The latest change in talent sourcing is driven by businesses moving to an extended workforce operating model creating a new state of competition. Is it right for you?

Outlook

The erosion of a job for life

When my father entered the workplace in the 1950’s, his expectation, and that of his counterparts, was that his employment was for life so long as he delivered his side of the bargain and worked the extra goodwill hours that extended the day, and sometimes shortened the weekend.

My generation had similar hopes and ambitions, in the 1980’s. No school leaver or University Graduate with a mild understanding of how the job market works today could have those expectations now.

It’s easy to blame employers for this reality but that would be shortsighted. What’s fundamentally changed since the turn of the century is what Bill Gates described in his 1990’s book as Business at the speed of thought. The principle observation Gates had back then—his conclusion from a series of discovery meetings held with his larger and more influencing customers at the time—was this: ‘How you gather, manage and use information will determine whether you win or lose.’

The World Wide Web—closely followed by Mobile Computing, then only to be rounded out by Cloud Computing and Big Data—has transformed how markets work. It has redesigned competition within markets and the shape of markets. We now see retailers selling holidays and insurance, ebook companies selling technology, banks promoting apps. The world of commerce has truly gone mad. For job seekers, it means employers can’t promise a job for life because their business models are so unpredictable and remain constant for no more than a couple of years.

The new market for talent

What we’ve seen in the last decade is a slide in the number of full-time jobs, paralleled with more individuals becoming contractors and gigging to make up their income to a sustainable standard of living. It’s a seesaw balance. The fewer well paid jobs there are, the more individuals transition to contract and gig working. For some, it works and it’s profitable. For others, they scrape by.

This then is the new talent industry and, in 2020, the market went truly global. The pandemic resulted in companies sending their people to work from home. This led employers to realize that home working wasn’t so unproductive or technically challenging after all. It also gave talent leaders authority to source talent beyond the geographical territory that we call the ‘commuter distance.’ Businesses explored the extended workforce and found a combination of overseas workers and local workers can work well together, but it demands new technologies, such as a Microsoft Teams site, and Vendor Management System (VMS) like SimplifyVMS, to sustain economically.

The Pros and Cons

So what are the advantages and disadvantages of what people are now describing as a hybrid, or extended workforce that blends employees and contractors? We’ve canvassed the team at SimplifyVMS and this is what we came up with.

First the Pros

Faster time to fill

The chief reason why businesses consider temp talent in the first place is to rapidly fill resourcing holes when full-time employee prospects are in short supply. Vacancies in most large businesses today exceed 15% of their desired workforce target level. Filling those vacancies has a key influence on the achievement of business goals.

In January 2019, Gartner published its Emerging Risks Survey of 137 senior executives and reported that global talent shortage is now the top emerging risk facing organizations. They noted in their conclusions that good talent is in incredibly short supply.

Agile talent resourcing

For organizations beset with challenges as the result of the pandemic, workforce agility is paramount. COVID-19 reconfigured how many markets worked. Some stopped altogether. Responding to these unpredictable external challenges has become the norm for business in the digital age. And the most difficult aspect of organizational design to adapt is the labor force. Cost of change for full-time employed workers is high, demanding high levels of executive time. Today there are many protections afforded full-time workers, particularly in Europe, that make it hard for organizations to adapt skills-pool to re-model them to best-fit rapidly changing business models.

A preparatory school for new employees

One of the great benefits of filling vacancies with contractors is that many of these individuals can go on to be employees later. Temp contracts are a fantastic proving ground for new talent to join organizations. It offers individuals the ability to ‘test the water’ in a role. This is good for the worker, who can try out different companies and roles to find the best fit for themselves in the talent market, and it’s helpful for employers, who get the opportunity to see which candidates sink or swim before entering into a full-time employment contract.

Access to greater cultural diversity

Perhaps the biggest long-term benefit of a hybrid workforce lies in its ability to extend the cultural richness of an organization. It’s critical these days for companies to understand their audience and for international companies, that means appreciating how different cultures think and work. Bringing in talent from overseas dramatically re-models an organisation’s cultural richness, introducing new ways of thinking, new ideas, fresh perspectives—and the means to broaden market understanding.

The Cons

Compliance and permatemp risks

While—for purposes of fairness, engagement and cultural cohesion—it’s desirable to encourage a ‘one workforce’ approach, even when your business does combine temporary and permanent workers, you have to be careful how you do it. If you hire temp staff, you can’t treat them as employees and not offer the same benefits provided to employees. In 1996, Microsoft fell foul to weak governance of their temporary staff and were fined $97 million by regulators for treating temp staff similarly to employers. These compliance risks need to be managed by somebody; this is a risk overhead that doesn’t exist when you only employ full-time workers.

The potential for indirect spend to spiral out of control

Sourcing talent often requires a broad set of agencies who know where the talent is, and perhaps already have the best people on their books. Managing spend with staffing agencies, particularly when hiring managers are given a high level of autonomy in their selections and relationships with suppliers, can be a challenge. This is why Vendor Management Systems (VMS) first came about. Today however, the major VMS platforms like SimplifyVMS do much more than efficiently manage the spend through—and operation of—staffing vendors.

Loss of a cohesive company culture

While it’s not inevitable, few could argue that an extended workforce makes it harder to sustain a cohesive company culture. Many of the ‘softer’ aspects of sociability and solidarity that go to define company culture are compromised when individuals work remotely, cut off from the office and a close proximity with other colleagues. The water-cooler moments and happenstance meet ups in the office corridor are lost. So too, are opportunities to look over the shoulder of new starters to help them with a problem, and the ease at which exes teams can arrange Town Hall meetings. While not impossible to resolve, activities like enforcing company policies, brand values, and norms of operational behavior—all these things now need to be considered differently in the era of hybrid workforces.

About Simplify Workforce

We’re an AI-savvy technology company operating in the contingent workforce and service procurement market. Our tech savvy team create unique and agile solutions that enable human resource, procurement, and talent sourcing professionals to maximize profitability, optimize their non-employee labor programs, and gain visibility into their extended workforces.