Category: Contingent Workforce Management

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.

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.