In my previous blog, I outlined the rise of the on-demand economy, the increasing use of contract staff, and the potential implications on the workforce. In this blog, I’d like to explain the opportunities this and other labour trends present for HR leaders.
So just to set the scene, let’s remind ourselves of the challenges: First, we know the workforce is changing globally. New business models, such as the on-demand economy, combined with a new generation joining the labour force (think more Millennial employees with more diversity, evolving definitions of work and a desire for greater flexibility) are reshaping the workforce, making workforce management more strategic and more imperative than ever before in the history of the HR profession.
Second, we know that because of the disjointed and limited nature of most HR systems, HR leaders lack the information, insights and in some instances, the internal status, to be truly strategic, which has a knock-on effect on overall business performance, leadership skills, and corporate culture.
But it is the rise of non-payroll positions – in other words, contract staff and contingent workers – that is forcing the biggest change on companies and their workforce strategies. In fact, the recent Oxford Economics survey, Workforce 2020, found that forty two per cent of companies say non-payroll positions are forcing them to change their workforce strategies.
Whilst contractors provide an elastic ready made workforce for offloading non-strategic tasks, and freeing up your core workforce to focus on higher level activities, contingent workers bring their own set of constraints. Their desire for flexibility means that on average they are typically only active in your company for a maximum of 18months. Likewise, the on-demand business model is still emerging. The majority of companies based exclusively on an on-demand model are less than five years old and are still finding their legal footing. Companies, such as Uber, for example, are now forbidden in some countries and facing legal challenges around worker classification and benefits in others.
In the late 1990s, HR efficiency gains were mostly found in the form of self-services as a means to free knowledge workers from administrative tasks so they could focus on more value added tasks. Today, the trend is more towards the extended workforce, such as temps, seasonal workers, consultants, and project staff for non-core activities. These relationships, of course, must be managed in a wider workforce context. Cloud solutions, such as Fieldglass, are enabling organisations to address the increasingly temporary, networked nature of both their employment and procurement relationships by gaining complete visibility into their contingent labour pool – such as retirees, alumni, independent contractors, as well as individuals with loose, temporary relationships with suppliers.
This sort of insight is providing HR leaders with invaluable and unprecedented insight into their wider business networks, which in today’s on-demand economy are increasingly characterised by contractors who value flexibility over job security. In the age of corporate individualism, individual people sit alongside companies as the supply chain. They are redefining traditional business networks.
Whilst core strategic employees will continue to be orchestrated through talent management systems, external, flexible talent should be managed with a supply chain approach, ensuring an on-demand workforce management capability. By managing your entire workforce – both temporary and permanent staff – from initial recruiting and on-boarding to ongoing development, performance management, retention, and retirement – you are in a powerful position to harness variable operating models. This means you can quickly dial up and down your infrastructure, your talent, and your expertise to accommodate changes in market dynamics, business needs and special projects.
This is where I see HR embracing a new role. In a volatile, uncertain, complex and ambiguous world, megatrends are impacting companies, and in turn, their HR functions, faster than ever (Tweet this). Historically, HR has not moved at the same pace as the rest of the business. On-demand workforce management provides an opportunity for HR to not only keep pace, but to lead. As Ley Hayman, former Chief HR Officer at SAP would phrase it, “HR can become a player that changes the business, as opposed to being a partner that only runs the business.”