Contingent Workforce : Prepare now for the new work era

June, 04, 2013 by Brooke McLaughlin author workhoppers

As far back as the mid 1990s MITs Sloan School of Management envisioned that by 2015 there would be a shifting network of contingent workforce. Companies would have the potential to maintain small regular workforces and increasingly rely on outsourcing a contingent workforce. Similar to the model used by the Hollywood film industry, specialized people come together to complete the film and this temporary work force is disassembled when the film is complete. For a company, this means hiring on a project by project basis. Companies would hire the right skills at the right time on an as needed basis. It was envisioned that a outsourcing with a contingent workforce would become the way to get work done.

This MIT model has become a reality for many employers and a viable option for more to come.  In a 2009 report by Littler Mendleson he predicted that 50% of all new jobs would be made of contingent labor.

In a recent report by McKinsey Global Institute Preparing for a new era of work”(November 2012) it is pointed out that work requiring extensive human interactions, such as doctors, engineers, lawyers, managers, sales representatives, teachers and other skilled professionals that are knowledge based are the fastest-growing category of employment in developed countries and in the U.S represents 40% of all jobs.

Work that requires extensive human interactions cannot easily be done virtually due to barriers in language interaction, cultural barriers and differing professional certifications.

Today interaction work is at an inflection point as global competition, emerging skill shortages and changing demographics force companies to use their most highly paid talent more effectively (McKinsey).  Research from McKinsey found that in the U.S. , there will be a shortage of 1.5 million highly trained graduates by the end of the decade.

Against this backdrop, leading companies are exploring how and by whom interaction work is performed:

  1. Break down jobs: Most skilled interaction jobs have certain tasks that can be allocated to others allowing these high paid talented individuals to focus on the most value-creating activities. For example, the legal profession has paralegals to relieve the attorneys allowing them more time in the courtroom or servicing clients.  In the corporate world, for example, HR functions can be broken down into specific disciplines such as compensation, recruiting and benefits administration. Specialists (who may be full time or contractors) can bring expertise that generalists may lack, often at a lower cost. As the skill shortage increases the trend to dis-aggregate jobs will speed up and the reliance on contingent workforce will increase.
  2. Go Virtual

    Thanks to on-line collaboration tools many more jobs that once required daily in person interactions can be performed from anywhere. These jobs range from administrative assistance, insurance claim processors, law associates and corporate workers in finance or HR. Virtual approaches to work are attractive to a wide array of employees, including working mothers, older workers and younger generation Y professionals who want flexible lifestyles from the start.

  3. Make work more flexible

    By breaking down jobs into components and using technology to virtualize others, employers can engage labor far more efficiently. Some companies are exploring a spectrum of full time in the office, part-time, temporary, contingent, and remote workers who can help meet spikes in demand. Companies that optimize such configurations, engaging talent as needed can lower their overhead costs, improve response times and efficiency.

Contingent workforce

Outsourcing with a contingent workforce

The key to this talent-on-demand model is the availability of workers with specialized skills who are willing to work on a contingent basis.

The workforce appears ready. The mix of contract workers is shifting toward highly skilled professions. The 4 largest job gains were Business, financial-Health care, personal services (trainer, nanny)-education-Computers, mathematics.

The first priority for executives leading their organizations into the new world of work should be helping their management teams improve or develop the following abilities:

1-Coordinate and sequence:

Managing diverse groups of on site and remote employees will be challenging as project based and temporary staff come and go. Managers must coordinate, coach and ensure that all the tasks mesh smoothly and the information is shared. Group interactions will require careful planning.

2-Over communicate:

Some companies require that offsite workers be available for a certain period each day to catch up and check in with colleagues; other companies set aside time for in-person meetings. You need to over communicate to make sure everyone understands their roles and when work will be handed off.

3-Observe and Listen:

The best managers will vigilantly observe how their people adjust and respond accordingly. They need to ensure loyalty and identification with the company which is more difficult to do in the absence of daily contact or the camaraderie of working in a traditional team.

4-Let Go:

Some managers struggle when evaluating performance of knowledge workers. It’s difficult to judge based on outcome not hours. Defining clear goals and reasonable time lines is difficult. One must define the goals and step back.

5-Hiring strategy:

Managers should have a strategy in effect to find local flexible people to complete these projects when needed.  Consider networking within the freelance community, or rely on to find the ideal matches and take advantage of the review system.

This new world of work opens up new possibilities for how companies define their boundaries and organize their work. Companies that take advantage of these trends-and indeed pioneer them-can lower their costs while significantly enhancing their value proposition to employees.

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