Carpe Procurement - sig.org
37
Seize the Opportunity for Self-Sourced Independent Talent Carpe Procurement: MBO Partners Dustin Talley Director, Solutions Design Dennis Kanegaye Senior Vice President & Chief Client Officer www.sig.org/eval
Transcript of Carpe Procurement - sig.org
Seize the Opportunity for Self-Sourced
Independent Talent
Carpe Procurement:
MBO Partners
Dustin TalleyDirector, Solutions Design
Dennis KanegayeSenior Vice President & Chief Client Officer
www.sig.org/eval
Carpe Procurement: Seize the Opportunity
for Self-Sourced Independent Talent
Independent Workforce Trends and Next
Practices
Dennis KanegayeChief Client Officer, MBO Partners
Dustin TalleyDirector of Solutions Design, MBO Partners
March 12, 2015
MBO Partners Snapshot
• Contractor compliance and
engagement since 1986
• Served 40,000+ contractors,
consultants, freelancers, small
businesses, and payrollees
• Processed nearly $2B in payroll
and IC spend
• Proprietary technology
platform ($20M+ cost)
Source: Staffing Industry Analysts. “2014 Payrolling and IC Evaluation & Compliance Landscape Report,” December, 2014
MBO makes it safer and easier for self-employed workers and their clients
to work together“MBO Partners is the largest
provider in terms of US agent-of-
record spend, in which they pay
independent contractors or their
companies on behalf of the end-
client. While most providers
typically receive business from the
end-client or… MSP, MBO also
markets its service to the
independent worker, often
providing a portable service as the
IC might work with multiple
clients.”
3
Session Agenda
• Macro industry trends
• Independent workforce
demographics
• Risk update
• Sourcing: current state
and “next practices”
• Questions
4
• External talent
– Half or more of workforce for over 1/4 of all organizations
– Includes contractors, outsourced service providers, temporary
staff, freelancers
• Shift from employees to external resources set to accelerate
over next five years
• High performers more likely to have tools, strategies, and
frameworks in place to leverage these complex structures more
effectively
Macro Industry Trends
“Jump ahead to the year 2020.Half the people you rely on don't actually work
for you and that's a good thing—if you're ready.”
Source: Deloitte, The Open Talent Economy, 20135 Source: Chartered Global Management Accountants, New ways of working survey, August 2014
Business are Adapting
How do you expect your organizational structureto change over the next five years?
Source: Chartered Global Management Accountants, New ways of working survey, August 20146
Gen Y 28%
Gen X 29%
Boomers 30%
Seniors 14%
Independent Workers by Age, 2014
U.S. Independent Workforce: Growth
30 million now, 40 million in five years
“Solopreneurs” (regularly avg. 35 hrs/wk)
“Side-Giggers” (regularly avg. 11 hrs/wk)
0
5
10
15
20
25
30
35
40
2014 2019 Est.
Mil
lio
ns
Source: MBO Partners “State of Independence in America” report, October 20147
Independents Contribute to the Economy
GDP in 2014
Source: MBO Partners “State of Independence in America” report, October 20148
HOURLYSOW-BASED
ERP / VMS VMSPartner System
TEMPSICs / FREELANCERS /
SMALL COMPANIES(10 OR FEWER EMPLOYEES)
VENDORS
Sourced and engaged through Procurement
Sourced and engaged through MSP/staffing
vendors
Sourced internally, evaluated for qualification and engaged through
IC compliance and engagement partner
Contract Workforce Landscape
9
New Hampshire
and Massachusetts
sign MOU
Memorandum of
Understanding
with 11 states,
IRS, DOL
2012 federal budget
includes $23M for
“Misclassification
Initiative”
California Senate
Bill 459 goes into effect
Solicitor of Labor indicates
that misclassified labor is
one of agency’s top
priorities
DOL FLSA suits reach
all-time high in 2012
Payroll Fraud
Prevention Act of
2013 introduced in
U.S. Senate
Iowa signs MOU
New York
signs MOU
IRS re-starts Questionable
Employment Tax Practices
program
Affordable Care Act
goes into effect
Payroll Fraud Prevention Act
of 2014 introduced in Congress
Executive order adds compliance
requirements for federal contractors
Alabama
signs MOU
Wyoming
signs MOU
Florida
signs MOU
(20th state)
Louisiana
signs MOU
Wisconsin
signs MOU
California
AB-1897
passed
2016 Fed Budget
focuses on IC
misclassification in
“fissured workplace”
10
Recent Regulatory Activity
The Compliance Tug-of-War
11
The Compliance Tug-of-War
BEHAVIORAL
CONTROL
FINANCIAL
CONTROL
RELATIONSHIP
OF PARTIES
I want to collect payroll taxes to
minimize the tax gap!
COMMON-LAW TEST
12
The Compliance Tug-of-War
I want to penalize FLSA
transgressions to help unemployment
insurance shortfalls!
SUBSTANTIAL
INVESTMENT
IN BUSINESS
RISK OF
RECEIVABLE
NO ECONOMIC
DEPENDENCY
ON CLIENT
ECONOMIC REALITIES TEST
13
The Compliance Tug-of-War
MUST
OPERATE
BUSINESS
OUTSIDE
CLIENT’S
BUSINESS
FREE FROM
CLIENT’S
CONTROL
A-B-C TEST
We want to collect taxes to reduce
Workers Comp and unemployment
budget deficits!
14
The Compliance Tug-of-War
MEMORANDUM OF
UNDERSTANDING
Between IRS, DOL,and 20 states (currently)
15
The Compliance Tug-of-War
We want to compensate our clients
if they’ve been treated unfairly!
CLASS ACTION LITIGATION
16
Incorporation:
Self-incorporation does NOT guarantee
qualification
Term Limits:
Setting term limits has minimal impact
on qualification
Contracts:
Existence of an IC contract does NOT ensure qualification
SOWs:
Contactors engaged under SOWs are
NOT risk free
Shifting Risk:
Firms that pay workers as 1099s do
NOT remove risk from client
Dispelling Compliance Myths
17
IC / SSP Sourcing and Engagement Landscape
“Contractor clouds” with
embedded compliance and engagement solution
MSPs / staffing firms
Engagement Risk
Current State:Managers sourcing and
engaging contractors
Freelancer marketplaces
LowHigh
Ser
vice
Co
mp
lexi
ty
Hig
h
(Pro
ject
s)
Lo
w
(Tas
ks)
18
Safe, cost-effective solutionsthat make it easy to
source, curate, and engage
independent talent
“Next Practice”: Controlled Contractor Clouds
19
“Next Practice”: Controlled Contractor Clouds
Utilization of marketplaces and freelancer networks
will grow by 96%
over the next two years
Over the next 12 to 16 months
Nearly 40% of organizations
expect to adopt an FMS
Source: Ardent Partners, “State of Contingent Workforce Management,” June, 201420
Talent Management: Reaching New Heights
TRADITIONAL STAFFINGExternal Sourcing and Engagement, Highest Cost
CONTRACT “MATCHMAKERS”Sourcing Performed Internally, No Engagement
FMS PROVIDERSInternal, Private Sourcing and Curation, No Engagement
CONTROLLED CONTRACTOR CLOUDFull Curation, Engagement, and Risk Management
21
For self-employed professionalsProvides a pipeline of relevant project opportunities and creates a steady stream of assignments from “clients of choice.”
For organizationsProvides the ability, through independent talent access and engagement, to fast-track critical projects and initiatives not otherwise achievable without just-in-time access to resources.
Value for Both Sides
22
Sourcing and Engagement Landscape
“Talent clouds” with
embedded compliance and engagement solution
MSPs / staffing firms
Engagement Risk
Current State:Managers sourcing and
engaging contractors
Freelancer marketplaces
LowHigh
Ser
vice
Co
mp
lexi
ty
Hig
h
(Pro
ject
s)
Lo
w
(Tas
ks)
23
65% of companies cite the creation of a
visible talent pool as the largest contractor
workforce-related issue.
Source: PageUp People Survey, 201424
25
Use Case: Large Upcoming Project
Solution:
Share the campaign with existing
managed contractors and selected
external networks (e.g., Talent Cloud,
other vertical marketplaces, etc.) in an
RFI format.
Challenge:
A Business Unit has a large upcoming
need but is not ready for specific
candidates to apply.
But pre-project awareness within the
talent community may enable applicants
to be ready when the project nears.
The BU can vet interested workers earlier by positioning their proposed solution and value.
Workers can be placed on a “virtual bench” and assigned to project teams when the project
commences.
VALUE:
26
Challenge:
Reporting shows a high level of temp
worker “re-use” across departments
and managers, with most billing at the
initial recruiting mark-ups.
The client lacks ability to schedule and
engage alumni workers at a reasonable
cost.
Solution:
Create groups by skillset in the Talent
Cloud. Mandate that all client-caliber
contractors be loaded into the TC upon
expiration or completion of their current
assignment.
Use Case: Talent Ownership
By strictly enforcing/modifying talent ownership clauses in supplier contracts, managers can
compare previously engaged talent from all suppliers and re-engage the best at lower payroll
markups.
VALUE:
27
Continuum of Contract Workers
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Direct Engagement
Clearly Qualified Clearly Non-QualifiedEveryone Else
1099/Corp W-2
Traditional Engagement Solution
Low Tax Risk No Tax RiskHIGHEST Tax Risk No Tax Risk,
UNHAPPY CONTRACTORS
1099/Corp W-2 PayrollLost Talent
Talent Clouds + Engagement = Ongoing Results
Program
Adoption
Access to
Top Talent
Operational
Efficiency
Cost
Savings
Risk
Mitigation
Awareness – and Lawsuits – Are Escalating
http://www.sfgate.com/business/article/Handy-com-housecleaners-lawsuit-could-rock-5891672.php (Nov 13, 2014) • http://www.bizjournals.com/sanfrancisco/blog/2013/09/drivers-suit-says-lyft-is-his-employer.html (Sep 5, 2014)
http://www.nbcnews.com/tech/innovation/ubers-wild-2014-can-lawsuits-protests-bring-it-down-n265536 (Dec 2014) • http://www.jdsupra.com/legalnews/fedex-hit-with-avalanche-of-independent-63635/ (Oct 7, 2014)
NBC News
SFGate
S.F. Business Times
JDSupra
29
Important Considerations
Is it compatible with your existing technology?
Do you have executive support and air cover?
Do current policies support this program?
Should this program operate under your MSP?
How does your business respond to change?
30
Seize the opportunity to guide your companies through
services procurement next practices
Contact Us
Dennis Kanegaye703-793-6002
Dustin Talley703-793-6016
32
Questions?
33
Thank You!
MBO Partners
13454 Sunrise Valley Drive, Suite 300
Herndon, VA 20171
34
Evaluation How-to:
Your feedback drives
SIG Event content
By signing and
submitting your
evaluation, you are
automatically entered
into a prize drawing
Why?
Option 1: App
1. Select Schedule2. Select Schedule by Day3. Select Day4. Select Session5. Scroll to Description 6. Click on the Evaluation link
Option 2: Browser
1. Go to www.sig.org/eval2. Select Session (#29)
How?
Complete and
submit!
bit.ly/downloadameliaappTweet using: #SIGspring15
Session #29
Carpe Procurement: Seize the Opportunity for Self-Sourced
Independent Talent
Dustin Talley
Dennis Kanegaye
Speakers:
www.sig.org/eval
