During the past 20 years I have been involved in a broad spectrum of Global Managed Service Provider (MSP) programs and in that time I have witnessed many changes in the way that organisations utilise contingent workers.
I have also watched the profile of the contingent market evolve [incorporating agency temporary workers, independent contractors, Gig workers, freelancers and statement of work oriented service providers] as organisations struggle to cope with rising costs of hire, regulatory restrictions and the need for a scalable and more agile workforce. These days a contingent worker essentially means any non-permanent worker who is hired on an ‘on-demand basis’.
Companies are fast realizing that their approach to talent management could be a key competitive differentiator and that to maximise this advantage they need to continually adapt to workforce shifts and adopt a more flexible talent strategy and work environment. But contingent work isn’t only advantageous to businesses, the workers themselves are seeing greater benefits through improvements in work/life balance, a wider variety and choice of assignment and remote and mobile opportunities.
The popularity of contingent work is set to continue to rise and it is predicted that by 2020 - non-permanent workers will make up 40 percent of the average company’s total workforce.
But what does this mean for the way that organisations manage and meet their needs?
Well there is a growing amount of change here too as the routes for attracting and engaging contingent workers continue to be expanded and innovated. Whilst a greater degree of choice can undoubtedly lead to better value – there are some interesting questions emerging over where ownership and management responsibility for contingent worker supply chains should lie.
For some organizations this category of labor sits firmly with procurement, while for others it is the responsibility of HR. In my experience of working on large scale contingent workforce programs in the past, I have found it extremely rare to interface with any stakeholders outside of the procurement function. It has been typical of organizations that have already moved to an outsourced arrangement for procurement to sponsor and own the initiative, hence the ‘purchase’ of a third party program. However I am definitely now starting to see a shift in stakeholder ownership, caused I believe by;
The changing world of work
Long gone are the days of working for one employer for an entire career. Talent is now taking control and ownership of how they work, when they work, what they work on, and if they want to engage with certain organisations. The concept of the ‘gig-economy’ is being pushed globally and the millennial workforce is using that to its advantage. Organisations need to be able to adapt to this change and reshape how work is completed across their business to allow for a more agile workforce.
With talent now being engaged in a variety of ways and not necessarily through the traditional, full-time worker route, the attraction of talent is key.
How an organisation attracts talent, what the workers experience is or how the company markets themselves is traditionally a role that HR would own.
With procurement taking the lead in managing the contingent workforce the core focus has tended to be that the worker is a ‘cost’ rather a generator of value. In more recent years however, as the ‘war for talent’ has become more prevalent, the program priorities have started to shift towards a greater access to skills, improved quality of workers, and mitigation of risk.
As we move into the next evolution of the ‘changing world of work’ we should expect the business drivers to continue to shift accordingly. A bigger focus on the ‘talent’, employer brand, agility and innovation as well as total talent management solutions will take the lead. Thus causing a need for more integrated departmental ownership between procurement, HR and operations.
It is a long established principle of the staffing industry that whilst organizations have visibility and structured management of their permanent workforce, the same cannot be said across their non-permanent headcount. As governments around the world pay increased attention to the growing Gig-economy, Freelance and Independent Contractor landscape, the complexities and regulations will become inevitably tighter. Often times it is now the end-user that owns the risks associated with misclassification of worker – meaning that it is now vital for organizations to get a better handle on their total workforce and adopt a comprehensive compliance regime.
Legal issues arising from the misclassification of workers (usually after the fact) already tend to become the concern of departments outside of procurement (HR, Legal..), however as the use of contingent talent increases there is clearly a need for up-front HR involvement to help end-users mitigate these risks.
So yes…the centre of gravity is moving towards HR
As the above factors take hold and organisational attention moves from cost of purchase to talent attraction I fully expect to see a wide-ranging shift in ownership. The labor category of old has evolved, and the talent of today is just not something that can be bulk purchased.
Resourcing Managers, Talent Executives and Talent Acquisition Leaders are all positions that are fast becoming the norm. Advanced organizations see the need for the combination of procurement and HR attributes coupled with a new ‘People’ focus.
Interestingly the SIA recently stated that they are seeing an increase in HR, or Talent orientated roles attend their certification course for contingent workforce management. With Jon Osborne, vice president of strategic research saying “As the size of the contingent workforce has been increasing, there has been a professionalization of that job,” Osborne says. “It’s no longer just a side issue for HR.”
Further evidence of this shift came at the recent CWS (Contingent Workforce Solutions) conference in Europe where 171 Companies where in attendance. Of the 220 attendees a huge 30% of those had a HR or Talent/Resourcing focused role, 78% of which were first time attendees to the typically procurement focused event.
I think this is a welcome development in the marketplace but it will require HR professionals to adopt a broader scope of responsibility than they are used to. In a future post I shall outline the mentality and skills required for success. For more information about the broader challenges in managing an end to end talent supply chain please click here.