3 Contingent Workforce Priorities Leaders Can’t Ignore
We are in a pandemic economy, and the importance of talent has never been greater. Organizations around the world not only need to determine the critical talent they need to survive; they are also looking for a path to grow. They need the people – at all skill levels and capabilities — who can deliver the outcomes to push forward in the post-pandemic future.
Looking to the Gig Economy and Beyond
If your company is like many businesses around the world, the skills you seek may increasingly come in the form of non-employee talent: a contingent worker, contractor, freelancer, or outsourced service. The opportunity to achieve business value through the extended workforce is great, the flexibility is essential, and the scope of available skills available is significant.
Across all industries, organizations are finding that engaging flexible talent today is much different than it was just 10 years ago and applying yesterday’s thinking to current conditions is risky at best. The right approach to securing workers — with the speed, cost, and quality needed to deliver results — will play a large role in business survival and success moving forward.
To address the demands of a complex landscape and leverage the flexible workforce on today’s terms, organizations will need to understand the dynamics at play as they refine their approach to talent engagement. To help guide the conversation, we have identified three areas of challenge and actions companies can take to reposition their contingent workforce strategy for a competitive advantage:
- Economic Issues: Rethink what talent means and how it delivers value to the business
- A Changing Landscape: Meet the contingent workforce where it is today
- Emerging Priorities: Stop chasing process fixes and start building workforce readiness
1. Rethink Workforce Strategy and How it Delivers Value to the Business
The current challenges facing workforce planners are complex. Whether you are thinking about workers from the perspective of HR, a business line, Procurement, or the C-suite, the pressures of business disruption loom large.
The issues facing organizations stem from uncertainty. No one knows for sure what the next year will bring. Budgets are restricted. Business futures are uncertain. Processes of engagement need to be reinvented for flexibility and remote work. Given the pressures, there is no room for error when it comes to engaging all forms of workers. The timing has to be right. The cost must be right, and the outcome has to be on target.
These challenges have pushed companies to rethink what talent means to them and how effective management of that talent delivers value to the organization. Consider the following implications that may influence your workforce plans for the near- and long-term future.
Expanded Scope: Traditional hiring no longer supports an entire talent strategy.
Many companies are reconsidering whether acquiring new employees to fill in talent needs is the best path forward. A fixed job role with a long list of responsibilities and permanent addition to the payroll is not always the answer.
The flexible, non-employee worker provides a solution to many of the challenges related to today’s uncertainty. Flexible resources have the skills companies need. They can be brought to bear to solve immediate demands. They can be scaled back as conditions evolve. As a result, contingent workers are no longer a nice-to-have option; they are a core necessity for doing business.
- 32 percent of companies are replacing employees with contingent workers as a cost-saving measure.
- A recent survey of executives on post-pandemic plans found that CEOs rank increased use of contract and gig workers as part of their top five priorities.
Different Landscape: The playing field to compete for critical skills has changed.
Compared to demand, the supply of workers in some fields remains low. The business disruption of COVID-19 put many people out of work, but securing critical talent such as nurses, programmers, engineers, or financial professionals remains a challenge.
Traditional boundaries do not always apply when competing for workers. In some industries, such as in healthcare, the need for workers varies by skill. In other fields, such as IT, the demand for talent spans multiple sectors for workers with transferable skills.In the past, hiring decision-makers could rely on rigorous requirements, years of industry experience, and college degrees to point their way to the right talent. Today, those same approaches may stand between them and the workers they need. Many times, those workers are qualified people who do not apply because they do not meet a listed job requirement that is not necessarily relevant to the work.
- Even prior to COVID-19, the emphasis on years of experience began to change, as only half (53 percent) of hiring managers surveyed insisted candidates met requirements for years of experience.
Renewed Values: Workforce well-being and inclusiveness become business priorities.
For decades, companies have promoted the value of wellness among employees, but their real level of commitment to the idea varied greatly. Unconscious bias and associated ethnic and gender discrimination, as well as traditional demands such as inflexible hours and mandatory physical office attendance can diminish the worker experience.
In the shuffle of layoffs, reorganizations, and remote work following the pandemic, both well-being and inclusivity became priorities. Stress about health and job security, along with potential 24-hour work cycles due to remote arrangements, forced organizations to become more intentional about talent well-being. Availability of mental health resources, flexibility for family and childcare, and a focus on communication are now widely practiced strategies for maintaining engagement and productivity.
Along with well-being, the cultural shift toward inclusiveness gained traction. Organizations now need to ensure that isolated workers do not “fall through the cracks” in a physically isolated virtual communications environment. Likewise, a widespread social and cultural shift toward diversity and social justice has compelled organizations to become more active in building inclusion in the workforce and in making a presence in the community.
- 7 of 10 surveyed business leaders and employees believe the COVID-19 crisis will accelerate gender equity in the workplace.
- Another survey found that 65 percent of employers cite employee well-being as a priority, compared to only 37 percent prior to the pandemic.
The Takeaway: Question Everything You Assumed About Gig Economy and Contingent Workforce Practices
To address the changing priorities of the workforce, companies have begun to rethink their assumptions about attracting, engaging, and retaining flexible talent in a post-pandemic business environment.
Ask what hiring really means: That next hire should just as easily be a flexible worker as a traditional employee, but the mindset among all stakeholders must be open to all options. Start the conversation to bring HR, Procurement, line of business managers, and leadership into the same mission.
Reshape requirements: Rigorous job requirements and a daunting screening process will not sustain a strategy for securing either employees or flexible workers with in-demand skills. Focus instead on essential must-haves that allow you to cast a wide net for workers with transferable skills outside your industry.
Look for actions, not words, to define culture: Inclusiveness and worker well-being are not principles; they are conditions built on action. Show how the organization is taking action today, how it is influencing the workplace and community, and how others are embracing the organization as a force for social good. The worker and the community are often the best, most authentic voices for promoting a company’s reputation in the eyes of potential, future talent.
2. Meet the Contingent Workforce Where it is Today
Whether they recognize it or not, organizations already find themselves adjusting to a new world of work and a new set of values that the extended workforce brings to the table. It is a world of work that evolved over two decades of steadily improving technologies and practices.How do companies connect today’s pressures on business to the changes they need to make to their talent strategy? The answer requires an understanding of the growth and trajectory of the extended workforce and, most importantly, how that direction will position the relationship between organizations and their workers. Consider the following trends that underscore the new realities of non-employee talent.
Evolution in the 1990s and 2000s: Talent practices expanded companies’ access to all worker types.
The evolving practices of the last few decades expanded employers’ reach to the entire supply of available talent. Companies improved their ability to leverage the right person, at the right cost, for the right job – regardless of work style – to achieve the outcomes they need. And organizations slowly adopted those practices as they competed for a short supply of talent with critical skills, boosting their reach to the non-employee workforce.
Growth from 2008 to the present: Non-employee workers expand their presence in the talent supply.
The portion of the labor supply referred to as the contingent workforce grew and changed following the 2008 recession. At the time, that growth stemmed from necessity on the part of workers and companies’ unwillingness to rehire permanent employees. While necessity is still a factor, many workers today also take on contingent work as a matter of choice, and companies may find themselves competing for flexible talent that was more readily available in the past.
Today, the term “contingent worker” still includes traditional temporary labor, but it also typically refers to a broader spectrum of workers supplied through a staffing partner, or who may be freelancers or independent contractors.
Disruption in 2020: The pandemic forced companies to revisit talent costs, quality, and outcomes.
Around the world, the corona virus spread brought with it a sudden shift in business conditions. Disruption shattered the physical connection between workers and offices as remote work became the norm. Loss of business, layoffs, and furloughs magnified the importance of costs and results for every activity.
Today, companies place a premium on doing the absolute best work and achieving very specific outcomes with the most effective use of resources and budget. At the same time, many are looking to the future and new ways to achieve growth, including new markets, changes to products, services, and pricing, all of which will have an impact on the work to be done, the workers needed to do it, and the strategy for delivering results.
- 63 percent of surveyed CFOs cited changes to products and services offerings as the most pressing need for growth following the pandemic.
Transformation now: Pressures to survive spur a transformation in how companies approach talent.
As the pandemic unfolds, the gradual evolution of business and talent over the past decade has accelerated and turned into a rapid transformation. The leading-edge practices of remote engagement, reliance on contractors, and advanced data and analytics solutions are no longer nice-to-have ideals.
Best practices are now immediate necessities. Even when the pandemic subsides, there will be no return to the past. Many of the approaches adopted during the crisis will permanently reshape the workplace – and the workforce – of the future.
The Takeaway: Don’t Let Temp-Think Cut Off Your Talent Supply
In the next-normal world of business, talent leaders will act on new assumptions about contingent workforce values that were not true in the past. Keys to success include a clear understanding of the major issues at play and a willingness to adjust to changing demands.
Leverage flexible workers for more than stop-gap solutions to talent needs: Flexible talent includes more than on-demand workers to fill open low skill, high-volume requisitions. With many hard-to-find skills more readily available through contract labor than employee talent, organizations cannot afford to limit their use to traditional temp work. Look to the contingent workforce as a potential source of talent for all types of roles and skill levels.
Look at non-employee talent as more than contingent workers and agencies: The contingent workforce encompasses the entire universe of non-employee talent, including freelancers, independent contractors, and services. Consider all options when a talent need is identified and then determine the best fit based on the ability to deliver the right outcomes.
Rethink what qualified means: Traditional notions of jobs and job requirements are also evolving, as organizations think more in terms of outcomes than in responsibilities. First, skills evolve quickly, and in many cases, the relevance of a particular skill may only last several years. Second, traits such as flexibility, aptitude for learning, and interpersonal skills may take precedence in projects where changing demands are expected.
Rethink “qualified” as “having potential and able to learn quickly,” and then provide the resources to enable the worker to do just that. The result will be a more agile workforce, and the ability to act quickly on changing business demands. The approach applies to contingent workforce suppliers, with a great example from Allegis Group’s CareerCircle organization, providing assessment, support, and learning resources to help workers identify areas of aptitude and develop relevant skills.
Focus on cultivating talent readiness: Thanks to the uncertain dynamics of business today, three- and five-year strategic plans are giving way to quarterly strategies. Organizations that shift quickly to meet changing talent demands enjoy a competitive advantage over those who cannot. That advantage is what defines talent readiness. It not only refers to the ability to access new people with new skills. It also includes the ability to respond quickly to everything from changing work conditions (a shift to remote work), to regulatory needs (auditing workers for proper employee/contractor classification), and performance demands (measuring success and outcomes).
3. Stop Chasing Process Fixes and Start Building Workforce Readiness
When it comes to engaging talent and managing contingent workforce spend, companies have historically looked for ways of evolving processes to deliver bottom-line value. The rise of the managed service provider (MSP) solution grew out of such a desire for process improvement.
By placing the engagement of all contingent workforce suppliers and their associated budgets under a single umbrella of spend management, an MSP can enable consistent processes and pricing that translate into cost savings. But today, process improvement and cost-savings are only part of the story.When business survival and growth are at stake, every investment in people and resources must deliver on the outcomes an organization needs to achieve. An advanced MSP approach, provided by a forward-thinking solutions partner, is expected to connect better processes and improved business outcomes. Those outcomes still include cost-savings, but they also include enhanced talent readiness. Keys to success include access to talent, freedom from compliance issues, visibility to data and processes, and overall preparedness to align talent to new business needs.
To realize the full potential of an advanced contingent workforce strategy, look at the evolution of practices over the last few decades. Once understanding the approaches and reasons for applying them, Procurement and HR planners can implement the right strategy to deliver results with predictable costs and reliable performance.
The persistent past: Ad-hoc, siloed workforce engagement remains a temptation.
Hiring workers to address tactical needs will always be an important part of business operations. In the past, hiring managers directly engaged their contingent workforce suppliers at the department- or line-of-business level. With little connection to other managers or departments making similar engagements, managers paid widely varying rates for people to do the same work.
As companies grew sophisticated in directing their contingent workforce spend through centralized strategies, managers continued to find ways of securing workers on their own. The temptation continues today, as managers naturally seek familiar paths to get work done, quickly, and in some cases, budget the spend outside the view of Procurement oversight. An effective workforce strategy must provide the means to keep managers on track and avoid rogue spend, delivering the same convenience along with improvements in speed, cost, and results.
Advances in processes: Cost-driven strategies focus on enterprise savings.
To better manage their growing network of contingent workforce suppliers, companies engaged MSPs to implement programs that standardized bill rates for roles and skills and provided a governance structure for accountability and outcomes.
The traditional MSP model supported by vendor management system (VMS) technology continues to be viewed as a means for cost-savings and a resource for the enterprise Procurement function to manage contingent workforce spend.
Moving forward, the use of flexible workers, regardless of cost, must contribute to an organization’s ability to survive and adapt to changing, sometimes unforeseen, demands on the business. With that in mind, leading MSP solutions and their customers bring workforce readiness and agility into the equation, giving organizations the capability to adjust rapidly to business demands.
A next-generation focus: Companies look for a complete strategy for talent readiness.
The onset of COVID-19 and its associated business disruption amplified the call among companies to become more flexible in their talent strategies and do so in a way that is natural to the way work gets done. Managers should not be limited to their own contingent supplier network or to their channels for freelancers, services providers, or other sources for the talent they need.
The next-generation approach makes all channels to talent available through a common system and program. Organizations can access the right resource, not simply the resource that is available in their view. Advances in technology help make this level of visibility into the contingent workforce possible, as innovations in data science and artificial intelligence (AI) applications navigate all talent sources through one field of view.
Takeaway: Turn the Contingent Workforce into a Core Talent Readiness Function
Companies are looking at a holistic approach to the contingent workforce as the strategy that will carry them forward in a world where both predictable trends and unpredictable events influence the work to be done.
Reach beyond isolated, incremental improvements: Transformation is the driving force in a contingent workforce strategy. No improvement effort, whether related to technology, organizational structure, processes, or activity, is an end unto itself. Bring together disparate sources of data into one system, leverage expert guidance to identify resources, and rethink how work gets done. These are the actions that will carry value beyond tactical cost-savings and isolated outcomes.
Look to an MSP partner to lead every project, experience, and activity forward toward one critical goal: the ability to access the right resource, for the right work, quickly and cost-effectively. That is talent readiness, and it will separate many successful organizations from those that fall behind in the post-pandemic economy.
Make the hiring manager happy: The task of transforming workforce engagement does not sit with the manager who needs the talent. That person’s job is to execute the talent acquisition process and make sure the project is delivered on time and on budget. Along the way, that person should have no obstacles between determining the work and securing the workers.
An effective talent engagement function accommodates the complexity of today’s environment, including the multiple channels and worker types, but it does not mire the manager in the process. A human expert, acting as a talent advisor, provides the contact point to create a simplified experience and guide the solution toward options that may not have been considered before.
Can an outsourced service deliver results more reliably than a collection of individual contingent workers? Is a freelancer better for the job? Or, should the work be divided differently into tasks that spread to more specialized talent to execute? The talent advisor can provide the right answers for a practical approach, simply and clearly, based on data about the skills required and the available solutions.
Looking ahead, advanced technology and processes will define the next normal in smart engagement, but human expertise will be the central driver of adoption, user satisfaction, and results.
Give the candidate and contingent worker a reason to commit: Engagement and retention of flexible talent are just as important as with traditional employees. For example, consider why a prospective job applicant should choose your organization as a place to work? Now, adjust the same question to a flexible candidate: why should someone take the assignment you are offering instead of others that may be on the table?
The “assignment value proposition” is the reason contractors will choose your organization for their next gig. Are you giving them a challenge that will expand their abilities? Do you have a great team or support for skills development and access to other opportunities within your company? Do your contingent workforce suppliers provide the right opportunities to attract talent with a commitment to candidate care? The answers make a difference in creating better access to the talent supply and adjusting quickly to new demands for skills and resources.
Give Procurement, HR, and leadership the tools to win: The most sophisticated technology and best practices are only as good as the results they deliver to the organization. And those outcomes depend on the key stakeholders who can act as champions to gain buy-in and adoption for a contingent workforce strategy. What’s in it for these stakeholders? The answer is simple: the opportunity to achieve a win. For Procurement, a win is the opportunity to provide real numbers on cost-savings or their contribution to business value. It is also the ability to provide strategic impact beyond the traditional expectations as budget gatekeepers. The right contingent workforce function arms Procurement with the means to document key results such as the delivery of services, expansion of resource management, speed of response to a business need, and compliance with evolving regulations.
For HR, a holistic contingent workforce strategy can align best practices, such as employer brand, candidate experience, and worker engagement, with a previously unconnected contingent workforce population.
For leadership, numbers matter. Are projects being brought to completion on time and on budget? Are initiatives staying on track with the people needed to deliver the work? Does the company have the right headcount, cost-strategy, and skills to support strategic goals?
The key to creating stakeholder champions is communication, data, and results. An effective strategy supported by an advanced MSP partnership provides the right tools for all involved decision-makers to achieve the successes they seek in each of their roles.
Moving from Contingent Workforce Management to Holistic Extended Workforce Strategy
Aligning technology, resources, and talent supply – and humanizing a complex engagement process to make it user-friendly – is no easy task. But that’s what organizations will need to do as they engage the flexible workforce to its full potential.
Even today, most MSP capabilities cover different aspects of contingent workforce best practices yet fall short of putting all elements together to deliver true workforce readiness. An example of a new generation of MSP that does fill the bill is an approach embraced by Allegis Global Solutions.
This holistic approach brings all extended workforce categories into a single management process, encompassing freelancers, workforce suppliers, contractors, and outsourced services. The framework is supported by a technology platform that brings data from all sources together for one view of the resource supply. A key to the success of this model is a central advisor that provides the expertise to manage the complexity and help companies drive informed, decisive strategies for applying the right resource to achieve the desired outcome.
This solution provides the capabilities to take on every engagement and management challenge and bring the promise of the contingent workforce to life. No two organizations are the same, and so the journey toward a complete solution depends on a provider that gives a company access to all the tools available to achieve success.
For organizations seeking a path toward better workforce capabilities in the post-pandemic business environment, rethinking talent strategy, meeting the workforce on its own terms, and building talent readiness for the future, are all priorities that cannot be ignored. With the right contingent workforce strategy, companies now have the opportunity to meet those priorities directly and position themselves to achieve a true competitive advantage.