The contract labor force is growing twice as rapidly as the traditional workforce. The U.S. Bureau of Labor Statistics also added that this is projected to comprise more than 35 percent of all employees by the end of 2013, with workers in highly skilled occupations still in short supply.
Given the current trends, it stands to reason that non-employee workforce growth could result in changes to how the overall or total workforce (employees and non-employees) are most effectively managed. Here are some practices that are evolving to support the expanded non-employee or contingent workforce.
Human resources assumes leadership role. HR is more frequently taking the lead role as strategic owner of contingent labor program management. This includes partnering with the business and procurement to ensure a more value-based approach to the contracting process and a performance-based approach to supplier management. Managed properly, the resulting shift in control creates opportunity for a more strategic program partnership among the three parties. In addition, HR is likely to place more attention on strengthening talent management programs for non-employee workers.
Increased demand for integrated systems, data and common language. Integrating the information critical to planning and managing the total workforce requires establishing common language and collection parameters to enable more impactful data management, measurement and collaboration. Standardization helps decrease process cycle times and allows for resource (employee or non-employee) sharing across different areas of the business to minimize supply and demand gaps.
More planning for the total workforce. Planning organized around critical skills and how the roles that require them are deployed (employee versus non-employee) is gaining traction. While workforce planning principles are still not consistently applied, suppliers are seeing more involvement from CEOs and CFOs and the demand for systems to help assist with this process.
New performance management programs. Staffing providers are being asked by clients for programs to increase retention and ensure differentiation as they compete on their behalf for talent. An important byproduct of this effort is facilitated feedback from contingent workers and staffing firms, providing greater opportunity to encourage the behaviors needed to achieve corporate goals. Statement-of-work (SOW) and price-per-piece (PPP) programs are becoming more common and are referenced as the biggest growth areas, requiring contractually defined standards and outcomes from contractors who are managed and trained by the provider to deliver on specific objectives.
Integrated talent acquisition techniques. During the interview process both the interviewer and interviewee should gain a clear understanding of the candidate’s cultural fit regarding values, strategies, job expectations and operating style. In fact, cultural fit should be included in any recruiting effort, whether the candidate is hired as an employee or a non-employee, to help increase retention. Consistent use and explanation of the employment brand strengthens a company’s position in the market place, ensuring it is a true competitor for the best candidates.
Improved onboarding and training. Contingent worker suppliers and their clients are collaborating to provide more robust onboarding programs to foster quicker engagement and ensure a ready bench of contractors to support fluctuating demand. While many contingent workers are hired because they already have the requisite skills, more training is being offered to improve performance including:
- Development of simulation areas for testing and training on site at client facilities, primarily for manufacturing and logistics skills;
- Allowing high performance contractors to take advantage of provider’s learning opportunities such as online classes on Saturdays to improve soft skills; and
- Collaboration with clients on “quick ramp-up” programs to close the gap with recent college graduates who do not possess the required interpersonal skills needed to be “job ready,” mainly in the IT industry.
Why These Good Ideas Are Important
These trends are signaling the evolution of a strategic total talent management model and more “employee-like” talent management for contingent workers.
Increased economic pressures will continue to force all programs to convert functional results to dollars. The business, human resources and procurement departments all will be expected to prove how their efforts directly increase revenues and reduce expenses.
According to Dr. John Sullivan, author and HR thought leader, “Almost every survey shows that despite high engagement scores, more than a majority of employees are willing to quit their current job as soon as a better opportunity comes along.” He predicts turnover rates in high-demand occupations will increase by 25 percent during the next year and notes “… retention could turn out to be the highest-economic-impact area in all of talent management. Rather than the traditional ‘one-size-fits-all’ retention strategy, a targeted personalized approach will be required if you expect to have a reasonable chance to retain your top talent.”
Historically, the cost of retaining a worker is far lower than finding, hiring and bringing a new worker up to full productivity. While the cost of replacing a contingent worker may be lower than replacing a traditional employee, it still costs more than keeping those you have.
How well the total workforce is managed and leveraged may be the primary differentiator of a 21st century market leader.