In today’s dynamic business environment, contingent labour plays a critical role in enabling agility and meeting fluctuating demands. However, many organisations fail to properly manage their agency partners, resulting in hidden costs, inefficiencies, and compliance risks that undermine business success.
The problem with fragmented agency management
Agency relationships are often managed locally at the site level, leading to:
- No visibility into spend: Organisations lack a clear view of costs or agency usage across the business.
- Undefined metrics: There’s no consistent way to measure agency performance or hold partners accountable.
- Compliance risks: Inconsistent contracting leaves businesses exposed to legal and reputational damage.
- Administrative burdens: HR and TA teams are left to handle multi-invoice systems and timesheet errors with little standardisation.
- Missed opportunities: Poor oversight means organisations cannot optimise their contingent workforce or ensure cost efficiency.
This approach not only creates inefficiencies but also makes it impossible to track the true value or impact of agency partnerships.
How technology transforms agency management
Adopting a Vendor Management System (VMS) can help you centralise and streamline agency management, delivering significant benefits:
1. Centralised visibility
A VMS provides a complete view of contingent labour:
- Spend by location, supplier, and role.
- Fulfilment rates by agency and site.
- Agency scorecards to measure performance and accountability.
With real-time insights, organisations can make informed decisions and address issues before they escalate.
2. Cost control
Without oversight, agency fees can quickly spiral. A VMS helps standardise and optimise costs by:
- Benchmarking pay and bill rates.
- Eliminating ‘maverick spend’ through competitive bidding.
- Consolidating budget tracking for better forecasting.
3. Compliance confidence
Managing agencies without a centralised system exposes organisations to significant risks. A VMS automates compliance workflows, ensuring:
- Proper worker classification and contracting.
- Adherence to legal and policy standards.
- Audit-ready documentation for risk mitigation.
4. Measurable performance
Tracking metrics like fulfilment rates, turnover, and worker ratings allows organisations to identify top-performing agencies and address underperformance. This ensures only high-quality talent is sourced, enhancing workforce productivity.
5. Streamlined processes
Manual processes are time-consuming and error-prone. A VMS automates key workflows, including:
- Requisition creation and supplier distribution.
- Onboarding and offboarding processes.
- Timesheet and invoice management, reducing administrative burden.
The strategic value of agency oversight
Agency management is not just about filling roles—it’s about ensuring you get the best talent at the right cost while maintaining operational efficiency and compliance. Technology empowers HR, TA, and Procurement teams to move from firefighting to strategic workforce planning.
Key metrics to track include:
- Fulfilment rates: Are agencies meeting targets?
- Worker quality: Are they consistently supplying top-rated talent?
- Cost efficiency: Are spend levels aligned with benchmarks?
- Compliance adherence: Are agencies delivering against contractual obligations?
The cost of inaction
Failing to manage agency performance leads to escalating costs, compliance risks, and a lack of workforce optimisation. It’s a multimillion-pound issue that many organisations underestimate, and which we explore in more depth here.
Take control with technology
A VMS provides the tools to centralise agency management, reduce costs, and drive measurable improvements. By taking a strategic approach, organisations can turn agency partnerships into a competitive advantage rather than a liability.
