The Rise Of The Contingent Worker
By Mike Ettling, President, HR Line of Business, SAP
Winning the talent war requires a fundamental shift in HR strategies. Companies must seek new ways to find the right talent, develop skills, and share expertise. One of those strategic approaches is the growing reliance on consultants, intermittent employees, or contingent labor.
Historically, businesses rely on contingent labor to fill skill gaps during tough economic times. Once the economy improves, there tends to be a heavy shift towards building an internal workforce of full-time employees. But every once in a while, history doesn’t repeat itself. Sometimes, rules are broken.
As we enter 2015, we can’t help but notice that businesses are increasing their dependency on contingent labor – even if the global economy is improving. According to Workforce 2020, a study conducted by Oxford Economics and sponsored by SAP, 83% of executives indicate they’re increasingly using contingent workers ‒ at any time, on an ongoing basis.
The rise of the contingent is upon us
During this time of year, we’re all aware of the traditional mass hiring of temporary, seasonal labor in the retail industry. However, it’s no longer just a retail thing. It’s happening everywhere – all classes of work, from the executive suite to field laborers, in every industry across the globe.
Accenture recently estimated that contingent workers make up between 20% and 33% of the workforce in the U.S. alone. It’s even possible that the number of contingents may one day outnumber full-time equivalents. And the Workforce 2020 research backs up this data a startling percentage of organizations in a variety of industries that are increasingly enlisting the services of contingents:
- Retail – 82%
- Financial services – 80%
- Healthcare – 81%
- Professional services – 81%
- Public service agencies – 86%
When you consider the latest reports fromMarketWatch, The Wall Street Journal, and ERE.net about the extraordinary length of time it takes to fill open positions, this trend isn’t really all that shocking. The business world doesn’t slow down until a position is filled. The world goes on, and businesses must find a way to fill that skill gap now. Enter the rise of the contingent workforce.
New rules call for new thinking – and action
When the rules of building a productive workforce change, so must our beliefs about compensation, development, technology, and engagement. In Workforce 2020, approximately one-third of all respondents – no matter the industry – stated that increasing reliance on contingent, intermittent, seasonal, or consultant employees requires additional investment in training, changes in HR policies, and support for the latest technology.
From my perspective, the rise of the contingent workforce is weighing heavy on the minds of CEOs. They are asking themselves questions such as:
- How do we engage this extended pool of talent?
- How do we help ensure we have the best talent working on the right things at the right time?
- And when a job position opens, are we prepared to backfill with the talent we have on hand – permanent employees and contingents alike?
Traditionally, it’s been the procurement guy who wants to know how much spend is used towards contingents. They want to keep costs down and wiggle another percentage point out of the provider. Although labour costs matter to all leaders, the real power of the HR team is seen when contingent labour is incorporated into the overall thinking about the entire labor force. They are the real specialists who can answer their CEO’s top questions.
Thankfully, there’s technology available that can help make that connection between procurement and HR. Companies can allow both lines of business to work together by analyzing the same data to determine some of today’s common questions on establishing and maintaining a strong relationship with contingents:
- Why must you have a border between full-time employees and contingents?
- Why can’t you include contingent workers in performance management?
- Why can’t you include them in your talent pools?
- Why can’t you include them in succession planning for your organisation?
- Should the boundaries between contingent labour and crowd sourcing remain separate or converge into one relationship?
However, thinking differently about the workforce is only one part of the larger solution. Contingents must be included in processes that are traditionally reserved for full-time, permanent employees: onboarding, corporate learning, expertise sharing, performance reviews, and succession planning.
By going beyond the traditional boundaries of a system of record, HR systems can become a system of engagement – a central hub of all things workforce-related. Employees can form groups, network, and share knowledge around common goals, interests, projects, work experience, locations, and much more. And for HR professionals, this means a gold mine of insight that can help the business better engage and retain all employees while staying as productive as possible.