In today’s business environment, there’s a growing need for organisations to broaden their approach to workforce management, to remain relevant and high-performing.
This is where the concept of a ‘Platform For Talent’ stems from. It’s an expression borne from the share economy where organisations are moving away from simply ‘owning’ resources, capabilities and people to being focussed on managing access to people and talent resources. Mercer have previously published valuable insights on the concept, which you can find here.
It’s a nuanced approach, that goes beyond traditional employment, a more fluid model of engaging a workforce means that instead of an organisation hiring people, strategic alliances are more evident: partnerships, and even collaboration with competitors.
We’re in a marketplace where organisations are more inclined to manage and leverage on-demand and crowd-sourced talent. The use of contract talent is on the rise – recent Mercer research showed 75% of organisations believed that a more fluid workforce model will emerge in their industry, and 62% predict that they will have a higher proportion of contract workers in the future. Yet interestingly, only 26% would declare themselves as a leader in that aspect of workforce agility.
- how do we attract and engage the best talent?
- how do we performance manage to get the best out of that talent?
- and how do we disengage with that talent?
How do we access the best talent now? How do we engage them? How do we drive performance when we work in a third-party engagement structure?
Considering the traditional model is to use 30 recruitment suppliers, 20 service providers, and a few technology platforms enabling access to freelancers how do you get control of the governance and all categories of talent engagement? From an organisational challenge it’s absolutely a stretch.
And from a regulation and legislation perspective, governments are focused on protecting workers, so they’re trying to play catch-up in terms of regulations and legislation, making the environment even more complex.
In fact, there’s vulnerability all throughout the supply chain, with clients being increasingly liable. So you’ve got regulations and legislations causing challenges inside organisations, and then you’ve got the Tax Office clamping down on individual taxation laws. And as there’s more and more of these workers engaged through a distributed model. Hence, visibility of both the workers and the tax implications is opaque at best. So despite regulators scrambling to fix the laws, they’re actually making it more complex.
Is the risk in how we attract and engage the worker or is the risk around the management of the worker?
And what we’re seeing is a greater risk associated with the management of the worker. Yet most organisations aren’t focussing on that they’re simply focussing on this: ‘how do we get the person in?’, and then they take on the challenge of managing the worker themselves. And most organisations will function under this paradigm: whilst we’re aware of the challenges of managing non-permanent workers, as there’s poor visibility, and no data, until something happens within the business to force change, the challenge will remain unaddressed.
Other key drivers with big business in Australia include cost, visibility and control of the non-traditional, non-permanent workforce.
An example of our experience in the Australian energy, oil and gas market: access to talent was the key issue of importance for them. This client had a two-to-five-year plan and as far as they knew they were going to be laying pipes down in Queensland, and so had a significant non-permanent talent plan in place. They knew there was going to be a lot of compliance requirements around taking on non-permanent workers; and they also understood that the contract was going to come to an end. So when they went to implement a non-permanent talent model, their key drivers were:
And in addition to access, talent visibility is also a major consideration. Sometimes, that’s likely to be a contractor whose LinkedIn profile or CV is always up-to-date because they’re consistently ‘looking’.
But what about organisational memory? Where is it? Why can’t organisations say – we know this person who’s contracting and has this skill set, this person who’s an FTE and knows our industry well, this person who we know wants to work with us.
Without the right technology and corporate memory, this visibility is limited. The challenge is around establishing the visibility – whether it’s an intermediary or a lack of system spanning all worker categories, or vendor visibility remains one of the biggest challenges.
Then from a global standpoint, we’re seeing organisations being less concerned with how many permanent or contract workers in their business, and more concerned about spend.
A major factor right now, is the focus on extension management, intake management, and how to redeploy non-permanent workers. As a result, access to talent, speed to hire, operational costs and ‘deserters’ –are all increasingly in focus. Hence, there is a need for technology to facilitate visibility of:
- the talent acquisition team, and
- hiring managers
As such, we’re seeing organisations coming to us, asking the following..
How can we engage with CXC as the HR function for our non-permanent workers?
We’re seeing organisations employing our services, to ensure:
- they engage with non-permanent workers properly
- they engage with non-permanent workers compliantly
- they navigate the complex regulations and legislation whilst moving forward as a workforce and a business
Conversely, if the contractor is not performing, they need a clear pathway for how to disengage the worker. A typical example is this: the non-permanent workers in an organisation are managed by third parties. Say one of these workers goes rogue. The business realises they need to remove the worker quickly. They ask: Who did we engage that person through? We can’t really remember. Their lack of planning & strategy in the management of their non-permanent workers highlights the fact that they’re potentially treating these workers as permanent employees.
The result? Organisations are starting to review their practices for access to talent, be that internally or through their suppliers, and separating that from the engagement and management of workers. However, this approach is still the minority - if you look across the ASX200, CXC Global is delivering this kind of service for 20 of those organisations.
The prevailing trend we’re seeing is the client engaging CXC Global as the HR function for their contingent workforce, regardless of how those workers are sourced. Therefore, the client has all legislative regulations and compliance issues managed externally (by us at CXC Global), including the engagement process, onboarding, management and offboarding. And typically, the strategy for permanent talent, across engagement and performance management, is managed internally, which benefits that segment of the workforce. Each party is focused on their realm of expertise.
Most of the clients we work with, feel unable to assess the performance of the contract workforce and seek the expertise of an external service provider like CXC Global.
Most organisations have historic processes in place where hiring managers engage the supply chain with whom they have relationships, to land talent as quickly as possible. They may not necessarily be focussed on risk, cost or quality of hire for a project but simply that they need the talent engaged and in place. And often in this scenario it’s on the back of an imminent, major project launch, but senior execs are not necessarily on the journey with hiring managers, and so these hires fly under the radar – there’s low to no visibility.
Hence, the biggest issue and roadblock for informed decision making in this scenario is a lack of data. The exec and non-exec team have nothing to go on, for establishing a strategic management plan, for a highly visible, high performing, non-permanent workforce. And generally, given this lack of visibility, the exec team don’t know how big the problem is, how much the spend is, what the current situation is, and critically, they don’t know where to start.
At this point, considerations for the exec team of the business, tend to be:
- is this current situation a big problem for our business?
- do we have the capacity to change?
- what’s the spend from the recent period?
- what are the risks if we do nothing?
The key thing that we’ve experienced in order for the stakeholders to build the business case, is the cost implications. Risk is almost equally as important. Regarding cost, a major benefit of our hosting the initial workshops, is to regulate supplier margins. A divergence in rates means the business is over-paying at a minimum, on any number of contractors, pending how many suppliers are on the roster.
Another factor to consider: every organisation has HR strategy and objectives for driving engagement, performance and other key measures of success. The key is to take those measures and apply them across the non-permanent workforce. Because if not, it becomes an issue for the executive team. It’s critical for the most senior people in the organisation to be able to identify the key issues and challenges the business faces, especially risk.
The contingent workforce program will most likely be an evolving solution: at the start, it may be purely around access to talent; next phase it might be around visibility and control of the non-permanent workforce. Then it may move to supplier costs savings rationalisation of margins, or a focus on managing the workforce. And factoring in legislation change, an evolving approach is likely, not set and forget.
It’s critical to remember as well, that the workforce of today, is moving towards a total talent management solution, where both categories of workers – non-permanent and permanent – are considered in the workforce strategy & planning.
In this context the business needs to think about the proposition and experience for contractors and how the business becomes a compelling place for contract workers to want to work.
So for example, on the quality pillar, we measure the quality of the talent, the quality of the hiring manager’s experience, quality of supply chain, quality of processes, against the current experience. Same measures apply to efficiency.
On the risk pillar, we review how the client is managing it, who is managing it, how that can be improved, where the client may be exposed.
And for cost, usually clients focus on direct costs rather than indirect costs, as they are the costs you can see, you can manage. So establish the base line in the beginning and then set objectives around which levers you need to pull, which levers that you can pull the fastest.