Call it the gig economy, pools of contractors, or a contingent workforce — the labor market is in significant flux.
Indeed, the U.S. alone counts more than 56 million Americans as freelance workers.
Recent research lists the contingent workforce as one of the most impactful disruptors in the contemporary economy, as researchers Joseph B. Fuller, Judith K. Wallenstein, Manjari Raman, and Alice de Chalendar reveal in the Harvard Business Review.
As with any disruption, this presents new opportunities for organizations — but those opportunities aren’t without their challenges. Below, we explore the pros and cons that contingent workers present to hiring teams and how best to manage this important group of talent.
The 3 Biggest Challenges Hiring Teams Face
With any new hiring paradigm, there will be challenges. It’s best for talent management teams to anticipate these challenges so they can be better prepared to meet them head on.
1. Getting Everyone on Board With Management Technologies
According to research from Bersin by Deloitte, 50 percent of employers lack any consistent processes to manage contingent workers’ performance. Matt Shannon, senior research analyst at Bersin, says HR professionals also struggle to operate the tools designed to track and manage vendor performance. That’s not to say the tools are inadequate. Rather, they haven’t been trained to use them.
Even with the right technology in place, however, organizations increase their risk of data loss when hiring contingent workers or outsourcing project work. Andra Picincu at the Houston Chronicle gives the example of an outsourced customer service or payroll function. That person is essentially an outsider and could use that sensitive data irresponsibly or even maliciously. The result could be fines for the business or lawsuits from affected parties.
2. Job Insecurity
There are many freelancers who have chosen this form of employment and feel empowered. But not everyone enjoys this status, Willamette University’s Lisbeth Claus writes in Business Research Quarterly. Some feel overwhelmed by the need to reinvent themselves to stay relevant and remain constantly plugged in so they don’t lose out on job opportunities.
One way to solve this problem — and motivate workers more generally — is to improve engagement of all employees within the workforce ecosystem, argue Dimple Agarwal, Josh Bersin, Gaurav Lahiri, Jeff Schwartz, and Erica Volini at Deloitte Insights.
Engagement can be improved by working with IT and legal departments to set up secure communication channels, provide support and training, and agree to performance goals for these contingent workers.
The team at Deloitte also advises HR teams to onboard contingent workers and provide them with development opportunities. A lack of appropriate onboarding could be attributed to employers’ reluctance to treat contingent workers as full-time employers. But the researchers say this shows a lack of understanding of the changing workforce.
3. Misaligned Strategies Between Procurement and HR
Depending on the nature of the work, contingent employees are often tied to project work. This means that HR teams and their procurement colleagues need to align their strategies for a more complete approach to workforce management, says Tom Bissenden, global supply manager at mining company Anglo American.
Interdepartmental collaboration is key and, together, they should devise staffing solutions. Of course, HR will need to lead this collective strategy, but Bissenden notes that the workforce journey is about commerce and people. HR takes care of the latter while procurement adds the commercial element.
For those with the resources or particular needs, Bissenden says some organizations could be better served by creating a separate function with the specific purpose of managing the contingent workforce management. This approach would require that team to maintain independence from potentially competing operational demands of HR and procurement.
5 Opportunities Hiring Teams Can Seize
There are many benefits to staffing an organization with a contingent workforce. Here are five opportunities hiring managers can realize with this model of hiring.
1. Gig Economy Workers Are Always Upskilling
Upskilling and reskilling are fast becoming essential to career development for most employees, but it’s even more so for freelancers. They need to be learning constantly, not only to stay competitive in a tight job market but to broaden their potential employer bases, too, says Peter Swaniker, founder and CEO at employee scheduling software developer Ximble.
Another benefit to talent acquisition leaders is they know these upskilled gig workers are also motivated. After all, there’s no boss telling them to take a course. They’re driving their own development, Swaniker adds.
2. Contingent Workers Bring Fresh Perspectives
A dynamic workforce in which full-time employees and contract counterparts interact can lead to new ways of thinking. This fluidity can be a catalyst for organizations to adopt new models of working, argues Nisha Verma, chief human capital officer at Apparel Group.
Verma says this was one of the reasons Welspun, where she was previously CHRO, pursued contingent workers. It formed part of a hiring strategy. Additionally, contingent workers are a boon for hiring managers during moments of rapid business growth.
3. Contractors Diversify the Workforce
Flexible work grants organizations access to a larger pool of workers.
From parents with caring commitments to freelancers who enjoy not having a 9-to-5, these contingent workers can diversify a company’s workforce, explains Jason Wingard, dean and professor of the School of Professional Studies at Columbia University.
4. New Worker Models Enable Flexibility
Flexibility, rather aptly, comes in many forms.
Take PwC’s Flexible Talent Network. Siân Harrington at HR Magazine says the network, which attracted more than 2,000 people in the first two weeks post-launch, enables workers to join the firm on terms that suit them.
They join the network, list their skills, and PwC matches them to relevant projects. So, they are part of the organization — eligible for sick pay, holiday pay, and a pension — but work according to their own schedules.
PwC Chief People Officer Laura Hinton says the network attracts people to the organization who might not have applied for a role based on other commitments. Flexible employment, then, is mutually beneficial to employer and contractor. Hinton suggests this trend is only going to grow in popularity.
5. Contingent Workers Empower Startups
For established organizations with big budgets, contingent workers provide a great deal of flexibility and scalability. But for startups with fewer resources, freelancers enable them to staff their organization in manageable increments.
Take the example of construction startup Modern Cube Modular Homes, which builds homes from recycled shipping containers and high-rise materials. “There’s no way a startup company like us could afford to bring on a huge full-time crew,” says founder Baron Christopher Hanson. “What we’ve been able to do is bring on those experts on a part-time or an as-needed basis to work on whatever projects we’re building.”
Best Practice With Gig Economy Workers
The job market is competitive, and the growing number of workers supplying the contingent workforce are in high demand.
Organizations would be wise to treat them with the same level of respect they afford to permanent employees. That means good pay won’t be enough on its own, says Rhett Power, head coach at Power Coaching and Consulting. Within the particular regulatory limitations a company faces, Power recommends extending feasible benefits to non-permanent workers.
Take the examples of Uber and Etsy, both of which have partnered with Stride Health to help contractors afford health insurance. The freelancers still have to pay for their health insurance, but Uber and Etsy provide them with access to sound advice.
The workforce is changing, and as employers search for in-demand skills in a labor market that wants greater flexibility, they will need to embrace employees who seek alternative working arrangements.
Indeed, tapping into the contingent workforce presents organizations with many benefits — and a few challenges. But careful planning and coordinated strategy will allow talent acquisition and management teams to get the best from their people.
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