Managing the Total WorkforceGlobal perspectives on contingent workforce practices

Presenter: Alex HaganFounder and CEO, Kienco

@alexhagan

“It’s not about the money, money, money” Jessie J, “Price Tag”

50% of the Fortune 100 workforce will be contingent workers by 2020,

according to Staffing Industry Analysts

62% of executives surveyed by the Economist Intelligence Unit’s “Global

Firms in 2020” survey expect to see a growing proportion of contingent

workers

55% of global executives surveyed as a part of Deloitte’s Talent Edge 2020

study plan to increase the use of contract and/or part-time labor over the

next year

34% of the 2,000 US Companies surveyed by McKinsey & Company’s 2011

jobs survey expected to see an increase in contract and/or temp workers in

the next 5 years. 90% of the respondents were responsible for hiring in their

organisations.

40.2

96.7

87.2

95.5

61.9

82.9

86.9

84.7

79.7

89.4

80.8

73.1

67.9

62.6

97.4

89.9

82.8

75.6

68.0

10.6

5.5

30.8

4.5

2.1

2.3

14.3

6.9

9.3

11.7

16.5

25.4

5.9

7.3

17.3

13.9

49.2

7.3

7.4

12.6

11.0

12.9

6.0

3.7

9.9

15.1

15.5

12.0

4.2

9.9

7.1

18.1

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Agriculture, forestry and fishing

Mining

Manufacturing

Electricity, gas, water and waste services

Construction

Wholesale trade

Retail trade

Accommodation and food services

Transport, postal and warehousing

Information media and telecommunications

Financial and insurance services

Rental, hiring and real estate services

Professional, scientific and technical services

Administrative and support services

Public administration and safety

Education and training

Health care and social assistance

Arts and recreation services

Other services

% Employees % Independent Contractors % Other Business Operators

61.9

77.7

74.6

88.0

91.3

87.7

86.8

82.7

9.3

12.2

17.7

6.4

5.1

4.0

10.0

12.6

28.8

10.1

7.7

5.5

3.6

8.2

3.2

4.7

0.0 20.0 40.0 60.0 80.0 100.0 120.0

Managers

Professionals

Technicians and trades workers

Community and personal service workers

Clerical and sdministrative workers

Sales workers

Machinery operators and drivers

Labourers

% Employees % Independent Contractors % Other Business Operators

Australia

Agency Workers – 2.8%

Independent Contractors – 8.5%

Other Business Operators – 9.0%

vs

USA

Agency Workers – 1-2%

Independent Contractors – 7%

Self-Employed & Other – 8-9%

• To hedge bets in the face of uncertain workforce demand

• To respond to fluctuating or time-limited demand (such as seasonal work

or a new product launch)

• To add capability in order to execute very quickly (assuming time-to-

productivity is minimal)

• To reduce costs (by avoiding the fixed costs that employees entail)

• To “try before you buy”

• To obtain skills and experience for a fixed period while transferring that

expertise to employees

• To access talent that isn’t available as a direct employee

• To address global talent shortages

Disaggregation of Work

Globalisation / Remote Workforce

Technology

“On Demand” Workforce

Gamification

"No matter who you are, most of the smartest people work for someone else”

Bill Joy, Sun Microsystems co-founder

Onboarding

Performance

Retention

Development

Training

Safety

Deployment

Engagement

Knowledge Management

Employment Brand

Reference Checking

Professional Standards

Capacity Planning

…But often are not integrated into HR initiatives for

“Although it may seem like the company is saving money — because you don’t have to provide temporary workers with medical coverage or paid vacation time — the revolving door of new hires encourages low quality work, inconsistent productivity and wastes useful resources on training.”

“Temps who had not paid attention in training were now training new temps.”

– An open letter to Jeff Bezos, CEO of Amazon.com

Contingent workers have “work arrangements that

differ from regular/permanent, direct wage and salary

employment. Contingent work and workers are

primarily distinguished by having an explicitly defined

or limited tenure.”

Temp Employees

Independent Consultants & Contractors

SOW Consultants

Interns

Freelancers

Seasonal Workers

Crowdsourced Workers

“Supertemps”

Contingent Workers are more productive than employees

Contingent Workers are more motivated than employes

Contingent Workers are happier than employees

Contingent Workers are cheaper than employees

Contingent Workers are less productive than employees

Contingent Workers are less motivated than employes

Contingent Workers are not as happy as employees

Contingent Workers are more expensive than employees

studies show:

…and other studies show:

Nominally Low-Skilled Occupations

that aren’t core business. Often

includes things like call centre work,

assembly line production, catering

and cleaning services.

High-skilled and socially important

occupations such as nursing and

teaching where coverage is a critical

issue. Often Agency Temps to

supplement internal workforce.

Common for engineering and software

specialists, HR specialists, film

production crews, artists. Usually

highly specific skills that are required

on a short-medium term basis.

Non recession-proof fields that are

highly skilled, traditionally full-time

employment that are in oversupply,

causing a high reliance on short-term

contracting. (Architects, Lawyers)

“It used to be that only cheap foreign manual labour was easily available; now cheap foreign genius is easily available”

Thomas Friedman, New York Times Columnist

“products that are in low demand or

have low sales volume can collectively

make up a market share that rivals or

exceeds the relatively few current

bestsellers and blockbusters, but only if

the distribution channel is large

enough.”

"The Web allows people to show what they can do, regardless of their education and credentials. It allows groups to form and work together

easily outside of a company context... And these more informal organizations are much less constrained by geography; talented people

can live anywhere and shouldn’t have to move to contribute.“

It seems so much riskier to take a flier on someone you don’t know, just because that person has a degree from a good school.

• Masters degree in solid state physics and

mechanical engineering, working towards a PDh in

Hydrogen Energy.

• Author and co-author of nine academic articles and

16 presentation on international conferences.

• Participant in four international science research

projects with collaborators from Canada, USA,

Russia.

• Interested in the interaction between hydrogen and

zirconium based intermetallids and developing

hydrogen accumulators.

• 5 star rating from 4 clients across 7 jobs. 100%

Recommend, 100% would re-hire, 75% have rehired

In the global, online

talent market, social

proof replaces

reference checks

• Made out of a coat and 2 ping pong balls

• Has appeared in 36 Movies

• Talk show host

• Author of three books

• Has a star on the Hollywood Walk of Fame

• Holds an Honorary Doctorate of Amphibious Letters

from Southampton College

• Records birthday greeting videos in his spare time –

1,066 recorded so far with a 99% Satisfaction Rate

1,066 Reference

checks have already

been done

Integrating data about “traditional” employees and contingent workers into a common

framework enables companies to:

• Gain a more holistic understanding of how they use talent today

• Model the projected impacts of different staffing options (buy/build/borrow)

• Determine the optimum balance between the contingent and “permanent” employee

segments

• Customize the mix in different locations, functions, roles or work streams

• Project the changing mix over the product or project lifecycle

• Better information on external supply

• Integrating demand planning into workforce mix

• Rich environment scanning and scenario planning

• Reduce time to productivity of contingent workers

• Understand total cost, attrition, performance, etc across different sectors

• Removed 9% variance between contractor and

employee injury rates by pre-qualifying all contingent

workers

• Saved 5% of contingent costs by taking a strategic

approach to contingent engagement

• Reduced supervisor contingent workforce

management time from 35% to 15%

• Removed FTE caps, which managers were working

around by hiring contingent workers, even if this

wasn’t the best option

• Had data on only 30% of the non-FTE workforce

• Security gaps, such as the former CW who liked the

email account

• Created a decision framework for when to engage

contingent workers by type, including considerations

like ramp-up time, type of work, length of

engagement, and cultural fit.

• Duration of Work

• Type of Work (how strategic is the work? How difficult

to find the skills?)

• Knowledge Retention (how unique is the knowledge,

and how critical to retain?)

• Transition Costs (how significant?)

Recommendation on whether to hire an employee, or to

use contingent workforce

This decision should always be made strategically, not reactively – you may need a decision

framework tailored to your organisation to do this

Strategic use of contingent work requires an understanding of the entire workforce today, and

external supply into the future

Partner with people who know where the talent is

Understand your workforce supply and demand curve

Don’t treat Contingent Workers as a homogenous group – they are more heterogenous than your

employees

Be aware of the “Long Tail” of talent

Take advice from Jessie J

ISRAEL SPAIN

SOUTH AFRICA POLAND

GERMANY

TAIWAN

INDIA NORWAY PAKISTAN

Source: Staffing Industry Analysts’ Daily News

AUSTRALIA

Unique Relationship to Risk and Reward (2 sides to this coin)

“Casualisation of the Workforce”

Possible Structural inequalities for SOME contingent workers – younger

workers, female workers, and minorities are proportionally more highly

represented in contingent work

“Workers describe a miserable existence, long hours, pitiful pay and abuse if deadlines aren't met. In some of the worst cases

there is even violence and threats of jail”- Four Corners, 25th June 2013

A factory owner in China said that it would “...be nearly impossible for a foreign company to determine if one of its suppliers was

complying with labour and safety standards”- Australian Financial Review, 20th August 2013

"It's price, price, price, price, price and profit“ – Australian Financial Review, 20th August 2013

Although it may be cheaper to subcontract work, the practise can

create “long complex supply chains [that] can allow poor and often

illegal labor practices to exist in legitimate industries”

- Institute for Human Rights and Business

Reference Checking

Professional Standards

Safety Standards

Cultural Fit

Capacity Planning

Labor Market Conditions

Lack of experience in both Contingent Workforce Management and Strategic Workforce Planning

Siloed approach – HR for Employees, Procurement for the Contingent Workforce

Sketchy Information

The Difficulty of Scaling Globally

Functional Silos

Dr. Mary Young leads The Conference Board’s

program of research on Strategic Workforce

Planning (SWP). Trained in organizational

behavior and organizational development,

she has studied strategic workforce

planning‘s emergence and evolution as a

business process in more than 70 companies.

Dr Young generously provided research and assistance for this presentation.

Many of the case studies within are taken from her research “Managing the Total Workforce:

Bringing Contingent Labor inside the Strategic Workforce Planning Tent”, April 2013 http://www.conference-board.org/topics/publicationdetail.cfm?publicationid=2473&topicid=40&subtopicid=150