“Up to 30% of the Fortune 100 workforce is contingent. That number is expected to increase to 50% by 2020.”
When I read that statistic recently in a paper by our friends at the Starr Conspiracy, it hit me just how impressive this shift is in the makeup of the workforce. Nontraditional workers are making up an ever-increasing portion of the overall workforce. I wrote back in the fall about some of the legal risks facing companies who try to pull in their contingent workers and treat them as employees. I’d like to continue the discussion by focusing on some of the changes to job structure and how they are impacting what companies are seeking from workers.
Nontraditional workers and a focus on skills
When companies need payroll support, they seek out companies that know and do payroll on a daily basis. It’s no different when they are looking for nontraditional workers. The organization has a problem, and it needs a solution. In this case that solution happens to come in the form of a person with a specific skill set to get the job done.
Often times, those skills can be needed for a temporary basis if they are highly specialized. In this area, staffing and contingent workers can fill the skills gap without a long-term commitment on the part of the employer. According to information from staffing service Snelling, there is a skills shortage in several industries (healthcare, education, engineering, etc.) that can quickly and effectively be mitigated through the use of hiring temporary or contract workers for their specific skill sets.
Gigs vs jobs
With the rise of the “Gig Economy,” companies and workers are seeing less of a focus on the traditional employer-employee relationship. The downside of this is that many contingent workers do not receive benefits from the employers, whether financial or personal. This Workforce article highlights one worker who felt scorned by someone she supported, which ultimately impacts her loyalty and commitment over time.
On the plus side, driven individuals with extensive skill sets can differentiate themselves in the market and command the compensation they deserve. Instead of a single company having a monopoly on a person’s talent, the worker can partner with multiple employers on smaller jobs and tasks. In addition, it allows the person to focus on working in areas of strength, which we know has positive effects on the worker’s ability to reach higher levels of success.
Results vs process
One of the longstanding issues with companies attempting to hire contract workers is that they try to treat them as employees. The number one item on the IRS test for contractor/employee status is focused on this:
Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
If companies want to stay on the right side of the law, they need to stay away from “how” the work is performed and focus instead on “what” results from the activity. For instance, going back to the payroll example above: if my company hires a payroll provider to outsource our payroll activities, I’m paying for the results they give us (payroll) not for the privilege of telling them how to run it (the process, tools, technology, etc.)
The focus with contingent workers is more on the results they achieve and less on the process they use. In my mind, this seems to tie together a combination of two fairly recent movements in the world of work that seem to fit here.
- Dan Pink released his book Drive, which focuses on how to engage workers through three nonmonetary methods: autonomy, mastery, and purpose. These three words have taken on a power all their own as companies try to align with the findings of the research cited in the book. Check out the TED talk here if you’re interested in learning more.
- The Results Only Work Environment (ROWE) was started at Best Buy’s corporate office years ago (there’s a book about that, too) as a way to move away from the traditional considerations of how long employees were at the office and toward how well they were producing results. This shift forced managers to examine employee roles, determine what specifically drove performance, and measure those activities.
I’ll be back soon with more to share on the contingent workforce and how technology providers are supporting companies seeking to make the transition toward a larger nontraditional workforce. In the meantime, does your company use a large portion of contingent workers? If so, what skills gap are you filling with those workers?
Ben Eubanks, Associate HCM Analyst, Brandon Hall Group