If you’re looking at how your business manages external workers, contractors, agency workers and outside suppliers, right now, it’s probably not out of curiosity.
Maybe it’s an audit. Maybe it’s misclassification and joint liability rules tightening, or the Fair Work Agency’s new powers to penalise non-compliance. Maybe it’s someone senior finally asking what happens if a supplier gets it wrong, or part of a due diligence process ahead of investment or a sale. Or maybe it’s simply your board asking how many external workers are supporting the business today, and nobody being able to say for certain.
Whatever’s driving it, the word “governance” tends to pop up a lot, without anyone really articulating what that means in practice.
We’ve been designing and implementing external workforce governance for the last 15 years. Over that time, it’s only gotten more complex, and as practitioners, our job is to help clients understand what they need to govern, why they need to govern it, and the easiest way to go about that based on their capabilities and capacity.
A client used an analogy recently of a container and the content, and this is useful when thinking about external workforce governance. The container is the structure, the foundational elements that likely only change when the business goes through a major transformation.
The contents are the elements which need to be built for adaptability, as they change as the business changes, whether that’s expanding into new geographies, outsourcing elements of external workforce management to partners or refocusing how they use external support to stay competitive.
It can look something like this:
The Container:
Worker definitions – these provide a clear definition for each external worker type you have travelling through your business. By clearly defining each type, it enables classification and compliance structures to be built on common terminology and common understanding. Some industry standards already exist which can give you an easy place to start.
Workforce governance – these are the rules of engagement for each worker type you have defined. They should cover what checks and controls are needed at each stage of the worker’s assignment (from identifying you have a need all the way through to offboarding) in order to ensure a compliant engagement.
Ownership model – this is how functions and individual roles come together to either manage how external engagements are run, or govern how well externals are being engaged and managed.
Data standards – these are the rules and technical specifications that define how information is structured, formatted and shared. They help ensure easy roll-up of data across different systems to provide the insight you need to make decisions.
The Content
Classification and compliance decisions – this covers which worker type applies, and what checks have been completed against the requirements set out in the container. This is where the definitions above get applied to a real person, in a real role.
Process and engagement steps – the steps followed for each worker type, from identifying a need through to onboarding, delivery and eventually offboarding. These should reflect how the business works today, which is why they’re expected to change as the business does.
Supplier and commercial terms – the live list of approved agencies, contractors and outsourced partners, and the terms each one is engaged on. This needs regular review, since a supplier approved two years ago on one set of terms may no longer meet today’s standards.
Reporting and KPIs – the specific figures tracked regularly: how many external workers are engaged, what they’re costing, and whether anything is drifting outside policy. Built on the data taxonomy sitting in the container, so the numbers stay comparable over time.
Technology and systems – the platforms and tools actually used to run the above day to day. Even a well-designed process will fail in practice if the system underneath it can’t capture the right data or enforce the right steps.
Where to start
If none of this exists yet, don’t worry. You certainly won’t be the first business that hasn’t got around to putting governance in place across its external workforce. Most businesses we meet are in exactly that position. Some content, no container, or a container built years ago that the business has simple outgrown.
You don’t need all of this in place at once, and you can probably take the first step alone. Pick one worker type your business uses regularly, and try to write down, in a sentence or two, what actually defines it and where the boundary sits with the type next to it. If that’s hard to do cleanly, if you find yourself reaching for “it depends” more than once, that’s not a sign you’ve done something wrong. It’s a sign of exactly where to start.
That one exercise usually tells you more about your real position than any audit does.
From there, the path splits depending on what you find. If it’s mostly a case of getting existing thinking down on paper properly, our advisory calls and design toolkit give you enough structure to do that yourselves, at your own pace. If the exercise surfaces real gaps, several worker types with no clear definition, no one clearly accountable, compliance exposure you can’t currently size, that’s usually the point to bring someone in who’s built this before, and RedWizard designs and delivers the full operating model directly.
Either way, you’ll know more after that one exercise than you do right now. Start there, and good luck.
Written by:
Founder
I’m an art school graduate who ended up running a record label in Lisbon before finding my way into PMO. Not the most obvious path — but looking back, the thread is obvious. I’ve always been drawn to complex, moving-parts problems, and I’ve always wanted to work differently.
That second part matters. Extended workforce is about people choosing how they work. I found my way to this space because I wanted that freedom myself — and now I’m here to help make it work better for everyone in the ecosystem.
I founded RedWizard in 2014 when I realised how fragmented extended workforce management actually is — and the impact that has on both individual and collective effectiveness. Coming from a PMO background, I saw that fragmentation differently to most. Where others accepted it, I saw a missed opportunity. My early work focused on proving that — building a cross-functional Centre of Excellence on a global programme that brought client teams and strategic partners together around the same table. When people with different perspectives start sharing stories and challenges openly, the opportunity becomes obvious.
I’m at my best working with mid-sized organisations where I can genuinely feel the difference we make.