Attraction and retention of top talent has been on top of the agenda for almost every CEO. The end of the ‘War on Talent’ is not in sight, and especially with factors such as the COVID-19 pandemic boosting virtual working, organisations are rethinking their workforce.
Not the traditional picture of predominantly full-time employees coupled with outsourced services, but a complex balance between (fixed term) employees, contractors, strategic partners, and commodity partners: often the T&Cs underneath the contracts being different while the ‘team’ acts as one.
One area that has particularly shifted in the last years, is the focus on contingent labour – mostly driven by the increased volume of highly skilled contingent talent available in the market, and the specialist skills and flexibility this brings. This is underlined by Ardent Partner’s report, which found that nowadays 62% of corporations view contingent labour (contractors) as an essential part of their overall workforce!
However, while companies are quite eager to solve their talent issues by tapping into the trend of employing highly skilled contingent talent – this does not come without its own challenges.
Successfully building and managing a contingency workforce is no walk in the park. Organisations often struggle with keeping the overview on this ‘fluid’ workforce, driving and measuring value, managing the large volume of (re) contracting & compliance, and having clear roles & responsibilities between Business owners, HR and Procurement.
To get the most value out of contingent workforces, it is therefore important that it is in line with the overall talent strategy and how a contingent workforce enables this.
Based on our experience as a network consultancy (90% of our activities are performed by a contingent workforce) as well as our track record in operating model advisory for big corporates – below are 4 key steps to make your contingent workforce a success!
Step 1: Align with your overall business and talent strategy
This sounds simple, but it is not. Looking at your business strategy, it is important to identify where you need what type of capability. This informs which type of resources and competencies would be most appropriate (looking at e.g., IP, continuity, and business criticality) and with that where it could be beneficial to collaborate with contractors and partners (looking at e.g., cost, flexibility required, scarcity of the skills/experience, outside-in perspective). In general, this should provide a perspective on where a ‘contingency workforce’ would ideally play a role vs. inhouse resources.
For example, you want your product managers to be employees, but your product teams can fully consist of contractors. Or for a project centre of excellence where you want a mix of permanent and SME to respond to changing business needs. We’ve also seen situations where some roles like e.g., the chief of staff has been indicated as a ‘permanent’ interim role, to ensure that fresh and new perspectives are continuously brought into the C-suite. Therefore, step one is really to define your organisations’ approach and principles regarding the workforce mix as part of the business strategy, providing clear direction and purpose for your contingent workforce and where & how it plays a role.
Step 2: Define what a successful contingent workforce looks like for your organisation
Based on the role of a contingency workforce in your organisation, it is highly recommended to develop a clear set of ‘benefits’ or success criteria. Including how this integrates within the organisation. This to manage expectations up and down the organisation (avoiding that the executive will be very concerned at the cost analysis for internal and external labour and; or the business director limitlessly engaging contractors from his own network to the frustration of HR and Procurement) by having a clear view and agreement on the trade-offs and choices made. This will also inform the guardrails/key principles to drive and steer performance going forward.
Some example success factors/benefit levers:
- Talent attraction: ensure you will have the resources and competencies to respond to changing business needs and scarcity in the market
- Reduction in labour cost due to flexible & short-term contracting (reducing labour waste/increase utilisation in the organisation)
- Shorter delivery (lead) times on critical projects due to the quick access of the right temporary resources
- Higher value/impact delivered due to specialist talent/expertise that the organisation otherwise would not have had access to
- Decreased recruitment cost due to the availability of a pool or network of resources, vs. internal recruiting effort finding and contracting the right permanent employee
- More innovative culture, new ideas, new processes
- Higher engagement of the holistic workforce as people are more specialised in the work they do, and the value add resulting from it
Step 3: Define your contingent talent strategy & mechanisms
Having a view on your overall talent strategy and the role of your contingency workforce, as well as the business case and resulting principles, you can now have a look at the specific mechanisms to enable that. Some key areas to think of based on our experience:
- The type of operating model – how do you interact and engage with the contingent workforce; how do you make this an integral part of your organisation and engage your employees around this; how do you collaborate with partners, HR, and procurement; who sets and ensures that guardrails & principles are followed, and monitors the cost/value?
- Performance / Quality management – how do you manage and incentivise the good performance of your contingent workforce as they fall outside of your regular performance mechanisms?
- Engage and sustain your workforce – how do you onboard your contingent workforce so they are set-up for success and sustain a long-term relationship, so you are creating value for both parties and work more often when possible
- Value/cost management & reporting – how do you keep oversight on your contingent workforce (incl. financially & regulatory), and make sure that you get the return on investment as defined by the benefit case?
- Enabling technology – what supporting systems and technology do we need to be in place to digitise the management of the contingent workforce as much as possible, enabling scale and volume
Step 4: Test the model
Once you have your contingent workforce strategy, make a plan, make it simple, and start testing the model. Most organisations already work with a contingent workforce, but often not in a very deliberate or structured way. What we see in practice is that there might be brokers in place that take care of the regulatory & admin part, but other important factors are not fully thought through and integrated as part of the ‘holistic’ workforce which leads to suboptimal performance.
Especially when you are not in a greenfield situation, choose your battles and areas that would bring the most value (e.g., looking at critical business programmes, strategic new capabilities, functional areas with high scarcity of resources) and start there. Create a mini business case, initial key principles, and get the required support in place from HR & procurement where needed.
Design the pilot process as clear, simple, and appealing as possible. From an admin, contracting, on-boarding, legal and quality point of view. Test what works for all stakeholders in the pilot, before structurally embedding this into your core processes. It’s also worth looking into some easy to use/implement SaaS solutions to kick-start the journey!
Looking to build or get more value out of your contingent workforce? Contact our People & Talent lead Ilona Welfing (email@example.com) for a free inspiration session.
About Riverflex and the authoring team
Riverflex is a global collective of consultants united by a mission to drive the sharpest edge of business. We deliver digital expertise by tapping into the open-talent ecosystem combining top consultants with the power of independent specialists — providing digital consulting, data, and talent services. For more information visit us at our website.
Contributors to this article
Ilona Welfing is the People Lead at Riverflex. Ilona carries with her 15+ years of experience in business transformation, organisational development, and leadership coaching. She has worked in different corporate environments as a consultant within Deloitte, followed by working within Danone in various Senior HR / Organisational Development positions.
Danique Wagemaker is the consulting director at Riverflex, managing director of the NL & UK core consulting as well as the marketing team. Previously having worked at Deloitte Digital and Google, she has extensive experience delivering digital and technology strategies for CxO leadership at F500 companies. Helping set key direction but also enabling the implementation of change from an organisational perspective, applying latest thinking on structure and way of working.