HR managers in large organisations are already comfortable using Vendor Management Systems (VMS) to handle the processes of onboarding and working with third party contractors, sourced through agencies. However, using a VMS to manage freelancers creates friction.
This guide explores the differences between a VMS and an FMS and why it is become increasingly important for an organisation to use a dedicated FMS for managing its freelance and contingent workforce.
In this guide:
The VMS was the answer to managing a large number of resourcing and recruitment partners (agencies). Their key features are geared toward organising and controlling the spend of multiple vendors.
Typically a vendor is a recruitment agency or partner, approved onto a preferred suppliers list, or at least a relatively short list of vendors.
By the very nature of the relationship with these 'preferred' vendors, the VMS is designed to support long-term, 'engage once, use multiple times' arrangements - usually requiring detailed setup and approval of each vendor.
Unlike vendor relationships, an organisation can have several thousand freelancer relationships at any one time. The active engagements can also be extremely short, intermittent and in a lot of cases, one-offs.
This requirement to onboard freelancers at speed coupled with the need to capture very different data, makes it extremely difficult to use a VMS to manage a freelancer workforce.
When a tool doesn't quite meet the requirements to handle a process, it causes friction with its users. Users who experience friction with a system look for shortcuts and other 'easier' alternatives.
Friction causes users to bypassing important processes
Most often, in the case of freelancers, this results in freelancer details being stored and saved in an Excel Spreadsheet - and the inevitable chaos that ensues when there's no visibility of spend, risk or utilisation.
VMS are good at managing vendors. Freelancers, however, are people. Ultimately, a system designed to engage and manage a vendor organisation is not necessarily the right tool to engage, onboard and manage individuals.
Freelancer Management Systems are designed to specifically address the challenges with working with a large number of individual, independent professionals.
The fast, fluid process of hiring a freelancer happens at an individual level. The hirer deals directly with the freelancer. This individual level engagement doesn't fit with the standard VMS, which is designed for all hiring activity to go through a central department, like HR.
Standard VMS process
Using a VMS to manage freelancers, is an example of how shoe-horning a process into a VMS rather than using a dedicated FMS could create friction for both freelancers and the hirer.
In contrast, the FMS is designed to provide simplicity for the hiring manager, as well as reporting clarity for HR
Standard FMS process
Some industries depend on freelancers. Media companies, publishers, construction firms, software development houses, and marketing agencies would find it difficult to remain competitive without being able to access skills on-demand and at short notice.
To compound the issue, in most of the industries where the use of freelancers is prevalent, there is also a skills shortage and organisations are competing to attract - and more importantly - retain the best people.
So, where this is an abundance of projects, freelancers can be selective about who they choose to work with. Given the choice, freelancers will prefer to work with an employer who is easy to do business with and has a system that's freelancer friendly.
As organisations start developing Freelance Value Propositions, one of the key foundations should be to engage freelancers through a flexible, bespoke freelancer management system.
Running two seperate systems when managing a workforce that contains both permanent employees and freelancers might not be ideal.
However, it is possible to integrate the two for complete end-to-end visibility of an entire workforce. The diagram below shows the minimum required integration points to effectively share freelancer engagement information with a VMS.
Integrating FMS with VMS: Cloud-based platforms make integration simpler.
To shortlist the right vendors in your RFI process, you should look for the following must haves:
Using your brand to attract the best freelance and contract talent makes a direct sourcing strategy an attractive proposition for large organisations.
Understand how to reduce the risks of working with off-payroll contractors, freelancers and statement of work engagements.