The contingent workforce is a 21st-century reality, and it’s an exciting revolution going on in the working world. There are two parallels that directly correlate in the working world - the structure of work (business) and the actual workforce (people). Within the last decade, these two parallels have been rapidly changing, with the workforce changing demographically and the structure of work having to change along with it.
By the year 2020, it is expected that non-permanent workers are going to make up 40% of the average company’s total workforce. Known as temporary workers, freelancers, outsourced workers, on-call workers and independent contractors, the contingent workforce is becoming a major faction in the working world. You may think to yourself, how does this apply to my business? As employers, you have to start taking a fresh look at the workforce and the possibility of employing contingent workers, now and in the future.
So, what exactly is pushing this trend to become the new norm? Take a look at these five factors:
Statement of Work (SOW)
Simply put, SOW is a document that contains all of the work products and services, including the work activities and deliverables supplied under a contract or as part of a project timeline. The difference between a SOW and a typical temporary agency or a contingent worker arrangement is how workers are compensated. With a typical contingent arrangement, the worker is billed per unit of time worked.
SOW arrangements are typically billed upon agreement of price per deliverable and/or milestone identified. This key difference gives contingent workforce buyers leverage as the pay is based on the success of predetermined deliverables.
More and more companies are incorporating SOW consultants into their strategy because of the numerous benefits. They allow companies to accommodate fluctuation that occurs in their workload, hiring talent on an as-needed basis.
How can you leverage SOW effectively with your contingent workforce program? First, you must understand how it all works. When working with SOW relationships, the focus is on the deliverables and outcome of the work being done. Be careful not to misclassify your SOW consultants and define specific work activities, as well as deliverables and timelines. Cover all contract terms and conditions, along with pricing, so there are no questions left unanswered.
The Human Cloud
The human cloud is presenting businesses with more choices in talent engagement than ever before. Differing from other online programs, the human cloud encompasses the entire contingent work arrangement, from procurement to payment, entirely through a digital platform. Financial Times defines The Human Cloud as:
A type of workforce where tasks or projects, not jobs, are performed remotely and on-demand by people who are not employees but independent workers.
The type of work stems from white-collar jobs - chopped into hundreds of discrete projects or tasks, then scattered into a virtual “cloud” of willing workers who could be anywhere in the world, so long as they have an internet connection.
Some of these tasks are as simple as looking up phone numbers on the web, typing data into a spreadsheet or watching a video while a webcam tracks your eye movements. Others are as complex as writing a piece of code or completing a short-term consultancy project.
The reason for the human cloud is simple: reduced costs, increased speed and a controlled environment. In 2014, employers spent between $2.8 billion to $3.7 billion globally on paying workers in the human cloud, and that number has only gotten bigger. The human cloud allows for rapid completion of project deliverables from highly-skilled workers around the world.
Looking to implement the human cloud in your contingent workforce program? Make sure to drive with caution when it comes to legal concerns. Policymakers are taking a deep look into what the contingent workforce means from a legal and economic standpoint. When working with the human cloud, executives should discern where their liability begins and ends to help prevent potential lawsuits.
Changing Demographics of the Workforce
Demographic changes are a major influence in the drive that is pushing the contingent workforce. Millennials have surpassed Baby Boomers to become the largest living generation, and by 2019 every Baby Boomer will be 55 or older. With this reality, companies will have to be more creative with their hiring as the labor pools become younger and less experienced. A potential strategy for employers is to recruit older workers, even though it might mean luring them back out of retirement.
When it comes to recruiting the older workforce, there’s a large chance that most of them will want to work on a flexible, maybe even part-time or temporary basis, which is contributing to the growth of the contingent workforce. On the contrary, Millennials have reported that work-life balance is one of the most important aspects when choosing a career. The contingent workforce provides them with the flexibility that they crave, and they won’t have to tie themselves to a position.
An increasingly valuable asset to any company, talent pools give pre-identified, fully vetted contingent labor resources. When a business is looking for quality, proven talent, they can look at labor pools that are usually grouped by skill set, background or geography. This benefit allows companies to hit the ground running once they realize they have the demand for work.
With talent pools, it’s very common that payrolling firms have already processed workers, therefore saving businesses valuable resources, such as time and money. Talent pools are effective for hiring managers and companies at large by providing a sourcing tool that can be used prior to seeking additional help from other resources.
If you are looking at talent pools within your contingent workforce program, it’s important to familiarize yourself with how they work. It behooves you to become familiar with the technologies that provide these services. The challenge is finding out how you can incorporate a new program into your existing program to be able to move your strategy to the next generation. Do your research and begin taking advantage of the talent pool benefits.
Alive and well, industrial temporary staffing is a contributor in the rise of the contingent workforce. This area of work is defined by Staffing Industry Analysts as:
...the blue-collar segment of temporary help and permanent placement, this segment includes manufacturing personnel, factory workers, logistics/distribution staff, shipping and receiving clerks, materials handlers, and related occupations with “light industrial” often used to refer to positions not requiring heavy labor, such as electronic assembly.
Work demands in transportation and logistics are particularly high, with these workers comprising of about 37% of the U.S. market. This sector shows no signs of slowing down, either. Expansions in warehousing, trucking, construction and manufacturing are at the center of the drive behind industrial staffing.
With the rise of the contingent workforce, we see many businesses incorporating different strategies to put a program into place. The benefits of the digital age have given employers, and employees alike, the ability to connect and transform the workforce at a rapid pace. Have you started a contingent workforce program yet?
Looking to dip your toes in employing contingent workers? Stay competitive in your compensation with this guide: