Talent and vendor costs are increasingly interlinked, how do you align HR decisions with enterprise procurement and supply chain cost initiatives?

This is enabled through a strong budgeting exercise and close alignment between HR and the Finance team (with Procurement and Supply Chain reporting into Finance).

Approximately 3 months before the start of the financial year, the HR leadership team begins working on the budget — covering both "Run" (BAU) and "Change" (new/additional initiatives) elements. This is informed by insights from the annual Employee Pulse survey, leadership inputs, and business priorities.

The proposed budget is then reviewed and discussed with the executive leadership team. Once finalized, it is submitted to Finance, which integrates it with the organization’s overall G&A and operational cost plans. Finance then provides the final approved budget allocation.

We operate strictly within this approved budget, except in cases where there is a highly critical additional requirement — which must be supported by a strong business case and a clear cost code.

Interesting question!

Question back would be:
Why do you need to plan these according to the points raised? What is the real need here? What is the strategic direction? Commoditising this area and treating it like any other category in procurement, or treating people like people? Especially now, with AI and robotics advancing.

I'll be provocative here and for the right reasons - I see many companies going in this direction and not gaining any results.

In my experience, talented people stay with you (the company) if you treat them according to what they deliver, pay them well and provide them with opportunities within the company.
All of these can be planned but aren't linked to procurement / sourcing cycles or don't require any governance alignments to general category management.

If you (the company) treat them well, you don't need to align these as you will know when they are moving and where, therefore you can plan handovers. The only thing that everyone needs to be aware of is during transitions, nobody should expect additional projects to be delivered as it makes no sense. That every leader must govern themselves.

If you don't treat them well....well, then nothing can prevent the company from having to replace a talented person in the worst time possible and incurring extra costs.

These are my two cents based on managing direct reports also in Sourcing & Procurement from global head to purchaser levels.

Regarding the other side of the question of talent vendors....that's a part, where I can only recommend everyone in leadership to build up a strong network and reach out within your network, use these vendors as few times as possible. Very rare to find the right fit and level/extent of expertise within a short time and it costs you an arm and a leg. 

Therefore I'd not include them in the enterprise procurement and supply chain initiatives at all.

I'd rather measure other KPIs (e.g. real match up of external provider's seniority level and the internal levels of the roles....that's usually a mismatch, therefore overpaid), plus I'd push in the direction of not treating people as commodities. Then the company doesn't have these problems (from talent to everyday roles).

The key here is to have a strong and supportive HR leadership & department that enables functional leaders to do these well.

I'd like to see companies building HR functions that are proactive, strategic and real business partners to functions and vice versa.

Only additional aspect: if anyone is planning a change in their department which aren't aligned with the general budget and strategic directions, then either/or is wrong, or the leader is not the right one.

The tools you mentioned can only help, if everything above I wrote are already managed well. Otherwise none of them deliver.

Below approach helps in unified decision making for efficiency and agility improvement.

Unified cost visibility across FTEs, contractors, and vendors
 - Why is this required? - Helps with single view of overall cost – payroll, agency markups, miscellaneous.

Joint governance with Procurement on vendor performance & rate cards
 - Why is this required? - To build transparency and accelerate decision making.

Workforce planning synced with category spend planning cycles
 - Why is this required? - Proactive aligning the needs to avoid last minute rush and build cost effective models.

Skill-based, Project -based SOW models to avoid inflated or misaligned vendor costs-
 - Why is this required? - Co- creation of the RFPs and SOWs to avoid overpaying or mis-scoping.

Use of VMS & talent intelligence tools to drive smarter sourcing decisions
 - Why is this required? - Leverage of the digital tools for smarter cost controls.

Rationalize vendors based on both talent quality and cost efficiency
 - Why is this required? -Shifting from multiple partners to strategic skills aligned partnerships for efficiency and agility.