are you prepared for a new flexible world of work?

June 15, 2015

the rise of the gig worker requires you to rethink your talent engagement strategy

As an active observer and participant in the talent market for some time, I’ve witnessed many remarkable trends over the years – some caused by economic cycles and others the result of long-term structural shifts. Some of these changes are short-lived, while others are here to stay. One of the most noteworthy developments today is the rapid expansion of the flexible workforce, a truly transformational event that will affect how employers plan for and build their future workforce.

Widespread market data shows the flexible workforce is growing in every region as the global economic recovery continues to gain pace. One study conducted by software maker Intuit predicted that by 2020, 40% of the US workforce will be contingent. Another study conducted by MBO Partners predicted that 1 out of 2 US workers will either become independent or spend part of their day as self-employed professionals. Professor Patricia Leighton of the University South Wales reported that since 2004, the number of independent professionals has risen 45% to 8.9 million in the EU labor market. And Elance, the online freelance labor market site, cites Asia Pacific countries such as India, Pakistan, Philippines, and China among the 10 fastest-growing freelance markets in the world. Welcome to the “gig economy,” where employers’ desire to drive cost savings and efficiencies through temporary labor usage has created a new breed of worker with the desire to maintain an optimal balance of work and life.

With improving economies around the world, flexible labor is becoming increasingly difficult to acquire. According to the HR portal TLNT, time-to-hire in the US is at its longest since 2000. Citing that the world’s largest economy now employs a record number of temp agency workers, the site also noted all-time highs in time-to-hire for sectors such as manufacturing, construction, and financial services. Today employers are facing a greater challenge and increased competition in attracting the best candidates for contingent roles.

The rise of the gig worker is both a blessing and a challenge for employers. On one hand, many gig workers possess critical skills in IT, technical, marketing and other professional fields and can put them to work quickly for the hiring organization. They increasingly serve as an important talent pool for recruiters also. However, as their ranks swell, they add complexity, increase risk, and demand more management attention from their employers. 

So what can you expect in the gig economy, and how can you better prepare for it? As more of your workforce becomes flexible, how do you minimize the risk and maximize the return? Is there a competitive advantage to be gained? To make the best of the changing workforce, consider the following when developing your talent engagement strategy:

  • Agility comes from clarity. Using flexible labor to complement your permanent workforce is a great way to add agility and capability to your organization. However, determining the optimal mix of flexible and permanent labor to achieve the best business outcome requires a clear understanding of your organizational strategy and resourcing needs. Does the hiring manager in Hong Kong really need a permanent accountant to address seasonal projects? Why is the office in Rotterdam employing three statement of work contractors when one full-time employee can achieve the same deliverables?
  • Stress quality, not quantity. Quality of labor is a nebulous metric, but you need to focus on hiring the best temp talent. Of course you and your suppliers are always judged by how many and how quickly you can fill roles, but if the workers don’t produce or, worse yet, increase risk, then your organization is worse off.
  • Prioritize engagement. Like their permanent counterpart, the gig worker requires you to engage them on many levels to optimize performance. Just as a company needs to attract and recruit permanent workers through an effective employer brand program, it needs to make a similar effort with contingent employees, especially as workers with highly specialized skills have multiple employment choices. That’s why employer branding should be developed holistically for an organization’s entire workforce and built to compete in the market for the best contingent talent. Onboarding also becomes even more critical as you look to gain productivity gains from a flexible workforce even more quickly. Remembering all the time that today’s temporary worker maybe tomorrow’s permanent hire.
  • Adhere to compliant practices. With greater agility also comes a greater potential for non-compliant practices if not managed carefully. For instance, local authorities in Europe and the US have stepped up efforts to reign in abuse of contractor usage. The employment of “permatemp” workers – temporary employees employed by the same company for sometimes years – is beginning to attract the attention of labor organizations and regulators. MSP programs have helped many companies gain the visibility and alignment they need to ensure hiring managers acquire the best talent but do so compliantly. Similarly, services that help properly classify contractors are also an excellent way to minimize risk.

Are you prepared?

As labor markets around the world continue to embrace the flexible workforce, you will need to assess your own talent strategies to determine whether your organization is well-prepared for this structural change. Do you have the internal expertise to operate in this new climate, or should you look externally for the support to compete for the best talent? Once you’ve answered this question, you can confidently deliver the talent and resources your business leaders need to drive growth.

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