Bridging the management gap: The case for integrating management of contingent workers

In an environment that continues to rapidly change, contingent workers—individuals who are not on company payroll but provide services to an organization (e.g., contractors, consultants, temps, advisers like attorneys, and subcontractors that supply workers)—have become a key resource in helping companies achieve their strategic business goals and objectives. Whether contingent workers are brought in to fill a skills gap, provide temporary coverage for employees on leave, or meet cost and time considerations, they serve an increasingly essential role for organizations. The trend toward larger contingent workforces—increasingly constituting 30%–50% of an overall workforce¹—is creating new challenges for leaders looking to improve or streamline their workforce management.

For the past four years, MIT Sloan Management Review and Deloitte have researched the future of the workforce, conducting global surveys and interviews with executives and other thought leaders. Our most recent research reveals the need for an integrated approach to managing contingent workers as an important aspect of orchestrating an overall workforce ecosystem consisting of contingent workers, employees, gig workers, crowdsourced contributors, app developers, and even certain technologies.

Siloed management, uncertainty about which tasks to allocate to external contributors, and shifting organizational dynamics (especially among human resources, procurement, and business unit leaders) become especially complex when an organization’s contingent workers become a significant percentage of its workforce. But successfully navigating these challenges to implement an integrated approach can yield improved decision-making and efficiency, reduced costs, improved access to critical skills, and better commitment to putting cultural and diversity values into practice.

Deloitte’s latest collaboration with MIT Sloan Management Review offers a case example featuring global networking company Cisco as a potential model for organizations struggling to unlock new opportunities with their contingent workforce. Cisco recently launched a series of strategic initiatives and operational efforts to manage its contingent workforce in a more structured, organized, and coordinated way.

The Cisco situation

With more than 50,000 contributors making up their contingent workforce across the globe, Cisco is no stranger to the challenges of workforce integration. Because the company has grown largely through acquisitions in recent years, business units tend to operate independently and management is decentralized. Cisco’s human resources organization may be responsible for matters relating to full- and part-time employees, but its scope does not extend to engaging or managing contingent workers who are often administered separately within individual business units. In addition, some contingent workers have been with the company long enough for the premium paid to staffing agencies to exceed the cost of benefits paid to employees.

Keys steps towards integration

Cisco’s efforts to implement a contingent workforce strategy are still in process, but they have introduced several initiatives in key areas that are worth highlighting as useful practices for orchestrating not only contingent worker management but also workforce ecosystems as a whole.

Cross-functional steering committee

To begin operating more consistently across the organization for contingent workforce management, Cisco leadership has implemented a cross-functional steering committee consisting of members who are just below C-level with decision-making authority. The committee includes representatives from all functional areas, including finance, human resources, information technology (IT), and operations, and includes representatives from various business units. This team provides strategic guidance, resolves policy issues, and helps standardize the approach to managing contingent work across the board.

Technology systems

Technology is one of Cisco’s primary workstreams for implementing an integrated approach to managing contingent workers. Recognizing their existing IT systems could not support the changes necessary for seamless integration and would need a complete overhaul, they opted to work with a vendor focused specifically on contingent human capital management who offered an existing product that could be configured to meet the needs of an organization operating in locations around the globe.

Values, diversity, and culture

Aligning organizational values across a workforce of more than 83,000 employees and 50,000 contingent workers is a critical—if messy—step towards integration. Ensuring pay and benefits equity across demographics and partnering with organizations supplying contingent labor that can support Cisco’s diversity goals are a key focus, as well as understanding globally varied labor laws and their impact on the organization’s ability to build shared culture.

For companies that are beginning to consider how to manage their entire workforce ecosystem, it can make sense to start where Cisco started, with integrating the management of its contingent workforce. Tackling this part of the workforce ecosystem can offer a range of lessons for how, and whether, to integrate the people, processes, and technologies that make work possible across the enterprise. While reducing inefficiencies, costs and compliance issues, this approach may also shed new light on how to spur growth by redesigning and reallocating work across organizational boundaries.

Read the full article “Managing External Contributors in Workforce Ecosystems” by MIT Sloan Management Review and Deloitte.