As companies adapt to keep up with the demands of the modern economy, the composition of the global workforce is changing. In some industries, the pace of that change has been exponential, while other industries aren’t facing the same urgency to adapt.
But no matter the sector, one trend has become firmly established, the highly skilled, on-demand workforce is growing and it’s here to stay. Along with that shift comes the need for companies to understand how it works, what threats and opportunities it poses, and how they can react most effectively to extract the benefits of a modern workforce within their own business practices.
A central tenet among modern organisations is that in order to remain competitive, they need to be agile and adapt quickly. A recent survey by global consulting firm Deloitte showed that 94 per cent listed agility and collaboration as critical factors to their success. Interestingly, just six per cent said they met their criteria. Organisational agility is a top priority for leaders. Those who are not conducting organisational-agility transformation processes will have to do so in the future to remain nimble and competitive.
As a result, the anatomy of today’s workforce is primarily built on the foundations of flexibility and agility. Deloitte’s 2018 report on global trends in human capital highlights some of the changes taking place in line with that trend.
Traditional employment models have been replaced by “diverse workforce ecosystems”, comprised of a diverse mix of highly skilled workers and service providers and talent networks with increasingly innovative channels for procuring talent.
But for many companies looking for a competitive advantage, the shift from hierarchical work structures to organising their businesses around how work actually gets done requires a new way of thinking. Adopting a blended workforce, where a potent mix of internal and external people are deployed on a project is essential for modern-day business success. However, it’s not easy to directly access a broad pool of external expertise without the support of technology.
Freelance Management Systems (FMS) are a critical tool for workforce planners to directly source from a highly engaged talent pool with diverse expertise, at scale. Coupled with Vendor Management Systems (VMS) and Human Capital Management (HCM) Systems the ‘HR tech stack’ needs to align with the needs of the modern-day workforce.
The importance of FMS can be illustrated firstly by highlighting the benefits of on-demand work models for highly-skilled, professional workers. Having the capacity to quickly assemble teams for project-based work – who can solve complex problems quickly– offers a potential advantage which 5 years ago didn’t exist. In addition, it’s been demonstrated that bringing in skilled workers to work with existing teams can significantly improve productivity, and it also helps promote innovation and the crossflow of ideas.
Just as important, though, is the fact that facilitating those kind of worker engagements is easier said than done – unless companies take the time to fully understand and implement the appropriate systems to manage project-based work and directly engage people on-demand.
That means engaging with the infrastructure in a number of different ways; knowing how to find workers for the relevant project in questions, knowing when they’re available, setting up a one-stop shop for administrative tasks such as work contracts, and ensuring the necessary feedback channels are in place to establish a benchmark around worker/employee communication.
The end goal is to get the right workers into the right jobs at the right time – skilled workers who can perform critical job functions as they arise – the benefits of which have been outlined above.
But for many high-level corporate firms, obtaining the requisite FMS knowledge also performs a critical function in their daily business practice; the effective mitigation of risk.
“Creating a fit-for-purpose workforce while protecting your business requires knowledge across many areas of regulation - including employment, remuneration and benefits, mobility, data privacy/protection, tax and protection of confidential information/trade secrets,”
- Baker McKenzie
McKenzie goes on to note in his report that “nevertheless, the rewards of adopting new staffing models can be considerable.”
In view of that, smart companies are moving to allocate more resources to understanding the architecture of the modern workforce and specifically FMS systems, so as to avoid being left behind amid the ongoing changes in the way people and business approach, work.
The extent of those changes are reflected in the numbers, with around 31 million people in the US predicted to be in contingent roles by 2020.
A similar shift is playing out in other advanced economies, driven by changing demographics, technological improvements and a desire for increased job satisfaction. That last point is particularly prevalent in the Australian market, where the unemployment rate just fell to 4.9 per cent - the lowest level in eight years.
However, despite healthy jobs growth, an unusual trend has emerged; underemployment – a measure of those who are in employment but would like to work more hours – remains stuck at historically high levels above 8 per cent. As more workers leave traditional full-time and part-time roles, effective implementation of the contingent workforce could have a key role to play in boosting worker satisfaction and broader economic productivity.
Ultimately, the anatomy of the modern-day workforce is changing fast. In that environment, it’s important for businesses to first be aware of what changes are taking place (and the pace of that change), and secondly understand what measures they can take to remain competitive in the new paradigm while also mitigating the risks associated with the practical changes that will be required.