, Avis headquarters began its pilot run of the online human capital management system from application service provider White Amber Inc., of Lake Success, N.Y.

A combination of a Web-based tool called Workforce Hub Intelligent Transaction Engine and a consulting service dubbed Clear Amber, the White Amber system gives Leff and the offices other hiring managers a single online view of their temp worker procurement functions. Temp staffing agencies go into the White Amber transaction engine each day and update customer staffing transactions, negotiated rates and other information.

Through the system, Leff said, her staff can see what kinds of workers are available at any given point from several staffing agencies in the Garden City area, along with detailed information on hourly wages and skill sets for those workers.

Hiring managers can either send online requisitions directly to a preferred staffing provider or broadcast them to the list of local providers in the White Amber system. When workers are hired, drivers license and citizenship checks are done online. Managers in charge of the temp workers use the system to keep electronic records of hours worked and expenses submitted. White Amber charges its vendors a 2 percent fee on each temp position filled. It doesnt charge a fee to clients such as Avis.

Payroll functions are also handled online through the system, Leff said. This, in particular, was seen by Avis executives as a plus.

"We get one bill a week from White Amber, listing all 12 temp agencies we might have used that week and all the specific charges for the people we hired," Leff said. "Then we send them a check, and they pay the agencies. Its much easier than having to process bills from 12 different companies."

But lower HR administrative costs werent the only payoff Avis saw from using the White Amber temp e-procurement service. Since information about all of Avis headquarters temp procurement transactions was consolidated in one place online, Avis officials and White Amber consultants were able to easily figure out where the company was getting the most bang for its temporary worker buck.

"They did an analysis of our spending over the course of the year and showed us where we had been spending money on workers whose skill sets didnt always correspond to the job we hired them for," Leff said. In ensuring that the staffing providers it works with charged fees corresponding to the skill levels of its workers, White Amber consultants showed Avis how to make sure "we were paying for people with skills that were actually useful to us, instead of paying for people it turned out we really couldnt use," Leff said. "They did [the skills analysis] quicker, faster and better than we ever could have on our own," she added.

Next up for Avis is a possible expansion of the deal with White Amber—whose services are available nationwide—to cover all of the car rental companys other offices and possibly to cover the procurement of temporary IT workers. But this decision wont be made until after completion of the pending sale of Avis to Cendant Corp., set for the spring, Leff said.

Before Avis or any other enterprise comes to rely too completely on an online e-procurement service such as White Amber, it should consider how likely the provider is to remain in business long term.

On that score, experts say, White Amber and other work force e-procurement providers that take a vendor-neutral approach should have a better chance of surviving.

"Most of these solutions are basically the same with different bells and whistles, but the providers who arent vendor-neutral wont do well in the long run" because users will be skeptical of a provider thats allied too closely with one vendor, said Rob Maina, an HR analyst with Canadian Imperial Bank of Commerce, or CIBC, in New York.

In addition, according to another analyst, White Ambers strict focus on the contingent work force could help it survive any shakeout in the online human capital management marketplace.

"Companies that try to manage both the contingent and permanent work forces are going to have a hard time" because of the disparate issues companies face in hiring temp vs. permanent workers, said Katherine Jones, an HR analyst at Aberdeen Group.

And especially for companies that help organizations manage temp workers, the market for Internet-based human capital management products and services can only grow, according to Jones.

White Amber isnt the only online temp service out there. Staffing company Computer Horizons Corp., of Mountain Lakes, N.J., for example, provides a worker procurement system called Computer Horizons Information Management Efficiency System, or CHIMES, which lets users procure its temporary IT workers online. Vivant Corp., of Oakland, Calif., like White Amber, offers access to numerous staffing providers and gives its users tools to evaluate return on investment from various staffing companies and ensure that they pay only for temp services actually used.

The idea of the hosted e-procurement of contingent workers may be new and relatively unproven, but Avis Leff, for one, is a believer. The reduction of administrative expenses alone makes the idea worthwhile, Leff said. After all, if Avis can avoid managing the thousands of paper invoices generated by temporary workers, it means the company can spend its valuable resources trying harder on other things, like satisfying customers.

"Im hoping we can expand this system to other parts of the company, because I think wed save time and money there, too," Leff said.