The foundation principles establish who makes decisions, what expertise you need, and how you’ll make those decisions evidence-based. With those in place, you can build governance that actually works.
But governance built on good foundations still fails if you’re managing workforce in disconnected pieces. Finance optimising one budget line while Procurement optimises another. HR managing permanent employees while someone else manages contractors with completely different processes. IT negotiating with suppliers that Marketing is also using but nobody’s coordinating.
The next three principles address this fragmentation. They’re about seeing your extended workforce as a whole system rather than separate parts managed in isolation.
You can’t optimise what you can’t see. And you can’t manage strategically when data is fragmented by contract type, budget is split across departments, and supplier relationships are handled in category silos.
Principle 4: Total Workforce Perspective
See the person, not the contract type
Your finance team tracks contractors separately from permanent staff. Procurement manages agencies. HR focuses on employees. IT has a separate process for consultants. Meanwhile, the same person might work for you under three different contract types in a single year.
You’re managing contracts. You should be managing people.
Most organisations structure their workforce management around contract types. Permanent employees go through one set of processes. Contractors go through another. Statement of work providers get a third treatment. This made sense 20 years ago when these were genuinely different populations. It doesn’t make sense now.
The modern workforce doesn’t work in neat boxes. Someone might join as a contractor, move to permanent employment, leave and return as a consultant, then come back again through an agency. Are they four different people in your systems? Or one person with a relationship to your business?
This matters for three reasons. First, you can’t see patterns when data is fragmented — that brilliant contractor who solved your technical problem last quarter gets brought in six months later at a higher rate because nobody realised you already had a relationship. Second, compliance doesn’t care about your org chart. IR35 looks at the actual working relationship. Employment status legislation looks at the whole picture. If your data is split across five systems by contract type, you can’t even run the analysis. Third, you’re leaving commercial value on the table. People who know your business are more productive, but you’re only capturing that value for permanent employees because you don’t track the lifecycle for anyone else.
The fix isn’t “buy a new system.” It’s usually “connect what you have and fill the gaps.” Create a unique identifier that follows people across systems. Pick one source of truth for person-level data. Stop making it worse by adding more fragmented systems.
You need this building block now if you can’t answer the question “has this person worked for us before, in any capacity?” without checking multiple systems manually.
Principle 5: Total Cost Management
Stop optimising the wrong number
You negotiated a 3% rate reduction with your largest supplier. Saved £200K on paper. Meanwhile, the quality of candidates dropped, your hiring managers are spending twice as long interviewing unsuitable people, and three critical projects are delayed because you can’t find the right skills.
Net cost? Probably more than the saving. But nobody’s measuring that.
This is what happens when you optimise for unit rates instead of total cost. Procurement loves unit rates because they’re clean, measurable, and easy to put in a spreadsheet. But the actual cost of getting work done includes how long it took to find someone suitable, how productive they were in role, whether work needed to be redone, compliance risk, and the opportunity cost of not having better options. None of that shows up in a day rate.
The problem runs deeper than measurement. Your incentive structures fight each other. Procurement gets rewarded for lower rates. Finance gets rewarded for reducing headcount. HR gets rewarded for filling roles quickly. Operations gets rewarded for hitting project deadlines. Each one makes locally optimal decisions that increase total cost. Procurement pushes for lower rates that reduce quality. Finance pushes to convert permanent roles to contractors at higher cost. HR fills roles with whoever’s available fastest. Operations brings in emergency contractors at premium rates because earlier constraints created delays.
And this gets worse when you factor in compliance risk. That cheaper contractor working through an umbrella company cutting corners on minimum wage compliance? You’re now exposed to joint and several liability. The potential cost isn’t just back-paying wages. It’s reputational damage, audit costs, and the management time dealing with the mess.
Total cost management means giving someone accountability for the actual cost of getting work done — not just their departmental budget. That’s probably your workforce orchestrator. Because you can’t manage what you don’t measure, and if you’re only measuring unit rates, you’re not measuring the cost that actually matters.
You need this building block now if you’re making budget decisions based on supplier rate cards without total cost analysis, or if “savings” is your primary workforce metric.
Principle 6: Holistic Supplier Management
Your suppliers don’t work in silos. Why do you manage them that way?
Your IT team has preferred suppliers for contractors. Marketing has their own list. Operations has separate agency relationships. Finance uses different providers for project work. Each team negotiates separately, manages performance separately, and probably pays different rates for similar skills.
Meanwhile, three of these “different” suppliers are owned by the same parent company. Two agencies are sending you the same contractors through different channels. And nobody’s got a complete view of what you’re spending or what you’re getting.
This isn’t supplier management. It’s supplier chaos.
When every team negotiates separately, you have no leverage — suppliers see your total enterprise spend but each relationship owner only sees their slice. You can’t spot patterns — that supplier causing problems in IT is probably causing the same problems in Operations, but nobody’s connecting the dots. You’re paying multiple times for the same things — onboarding, background checks, compliance audits, all duplicated across teams. And you’re missing strategic opportunities because you’ll never know if consolidation or partnership models would work better when you’re managing suppliers in category silos.
This is also a compliance issue. Joint and several liability for umbrella company workers applies across your entire organisation, not just the team that engaged the supplier. Modern slavery statements need to cover your whole supply chain. IR35 determinations need to be consistent — if IT says a role is outside IR35 and Finance says a similar role is inside, that’s exactly the inconsistency HMRC looks for.
Holistic supplier management doesn’t mean centralising every relationship. Local teams still manage day-to-day. But someone needs to see the whole picture — who you’re using, where, what you’re paying, how they’re performing, and what risks they’re introducing. Category specialists own relationships. Your workforce orchestrator owns the enterprise-wide strategy. Neither works without the other.
You need this building block now if you can’t produce a single list of all the suppliers providing you with workforce across the organisation, or if different teams are paying different rates for similar skills from the same suppliers.
Connecting the Dots
These three principles share a common thread: stop managing your extended workforce in the same silos your org chart creates. Your workforce doesn’t operate that way. Your suppliers don’t operate that way. Your compliance obligations certainly don’t operate that way.
Total workforce perspective means seeing people, not contract types. Total cost management means measuring real business impact, not just unit rates. Holistic supplier management means seeing your whole supplier ecosystem, not just the bit your team uses.
None of these require massive transformation programmes. They all start with visibility — seeing what you actually have before trying to optimise it.
Next week we’ll cover the final four principles: the building blocks that protect your organisation and keep governance evolving as your business changes.
RedWizard – Operating at the heart of the workforce ecosystem.
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.