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The Alternative Workforce: it's now mainstream
Human Capital Trends 2019
For years, many considered contract, freelance, and gig employment to be “alternative work,” options supplementary to full-time jobs. Today, this segment of the workforce has grown and gone mainstream even as talent markets have tightened, leading organizations to look strategically at all types of work arrangements in their plans for growth. Best practices to access and deploy alternative workers are just now being invented. If the economy continues to grow, organizations must be more flexible in adapting to these new work arrangements, and plan to use them in a strategic way. Explore our 2019 Global HC Trends report for more.
Most organizations are using alternative workers transactionally, not strategically
How fully are organizations capitalizing on the alternative workforce today? Our survey results suggest that many could be doing more. Forty-one percent of our survey respondents told us they considered this issue important or very important—but only 28 percent believe they are ready or very ready to address it. In fact, our research suggests that most organizations look at alternative work arrangements as a transactional solution, not as a strategically important source of talent. Only 8 percent of our respondents, for instance, said that they had established processes to manage and develop alternative workforce sources; fully 54 percent of respondents said they either managed alternative workers inconsistently or had few or no processes for managing them at all. These organizations are using alternative work tactically as a way to “fill slots,” not strategically as a long-term solution for the future.
What’s more, our 2019 survey showed that using alternative workers can enhance organizational performance (figure 1). This is the real reason that managing alternative work and workers well is strategically important: It enables an organization to put the right talent in place where and when it’s most needed to get results, in a labor market where traditionally on-balance-sheet talent is becoming ever harder to find.
Human Capital Trends 2019
Rewiring the approach to the alternative workforce
Engaging alternative workers strategically is harder than it looks. To do so, companies have to move beyond “managing” contractors and freelancers to “optimizing” and “leveraging” the alternative workforce deliberately and well. Not many do. Even among companies with policies and standards, our experience suggests that a strategic, enterprisewide approach is rare. What is needed is a wholesale rewiring of how organizations operate as it relates to alternative labor—one that allows it to connect the appropriate talent with the appropriate roles no matter how that talent is sourced. Part of the answer lies in connecting the various parts of the enterprise involved, often in a fragmented manner, in hiring alternative workers. This includes procurement, IT, and, increasingly, HR.
The good news is that, at many organizations, HR is indeed stepping up in this area. Seventy-five percent of this year’s survey respondents indicated that HR supports sourcing alternative workers; 66 percent reported HR is involved in training them, 65 percent said HR negotiates work arrangements, and 63 percent reported HR is involved in benefits management. And investments to expand HR strategies to the alternative workforce are also rising. More than half of our respondents (51 percent) reported that their organization has specific plans to address recruitment strategies for the alternative workforce. Further, 31 percent of respondents now have learning and development plans for alternative workers, 23 percent survey them for feedback, and 22 percent award them bonuses and other types of incentive pay.
Alternative workers, mainstream respect
Remembering our principles for human capital reinvention, businesses must consider issues of inclusion, diversity, fairness, and trust when constructing organizational systems around alternative work. Alternative workers can have different backgrounds and cultures than many traditional workers, and these individuals are often accessed in different ways. Can managers lead a team with a diverse mix of people from both traditional and alternative talent pools, when each may come to work with a different set of motivations? Can the organization engage the alternative workforce in a way that promotes the organization’s brand as a social enterprise?
It’s important that the entire workforce, both alternative and traditional, be treated with respect with regard to culture, inclusion, and work assignments—and that perceptions on all sides reflect these values. While the greater risk is arguably that alternative workers will feel they are treated as outsiders—thus potentially damaging an organization’s overall employment brand—it’s also possible for the knife to cut the other way. Risks and challenges like these are not insurmountable, and the alternative workforce is now a critical mainstay of the workforce for a growing number of employers. Organizations that take this workforce seriously can build strategies and programs to access and engage talented people wherever they may sit in the labor pool, driving business growth and extending the diversity of the workforce.
For more information about the Human Capital Trends 2019, please contact Petra Tito or Ronald Meijers via the contact details below.
Human Capital Trends 2019
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