The composition of corporate workforces is undergoing dramatic change driven by both the demands of workers and the strategic needs of employers. A new study published by the Institute for Corporate Productivity (i4cp), Beyond Uber: Driving the Evolution of Work, has huge implications for senior leaders implementing talent management programs and initiatives. ATD’s Senior Leaders and Executives Community of Practice spoke with Kevin Martin of i4cp about the study.
Q: The study states, “One trend that was clear: 95 percent of the executives i4cp interviewed are using or anticipate using more non-traditional (non-employee) skilled workers than ever before. While the use of non-traditional workers is not necessarily a new phenomenon, what is new is the shift in the type of non-traditional worker these employers seek, as well as the strategies employed to utilize these workers.” Please share why you think this is happening.
A: We see two primary forces at work here. The first is workers’ demand for control and flexibility; the second is the need for greater organizational capability and agility. Driving these factors is the result of three economies: the gig economy, the starving economy, and the winner-take-all economy. The gig economy is the notion that instead of taking traditional 40-60 hour week salaries with benefits, workers are patching together a gig-type lifestyle of different jobs with different employers. That seems to be the result of a few things, including what we are calling the starving economy.
The World Economic Council notes that productivity in the U.S. over a 40-year period grew by 72.2 percent , but average wages grew by 9.2 percent in that same period. People are producing more but making less—thus the starving economy. The winner-take-all economy is one where we see the natural evolution of work in the last few decades. In the 1980s, companies started layoffs and at the same time technology and automation provided opportunity for greater productivity that required less human capital.
Generally the bond between the employer and employee contract, of “you stay here and we’ll take care of you,” is gone. In today’s workplace economy, workers have to take care of themselves. Through the utilization of technology, people can work anywhere, any time. There is also desire on the part of employees to have more of their lives back. All of which points to the current demand for worker control and flexibility.
Millennials are demanding this style of working, while many skilled aging Baby Boomers either need or want to keep working beyond retirement, yet desire to do so on their own terms. As you noted, the vast majority of employers are either using or planning to use more non-traditional workers. We're not talking about traditional (business process or recruitment process outsourcing) models in which employers outsource an entire function or process. Rather, we see employers relying on highly strategic and targeted outsourcing aimed at specific work that must get gone and focused on utilizing the best talent, no matter the location or employment status of that talent, to help the employer gain capability, capacity, and agility.
Q: What does such mass outsourcing mean for the future of employee development and talent management, a function for which most processes are developed and implemented internally?
A: Over the next few years, 30 percent to 50 percent of an organization's workforce will not be employees of the company. Additionally, the composition of the workforce may come from various sources: someone on a rotational assignment from a key customer, from a critical partner, or from an aggregator of talent where people with certain skills sets now have a platform to auction off their time and know-how.
Many of these workers will be in skilled or customer-facing positions or working on projects that require a high degree of collaboration with others. They will bring much more diversity in the form of knowledge, experience, background, and so forth to the workforce and project teams. All of this will require a different kind of leader.
For the last few years, we’ve been seeing the definition of 'leader' being much more about influence and collaboration rather than hierarchy or command and control. In fact, our research shows that it's the social side of leading that has the greatest variability on leader effectiveness. What this means for employers is the need to develop leaders—especially at the middle and frontline levels—who are more effective communicators (both in person and via technology) and can influence and drive collaboration across a diverse group of stakeholders.
We recently conducted our sixth year of research on global leadership development and it's become rather obvious that the era of national companies is over. Sure, there will always be businesses that operate in only one locale, but their customers, partners, and supply chains are boundary-less. Their workers and consumers are much more diverse culturally and economically. Every organization needs people with a greater global and more inclusive mindset. This is critical because as diversity grows, inclusion becomes the difference maker.
Q: Will organizations rely on the agencies they are using to procure these workers to train them as well, or will organizations train these workers?
A: We see both scenarios. However, there is one caveat and that is regulation. The lines are more blurred between employee and non-employee; there are more and more regulations each year, as well as penalties for crossing those lines. HR has got to be lock-stepped with legal departments in terms of the ever-changing labor laws. There are organizations out there, many of them in hospitality and the quick service restaurant businesses, which are not touching anything with talent management, because there are so many questions and lawsuits currently under way. Look no further than the National Labor Relations Board ruling of co-employment against McDonald's.
The major question is who will train these workers? Organizations want to have greater input on that, and this input could help negate issues such as sexual harassment that may occur in a franchise from a manager, who has never had training before. If a business gives that training, then co-employment may come into play and that business is now partly responsible.
In other organizations we interviewed, the issue of co-employment is of nominal concern. For instance, one large healthcare provider badges all non-traditional workers as employees, and has both sets of workers attend the same onboarding and development programs. This organization - along with most others we interviewed - recognize the importance of connecting with all workers to ensure better end-customer experience as well as better employer brand sentiment among employees and non-traditional workers alike.
Q: Does training more independent workers require different delivery methods and considerations?
A: Organizations must work on the ability of frontline leaders to communicate, identify, and resolve performance issues as well as drive collaboration with myriad types of workers, whether employee or not—located in the same office or not, people who are all over the place. One major area of capability must be on the use of technology to better communicate and collaborate. A lot of non-traditional workers for example, are only going to provide work in "off" or odd hours because that's what their schedule allows or simply because it fits their lifestyle best. These workers want control and flexibility of when, where, how, and for whom they work.
The creation and sharing of knowledge should also be two-way. For example, take a highly skilled contractor who is helping a company build a new revenue recognition model for software as a service offering. Imagine the positive impact on revenue growth if he were to share his knowledge through creation of a two-minute video from his iphone that explains the revenue implications on sales quota and commission payout, as well as, revenue pitfalls to avoid when negotiating a deal with a prospect.
Of course, all of this must also apply to the 50 percent to 70 percent of workers who are actual employees of the companies, as well. Overall, we see the need to make development more personalized, more situational, role based, and available via a variety of modalities, including social and mobile.
Q: Do you have anything to add?
A: John Boudreau, who happens to be a member of i4cp's Thought Leader Consortium, provided inspiration for this extensive research. John and his co-authors Ravin Jesuthansan and David Creelman recently published a book titled Lead the Work. John is also one of the trailblazing experts on the topic of why the non-traditional workforce is leading the future of work.
We wanted to gain a clear view on John's hypothesis and that's why we interviewed prominent business executives from eighty leading employers to gain their thoughts on the changing nature of work, the workplace, and workforce. The collective findings were recently published in i4cp's study, Beyond Uber: Driving The Evolution of Work. The report spells out specific implication for the human resources, talent, and learning functions.
It also highlights the imperative for employers to strengthen the intensity and sustainability of their strategic workforce planning efforts. In fact, we've built a model based on this research that shows how strategic workforce planning needs to be reimagined to enable organizations to anticipate, adapt, and act on this evolution. This reimagined approach emphasizes the 'work' in workforce planning.
What this means for talent professionals is that they must continue building on their existing business acumen, fine-tuning their abilities to partner with the business effectively, and tying it all to strategic planning. Further, collaborative skills, agility, and capabilities required to manage beyond enterprise walls will characterize some of the more social and inclusive abilities needed to work seamlessly with talent vendors and freelance platforms to ensure both performance and cultural fit.
