Category: Contingent Workforce Management

In this tight talent market, organizations need to change the way they look at talent acquisition. Traditionally, employers have relied on full-time employees, attracting workers and hiring through traditional channels. However, in recent years, a growing number of workers have eschewed the traditional model, turning to the gig economy. Now, the best person for the job might not be looking for a conventional job.

To stay competitive, many employers are tapping into this gig economy talent, but the process can be complicated. Organizations need to be able to attract these workers and manage the compliance risks that come with a contingent workforce. To accomplish this, many employers turn to a Managed Service Provider (MSP).

Attracting Gig Economy Workers

To understand how to attract gig economy workers, employers first need to know who these are and what they’re looking for. On one end, high-skill, high-earning freelancers enter the gig economy because they are looking for independence, creativity and increased pay. On the other end of the spectrum, low-skill, low-wage workers are looking more for the flexibility and ability to set their own schedule. You can learn more about the gig economy talent landscape in last week’s blog post.

Depending on the type of gig worker an organization wants to attract, it will have to tailor job descriptions to appeal to that kind of person. Because contingent workers are not permanent employees, they aren’t drawn to traditional perks like 401K contributions or generous vacation policies. Additionally, the types of factors that influence an employee to stay at a job or with an organization don’t always apply when it comes to contingent workers. The Harvard Business Review reports the biggest reasons employees stay at an organization are a clear career path, good pay and company culture. Gig economy workers are already starting an unconventional career path, and depending on their roles, gig workers may not fully take part in company culture. However, gig workers are drawn to more than just money.

In a sense, gig workers are always candidates. Generally, employees search for jobs when they’re looking to make a career move. Gig economy workers are always looking for their next move. If a gig worker is on a contract, they are still looking for the next one. If a project doesn’t take all of their time or provide enough income, they are looking for supplementary work. This sets them apart from traditional employees.

Organizations need to focus on their employer brand to attract gig workers. That brand can tap into gig workers’ desires to do meaningful work, which according to the Harvard Business Review, is something workers of all generations are looking for.

The Risks

While the gig economy can provide top talent for organizations, there can be legal risks, and the biggest is worker misclassification. Worker misclassification happens when an organization classifies a worker as an independent contractor when the person meets the legal definition of an employee. This means the person doesn’t get the benefits associated with permanent employment, even though for all intents and purposes, the person is in a traditional working arrangement.

A judge in Ohio recently ruled that American Family Insurance Group misclassified insurance agents as independent contractors in a class action lawsuit that could cost the company as much as $1 billion. While the judge ordered immediate appellate review, Staffing Industry Analysts reports that the impacts could ripple throughout the entire insurance industry. Other companies have shelled out hundreds of millions of dollars. Fed Ex settled a worker misclassification class action lawsuit for $228 million in 2015.

The line between freelancer and employee can be slim, and the classification isn’t always simple. According to Entrepreneur, the courts have put together six questions for organizations that can draw the line between an employee and an independent contractor. Aside from independent contractors, there are other classifications of contingent workers, including statement of work (SOW) and temporary – either hired directly or through a staffing agency.

Additionally, organizations need to remain compliant with the patchwork of laws impacting contingent workers across the country. New York City’s “Freelance Isn’t Free” law affects companies that hire New York-based independent contractors. Other legislation, like paid sick leave, that isn’t specifically aimed at contingent workers may impact certain classifications of workers depending on local laws. Because many of these compliance issues are based on state, county or even city legislation, organizations need to be prepared to keep track of the constantly changing compliance landscape.

Managing the Gig Economy

To alleviate much of this administrative burden, many employers work with an MSP to manage their contingent workforces, including handling compliance and risk mitigation, supplier management and driving cost savings. MSPs serve as strategic business liaisons, managing the entire lifecycle of an organization’s contingent workforce program from finding qualified workers and suppliers to standardizing processes and much more.

MSPs help organizations source the best talent from the growing gig economy by understanding the contingent workforce landscape and working with the best suppliers to meet clients’ needs. They enable organizations to take full advantage of the talent, providing peace of mind that all compliance requirements will be met.

MSPs are also valuable partners when it comes to workforce planning. An organization looking to find talent in the gig economy will have to find the right mix of full-time and contingent workers. An experienced MSP provider can help an organization determine whether the best person for the job can be found in a gig economy or as a full-time worker.

Additionally, an MSP can help with permanent hires. An MSP can pipeline strong contingent workers into full-time positions within the organization. Through this process, the new full-time hires already have experience with the organization, and the organization knows more about the new employee’s work abilities.

As companies of all sizes become leaner, their supply chain and procurement groups are openly embracing outsourcing for the non-employee category. As a result, the value of the MSP has evolved. MSPs were initially a strategy to help companies drive down costs, gain visibility and attain management reporting for their contingent labor usage.

Today, experienced users of MSP and those just beginning to evaluate an MSP strategy alike are putting more weight on the value of a broader supplier network for their contingent workforce. They are now looking to MSP providers to do more than just manage costs, but also to support end-to-end supplier management from sourcing to contracting to performance management to ensure better results and drive compliance in all aspects of the program.

You can read more about what an MSP can do for an organization here, on our PeopleScout Managed Service Provider (MSP) Solutions Fact Sheet.

Millions of people in the U.S. and across the world are leaving behind traditional working arrangements to join the growing gig economy. In this tight talent market, organizations will find some of their best talent through freelance and other contingent labor arrangements. The gig economy has received a lot of attention over the past few years, but it is more than just a trend. Organizations need to understand this new way of working and who these workers are to get the most out of their workforce strategies.

The Gig Economy? Freelancing? What’s the difference?

While the term “gig economy” is the latest buzzword, the concept behind it is hardly new. The National Law Review argues the gig economy has existed for years; what we see now is just growth and rebranding. Manufacturing and retail companies have relied on temporary labor to get through busy seasons for decades. Organizations have contracted freelance writers and graphic designers on a project-to-project basis to find the right talent for the job. The “gig economy” is a new name for an old concept – contingent workers.

Contingent workers are defined as freelancers, independent contractors, consultants, temporary contract workers or other non-permanent workers. Unlike full-time employees, contingent workers are generally used on a project basis or to meet seasonal needs. This can create a more stable workforce that is protected against cyclical changes by quickly downsizing contingent labor if necessary. In the past, contingent labor was attractive during times of economic downfall. Now, contingent labor is used increasingly on an ongoing basis.

The gig economy also covers a broad range of workers – skilled and unskilled, high- and low-earning. According to the Harvard Business Review, “workers with specialized skills, deep expertise, or in-demand experience,” or those contingent workers traditionally thought of as freelancers, tend to be successful in the growing gig economy because they can earn more and select more interesting work. However, the same article suggests that low-skill, low-wage workers in retail and service positions can also benefit from the gig economy, where they can find a more flexible schedule and greater autonomy. These workers aren’t usually thought of as freelancers, but they’re part of the growing trend.

Who Works in the Gig Economy?

The phrase “gig economy” likely evokes an image of a millennial driving for a rideshare service or doing freelance writing or web design, but statistics available about the gig economy tell a very different story. Many gig economy workers are Generation Xers who were laid off during the Great Recession and turned to gig work. According to the Aspen Institute, between 2010-2014, nearly 30 percent of jobs created were independent contract positions.

A Staffing Industry Analysts study estimates about 44 million Americans or about 29 percent of the workforce have taken part in the gig economy. Of that, the study breaks down those workers into a few more categories:

• Independent contractors or self-employed workers: 23.5 million
• Human cloud workers: 9.7 million
• Temporary workers assigned through a staffing agency: 9.5 million
• Temporary employees sourced directly: 5.5 million
• Statement of work consultants employed by a consulting firm: 2.9 million

An Aspen Institute survey of gig economy workers provides some demographic insights.

• The highest concentrations of gig economy workers in the United States are in the Pacific and Mountain regions, with the lowest concentration in the Upper Midwest and New England
• Gig economy workers are more likely than the average worker to work from home, but working from home is becoming less popular among gig workers
• Gig economy workers are more likely than traditional workers to have been laid off, most likely during the Great Recession
• Nearly 60 percent of all gig workers are male with a median age of 50 years old

Seniors are also a growing segment of the gig economy workforce, according to the JP Morgan Chase Institute. According to their recent survey, more than 400,000 seniors are participating in the online platform economy through apps like Uber and Airbnb, which is just one segment of the gig economy. This goes along with a greater trend of more seniors staying in the workforce. According to the JPMorgan Chase research, seniors get about a quarter of their income from labor.

Looking Forward

How confident can organizations be that the expanding gig economy is more than just a temporary trend? Some experts argue that the growth of the gig economy is tied to certain economic and political factors. Time Money reports the gig economy was a side effect of the Affordable Care Act. The article explains the increased cost of complying with the law pushed some organizations to rely on freelance workers, while at the same time, the increased availability of market plans gave some workers the ability to start the freelance career they wanted. Experts agree that at least part of the growth in the gig economy could be impacted by changes in U.S. healthcare laws. However, it’s not the only factor.

According to a study by the McKinsey Global Institute, the gig economy is growing in the U.S. and internationally. The study estimates that 20-30 percent of working people in the U.S. and Europe have engaged in independent work. This speaks to the fact that the gig economy is not a temporary trend tied to U.S. political and economic climate, but rather a global transformation in the way that people think about work. This suggests that while certain government policies may make an impact, the gig economy is here to stay.

Finding the Right Partner

So how do organizations that have been tied to the traditional employment model get their feet wet in the gig economy? They need to prepare by understanding what types of talent they are looking to tap into and understand how the best talent in that space operates. Then, they need to ensure they are set up to engage properly with different types of contingent workers – whether they’re independent contractors, employees of a staffing agency or statement of work workers.

When addressing these issues, it’s helpful to have an expert on your side. Working with a managed service provider (MSP) can alleviate some of the administrative burden associated with the contingent workforce, including compliance and risk mitigation and driving cost savings.

MSPs serve as strategic business liaisons, managing the entire lifecycle of an organization’s contingent workforce program from finding qualified suppliers to standardizing processes and much more. One benefit of using an MSP is their ability to leverage their vast supplier network to compare wages and make sure their clients are offering a fair and competitive rate. The relationships that MSPs have with their suppliers give them quick access to top talent which is critical when trying to fill specialized positions.

To learn more about how organizations can tap into the gig economy to find the best talent for their companies and how an MSP can help, check out our blog post on recruiting in the gig economy.

The rise of the gig economy increased access to global talent and changing candidate expectations are forcing many companies to reconsider the make-up of their workforces. Organizations are beginning to recognize the benefits of integrating both full-time and contingent talent into one total workforce program. Evolving your talent acquisition program to include both full-time and contingent workers allow you to focus on finding the best talent, regardless of worker type.

In this disrupted talent landscape, it’s clear that Total Workforce Solutions can provide a competitive advantage. But what, exactly, does a total workforce solution look like in action?

What are Total Workforce Solutions?

A total talent solution lets you hire the best talent for your positions, regardless of worker type. Total Workforce Solutions programs can incorporate full cycle, scalable RPO and MSP programs or specific services to meet your needs. Total Workforce Solutions provide a holistic approach to talent acquisition by providing visibility across all worker types – from contingent to full-time – and talent channels.

Key drivers and advantages of Total Workforce Solutions

Key drivers for MSP and RPO integration include:

• Bifurcated talent acquisition strategy
• Lack of visibility across total workforce
• Siloed decision making
• Risk
• Growth of the non-employee workforce
• Globalized workforce
• Emerging talent pools
• Skills and experience scarcity
• Escalating competition for talent
• Demographic shifts
• Ineffective pipelining
• Workforce disruption

Total Workforce Solutions drive financial advantages like cost savings from better workforce utilization, improved demand management and lower service and vendor management costs than in a previously decentralized program. Strategic benefits include more access to global expertise, cross-trained and fully integrated implementation teams, and insights and advice across your entire talent spectrum.

Finally, moving from a bifurcated talent acquisition strategy with siloed decision making and a lack of visibility across employee and non-employees to a holistic view of the entire talent spectrum will allow you to be more flexible and adaptable. You can engage the talent you need, whether it be full-time, contingent, freelance, contractor, remote or on-site, depending on the position.

Designing your total workforce solution

Other benefits of a fully integrated talent strategy include competitive advantage, stability and the opportunity become more proactive – moving from “default” to “design.” However, moving your talent acquisition strategy from default to design is not a simple process. The factors that go into creating an integrated talent strategy differ based on every organization and the maturity of their workforce programs.

There are three key questions you should ask yourself before starting down a path to a total talent strategy:

• What is your current state?
• Where do you want to be?
• How do you get started?

Getting started may be the most difficult hurdle for companies moving to a total workforce solution. For some organizations, it may help to first show the value of centralizing all forms of contingent and full-time employees into a single program. Once internal stakeholders can see the value of greater reporting visibility, risk mitigation, cost savings and more, it begins to remove the uncertainty and knowledge siloes that have been created.

At PeopleScout’s 2017 client forum, attendees participated in roundtable discussions on Total Workforce Solutions. Key takeaways on getting started with a total talent program included:

• Have a plan to help you move from reactive to proactive
• Analyze the data you have at your disposal to determine what you can use to support your workforce planning
• Find an executive sponsor for your total workforce program to provide guidance and reinforcement

Check out our white paper, Total Workforce Solutions: Optimize Talent Acquisition by Blending RPO and MSP, to learn how to optimize your talent acquisition efforts.

Total Workforce Solutions blend Recruitment Process Outsourcing (RPO) and Managed Service Provider (MSP) capabilities into one integrated program. With Total Workforce Solutions, you’ll add value and reduce risk by gaining valuable insights into your entire workforce, from contingent to full-time employees.

There is a growing global demand to bring together MSP and RPO services for a holistic approach to sourcing strategies. Total Workforce Solutions cover the full spectrum of talent; including employees, independent contractors, temporary workers, part-time workers, seasonal workers, SOW, outsourced services and freelancers. These solutions allow organizations to think about talent as a whole, by incorporating both full-time and contingent workers into their total workforce mix.

Total Workforce Solutions may also enable organizations to address relevant questions around the contingent and full-time employee mix, the real cost of different worker types and what worker types will best maximize productivity and cost-effectiveness. Visibility into the total workforce will help talent leaders understand how to integrate contingent and full-time employees to increase productivity and lower costs.

Talent acquisition professionals are ready to access not only combined MSP and RPO services but also to embrace the benefits that come with a blended approach to recruitment and talent management.

Stay Ahead of Industry Trends

The right strategic workforce for any business may involve a mix of permanent and temporary positions. It can require mass recruiting as well as laser-focused searches, with metrics and analytics to track performance. With so much riding on talent, it’s no surprise that recruitment and employment strategy has become more complex. The changing world of work, talent scarcity, demand for improved analytics and technology and pressure for improved ROI on every recruitment dollar are all drivers in the logical development of blended, or bundled, service offerings.

Research from the Everest Group identified industry trends underpinning the adoption of combined MSP and RPO solutions, which include:

• Growth in the contingent labor force: A study by Intuit predicts that 43% of American workers will be employed on short-term gigs by 2020.
• Globalization: Companies require the flexibility to access talent from diverse geographies.
• C-Suite Focus on Talent: Increased focus means effective talent acquisition is both a high priority and high visibility.
• Economic forces: Organizations continue to need the flexibility to scale up or down given the volatile nature of the economy.
• A Unified Strategy: Companies are struggling to integrate different types of workers into a coherent strategy.

Key Drivers of Total Workforce Solutions

The following five factors further explain why Total Workforce Solutions are needed — and needed now.

1. Growth in the contingent workforce makes working with an MSP a necessity.

The gig economy is growing, which means more and more talent will be classified as contingent workers. An MSP program will help organizations ensure they have the right strategy to access that talent. If your company solely focuses on hiring full-time employees to fill your workforce needs, you may miss out on the talent that lies on the contingent side.

2. Continued strategic focus on the contingent side means MSPs must go beyond business as usual.

An Ardent Partners survey showed that 95 percent of organizations perceive contingent talent to be vital not only to day-to-day operations but also to the ultimate success and growth of their enterprise. It is no longer just enough to attract contingent workers; companies must be able to integrate them into their total talent workforce planning strategically.

3. Increased C-Suite focus on talent means talent acquisition is a high priority and that talent acquisition efforts must deliver.

PricewaterhouseCoopers’ Annual Global CEO Surveys, which gather feedback from 1,400 CEOs worldwide, stresses that talent acquisition and management should remain a top priority. In the 2016 survey, 75% of CEOs listed developing talent as one of the top three priorities of businesses.

These priorities beg the question, is HR equipped to handle evolving talent acquisition and management needs? In 2014, researchers for the Global CEO Survey delved into talent and HR and found a crucial insight: 93% of CEOs said they needed to change strategies for attracting and keeping talent, but only 34% said HR was well prepared.

The increased focus on talent acquisition means that HR, talent acquisition and procurement professionals will need more visibility into their workforce to ensure that they are attracting, hiring and developing the right talent – contingent or full-time – to make the most impact on their organizations.

4. Companies are struggling to integrate all the different kinds of workers into a coherent strategy.

Recent Deloitte research demonstrated that more than 70% of the 7,000 companies surveyed are having difficulty integrating a blended workforce. The need for a blended workforce coupled with the difficulty companies have integrating their contingent and full-time workers creates additional demand for the integrated planning capabilities and enhanced visibility across talent streams Total Workforce Solutions bring.

5. Integrating your workforce into one unified strategy matters.

Blending contingent and full-time approaches mean a more mature talent acquisition function and those mature talent acquisition approaches produce big dividends for their organizations.

According to a study by Bersin by Deloitte, unified workforce strategies are 2.6x more effective on talent acquisition outcomes. Total Workforce Solutions help talent acquisition professional make more informed decisions cross-enterprise, drive worker quality and retention, and reduce costs and risks.

The adoption of blended solutions will continue to increase as talent acquisition professionals look for providers with an expanded scope of services to meet specific program challenges across the entire talent spectrum.

Are Total Workforce Solutions Right for Your Organization?

Implementing a Total Workforce Solution requires a strategic relationship with the right partner to match your company’s needs. That partner should understand your business and the strategic impact of talent – both contingent and full-time – across the enterprise, and have the tools and processes to make a difference in your organization. Furthermore, the partner should understand what top talent can accomplish and identify contingent workers that will make excellent candidates for full-time employees and vice versa.

These needs can be met with a Total Workforce Solutions provider skilled in talent pooling, workforce consulting and data analytics.

Before implementing a Total Workforce Solution, providers must complete a needs assessment to identify the ideal workforce mix for each client. Different factors, such as worker type, geography, assignment duration and more, will change based on each organization’s business goals and objectives. There is no way to prescribe the appropriate mix of full-time and contingent labor across the board; it is important to build a solution around what is best for each client individually.

With Total Workforce Solutions, integrated implementation teams cross-trained in both RPO and MSP programs gives clients the benefit of flexibility and scalability. Allowing for shared learning across teams provides access to the best expertise and processes from both MSP and RPO implementation experience.

Total Workforce Solutions are an emerging trend in talent acquisition that is poised to create an impact in the industry. With the C-Suite placing a high premium on talent acquisition, companies will require greater visibility into their entire workforce to create the most efficient program to meet both recruiting and revenue goals. No matter the maturity level of your current MSP and RPO programs, a holistic view of your workforce through a Total Workforce Solution will help you optimize your talent acquisition program.

Check out our white paper, Total Workforce Solutions: Optimize Talent Acquisition by Blending RPO and MSP, to learn how to optimize your talent acquisition efforts.

There is a growing demand from human resources, talent acquisition and procurement professionals for increased visibility into their entire spectrum of talent. Organizations can meet that demand by blending their RPO and MSP programs into one integrated Total Workforce Solutions program. Traditionally, RPO and MSP programs have been siloed. A lack of understanding of the terminology of either RPO or MSP programs can inhibit the collaboration between the two programs. To help ease the transition into a talent acquisition program that attracts and retains both full-time and contingent workers, we’ve put together a lexicon of some of the most commonly used RPO, MSP and Total Workforce Solutions terminology.

ATS: Applicant Tracking System

• An ATS is a software application that enables the electronic handling of recruitment needs. An ATS stores candidate data to allow recruiters or hiring managers to search, filter and route applications. ATS software can also be known as Talent Management Software (TMS), Candidate Management System (CMS) or Recruitment Management System (RMS). ATS solutions are often used in conjunction with an RPO program.

Assignment

• An assignment is a task or project performed by a contingent worker. An assignment may also refer to the length of time a temporary employee will be working for an organization.

Blended Workforce

• A blended workforce uses both direct hire, full-time employees and contingent, temporary workers. Blended workforce planning uses both RPO and MSP programs. A blended workforce is also known as Total Workforce Solutions.

BI: Business Intelligence

• BI tools provide powerful analysis of program-specific data and metrics. BI tools are used with RPO, MSP and Total Workforce Solutions programs.

BPO: Business Process Outsourcing

• BPO uses third-party business services providers to perform business activities or functions for a company. BPO services may include payroll, HR, accounting or customer service.

Candidate

• A candidate is someone who has applied for a job and is qualified for temporary or full-time consideration.

Consultant

• A consultant is another term used for temporary employees or contingent workers. Consultants often perform professional work for departments such as IT or engineering.

Contingent Worker

• Contingent is an overarching term that covers freelancers, independent contractors, consultants or any other outsourced, non-employee workers. They are generally hired on a per-project or temporary basis.

CWM: Contingent Workforce Management

• CWM is the strategic approach to managing an organization’s contingent workforce.

Contract Worker

• A contract worker is also known as a 1099 or independent contractor. There are very specific guidelines for classifying workers as independent contractors, including whether the worker controls when and where work is to be completed, if the worker provides their own work equipment and supplies, and how the workers are compensated.

CRM: Customer (or Contact) Relationship Management

• CRM systems manage a company’s interaction with current and prospective customers or contacts – including employees.

Direct Hire

• Direct hire positions are permanent, usually full-time with benefits.

Diversity Supplier

• Diversity suppliers refer to minority, woman, disabled or veteran-owned staffing suppliers.

Employee

• An employee works directly for an organization in a job with no specific end date. Employees may be full-time or part-time.

Exempt Workers

• To be exempt, an employee generally must be paid at least $23,600 per year, be paid on a salary basis and perform exempt job duties. Exempt workers are not entitled to overtime pay.

Non-Exempt Workers

• Non-exempt workers are entitled to overtime pay.

Freelancer

• Freelancer can refer to almost any independent professional who performs work unaffiliated with a specific employer. Freelancers are typically classified as independent contractors.

Gig Worker

• A gig worker refers to someone who works on gigs, or small freelance projects. Gigs are typically facilitated through an internet platform or app.

Independent Contractor (1099)

• The general rule, according to the IRS, is that an individual is an independent contractor if the employer has the right to control or direct only the result of the work and not what will be done and how it will be done. Independent contractors are also known as contractors or freelancers.

KPI: Key Performance Indicator

• A KPI is a measurable goal that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success related to specific business metrics.

MSP: Managed Service Provider

• MSP programs provide end-to-end workforce and vendor management for users of contingent labor.

RPO: Recruitment Process Outsourcing

• RPO programs provide direct-hire talent acquisition services for professional and non-professional positions that solve compliance, scalability, cost, quality or other recruiting challenges.

SLA: Service Level Agreement

• An SLA is a commitment between a service provider and customer. Aspects of the partnership – quality, availability, responsibilities – are agreed upon between the service provider and the service user.

SOW: Statement of Work

• An SOW is a document that captures the work activities and deliverables to be supplied as part of a contract or project timeline. SOW arrangements are used in contingent workforce programs.

Temporary Workers

• Temporary workers are generally hired to fill short-term positions or to complete specific projects with a set time frame. Temporary workers also fill positions that have irregular or seasonal work schedules.

Temp-to-Hire Workers

• A temp-to-hire worker is hired as a temporary worker with the knowledge that the short-term position may transition to a full-time job. Temp-to-hire workers can be managed by an MSP program and then transitioned to the employer once they become permanent employees.

Total Workforce Solutions

• Total Workforce Solutions blend Recruitment Process Outsourcing (RPO) and Managed Service Provider (MSP) capabilities in one integrated program.

VMS: Vendor Management System

• VMS platforms help businesses manage and procure staffing services – temporary, and, in some cases, permanent placement services – as well as outside contract or contingent labor. VMS platforms are generally used with MSP programs.

As RPO, MSP and Total Workforce Solutions continue to mature and evolve, we will make updates to this lexicon. If you would like to see new terms added or share corrections or contributions to the existing list, please send us a note at marketing@peoplescout.com.

Check out our white paper, Total Workforce Solutions: Optimize Talent Acquisition by Blending RPO and MSP, to learn how to optimize your talent acquisition efforts.