This July 4, the United States celebrated 240 years of independence from the British Empire. Interestingly, Britain sought to secure its own independence from the European Union just days before, in the now infamous Brexit vote. Freedom from the shackles of big governance isn’t just the rallying cry we hear in today’s political theater, it’s become a mantra chanted by millions of skilled workers. These are the professionals inspiring and fueling the steady growth of the gig economy. For procurement leaders, this is a hot topic. Our CEO, Sunil Bagai, will be addressing attendees at ProcureCon’s Contingent Staffing 2016 Total Talent Management summit in Atlanta. One of the big discussions on the agenda is how procurement can unlock the “world’s largest talent pool,” which the on-demand economy has created. We believe that staffing professionals hold the key.
The Gig Economy: World’s Largest Talent Powerhouse
In the not too distant past, we looked upon freelancing as a desperate measure. During bouts of economic decline, employers concentrated their recruiting efforts on contingent workers. The intent was to keep operations running smoothly while containing the costs associated with full-time employees. Conversely, in economic booms, companies returned their focus to building up their permanent staff. For workers, economic conditions carried similar sway. Freelancing became a temporary fix for cash-strapped talent struggling to find “gainful employment” in down times. That’s all changed.
According to the latest figures, over 53 million Americans are freelancing or contracting. That’s about one in three workers. In fact, the majority of all new jobs created are contingent. It’s a trend that started around 2001 and gained serious momentum seven year later during the Great Recession. The data depict a dramatic change in how we should be thinking about the nature of work. Take a look at the following chart, which aggregates data from the U.S. Bureau of Labor Statistics (BLS). While the majority of workers still operate under traditional full-time employment arrangements, most new positions created since 2001 have been contingent.
We tend to think of contingent talent as day laborers, agency temps, consultants, freelance writers, Uber drivers or construction workers. Yet professionals in nearly every industry are joining the ranks of the gig economy. Academia is a great example. Adjunct and part-time professors now make up the majority of faculty in colleges across the country. The traditional tenured staff account for less than one third of the teaching population in higher education, and they instruct fewer than 50 percent of the classes.
According to a poll from TIME, strategic communications firm Burson-Marsteller and the Aspen Institute Future of Work Initiative, independent professionals don’t simply turn to the gig economy for extra cash; “they either make more than 40% of their income in this economy, describe it as their primary source of income or say they can’t get work in a more traditional job.” The survey uncovered other fascinating details.
- Of the participants in the sharing economy, 51 percent claimed to be better off financially.
- Close to 65 percent of those individuals believe they will earn even more in the year ahead.
- Over 70 percent of gig talent said they loved working in the industry. Only two percent expressed a decidedly negative view.
Gig work can enable procurement leaders to enhance cost savings and process efficiencies through contingent work. This kind of freelancing appeals to talent because of the flexible scheduling, greater work-life balance, learning opportunities and skills development. However, the new arrangements are raising questions. Employers find themselves faced with developing compatible talent acquisition strategies to attract, engage and manage complementary workers without disrupting existing operations. There are also compliance issues, evident in the slew of lawsuits levied against companies such as Uber. This is where staffing providers can play a pivotal role as strategic partners for procurement.
How Staffing Suppliers Procure Gig Economy Talent for Procurement
Attracting gig talent. Different types of gig talent suit different environments, and they satisfy specific needs. To engage the right workers, staffing suppliers work closely with procurement to analyze requirements and determine the appropriate personnel for each position, mining data and evaluating predictive analytics for those roles. Yet, not all workers have the same motivations or objectives. That’s where seasoned staffing curators come into play. Their expertise in social recruiting, promoting compelling employment brands, and communicating a targeted value proposition to each candidate is essential. Beyond that, they understand how to match business cultures to individual workers whose professional goals and values mesh.
Comprehending organizational needs. Client hiring managers, procurement leaders and HR officers know what they want, yet all from their varying, independent perspectives. Staffing professionals have a rare opportunity to survey the entire organization’s employment landscape. Through the information they’re provided by disparate stakeholders, they develop a heightened level of visibility and objectivity. This insight, and accompanying program data, allows them to see short-term, near-term and long-term needs. Staffing curators can also identify the skills required today and in the future, and determine the best talent to fill all of those demands.
Consultative approach. Understanding spend is paramount. Staffing curators have years of experience working with different organizations, corporate structures, industries and regions. This lends a unique and informed perspective on the areas of a business that will benefit from on-demand talent. By consulting with staffing experts, procurement leaders can easily identify positions requiring a rapid deployment of skills.
Focus on quality and compliance. With greater variance in labor types, a blended talent strategy of this complexity runs the risk of introducing non-compliant practices into the program when left uncurated. In the gig economy, this oversight becomes more imperative. Fortunately, staffing professionals have been cultivating compliance procedures for years, which extend beyond assignment length and breaks in tenure. Many have specific compliance solutions for worker classification, exempt vs. non-exempt policies, Statement of Work (SOW) management systems, and more. Gig workers who accept assignments or projects with a staffing supplier are vetted and qualified. Moreover, the staffing partner becomes the candidate’s W2 employer of record throughout the assignment, which substantially mitigates procurement’s risk.
With online work platforms, freelance talent and procurement establish a marketplace that enables a process of bidding and interaction through services that offer identity and profile management, skills searching, resume matching, ratings and references, payment terms or negotiations, and more. The principal legal arrangement, however, is a contractual agreement executed between the freelancer and procurement. In this scenario, issues of worker classification, income reporting, and applicable tax withholdings are essentially left for the parties involved to figure out. And that’s more risk than any staffing firm would allow or be comfortable with.
A staffing provider mitigates a client’s exposure to labor-related risks and legal responsibilities. In this arrangement, a client has more assurance of compliance with mandated laws and regulations, such as health and safety, workers comp, EEOC, citizenship and work permissions, statutory withholdings, and some degree of indemnity.
Expert staffing professionals can be engaged to lend consultative guidance on issues of workforce regulations, employment classification, labor laws, tax reporting, and a variety of screening processes. Where issues are identified, staffing curators can step in to represent the talent for procurement, taking workers on as employees and ensuring a compliant placement process.
Most staffing providers already have a firm grasp and level of familiarity with online recruiting platforms. If procurement leaders have engaged MSPs, it’s worthwhile to note that their VMS partners are integrating key aspects of online recruiting and freelance management systems into their software.
Comprehensive management. Staffing curators know firsthand how contract workers’ needs differ, as well as the nuances in scheduling, measuring attendance, reporting on metrics, executing the proper agreements, ensuring compliant payrolling, and more. And because managing outsourced enterprise workforce efforts is their job, they aren’t overwhelmed by the corporate obligations that consume hiring managers. Staffing curators can devote time and resources to satisfying the needs of gig talent and procurement leaders in concert.
Branding. Skilled gig talent know that they have choices. Their perception of your employment brand is a priority. Staffing professionals excel at communicating your value proposition effectively. They develop messaging and social recruiting approaches that explain how the job can fulfill their professional goals and desire for personal balance.
- Staffing curators interact and engage gig talent on the social networks they use. Through these personalized communications, staffing professionals use the information they’ve gathered from procurement to alignment the company’s culture to the aspirations of candidates, which inspires confidence and enthusiasm.
- Staffing professionals have a refined approach for creating job descriptions that impart engaging, accurate and informative details about the position, the company and its opportunities.
- A staffing firm’s recruiters spend a larger amount of time on social media than procurement leaders typically do. Their presence is frequent, human and interactive. And the information they share is directly related to the key characteristics of the organization and its culture — tech savvy, creative, etc.
Emerging recruiting models. Few corporations outside the staffing space devote as much time or energy studying labor trends, perfecting hiring techniques and striving to create an equitable situation for talent. Staffing professionals have been at the leading edge of diversity efforts, recruiting innovations, search and placement expertise, skills development, employment classification practices, compliance assurance and more. They’re also aggressively designing and advocating evolutionary programs that capitalize on open marketplace models. That’s exactly where gig professionals congregate – in the crowd.
Think about it. What if we created an open marketplace for available positions, let anyone apply and actually perform the work? What if we compensated only those who performed well and delivered the highest quality work? Could this approach succeed? Well, it’s already working and thriving. UpWork and 99Designs prove that open marketplace models can flourish. We’ve proven the same with our own Crowdstaffing solution.
Next-generation hiring techniques will inherently develop crowd-based networks of skilled talent and independent recruiters. Unlike online recruitment solutions, however, the process is supported by staffing curators to ensure complete labor compliance, quality and customer service. A Crowdstaffing model streamlines recruiting and hiring processes for time-strapped procurement managers. And it’s the move toward fluid, performance-based structures that will unleash the potential of the sharing economy for procurement.
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