The Nature of Work Changed – and with it came a new war for talent, and a new workforce.
The commonly used term war for talentthough cliché, is poignant as it underlines the impact that the changing nature of work is having on business. The result is the emergence of a new workforce comprised of many of the best and brightest. It represents a new, third option to the traditional model of being either a full-time employee or contractor. As we look at how the nature of work is evolving, we will also review societal drivers that are fueling the traditional workforce to want more. Last, you can engage this new workforce, but be prepared to be more creative than ever to attract them to your organization.
If you work for one of the five million plus US-based companies whose moniker does not say Apple, Facebook, Google, LinkedIn, Microsoft or Tesla, your company is likely engaged in an ongoing battle to attract talent, especially technical talent. Like war, the nature of both attracting talent and the development of technology has changed. In war we no longer line up, beat drums and march directly into gruesome battles. In attracting talent, it is no longer about the promise of full-time (life-time) employment and a pension. In technology, we no longer have lengthy project timelines, preapproved budgets and armies of employees and contractors.
Like many, I am a fan of the long running hit series The Office, that wittingly poked fun at corporate culture, and found humor in the absurd. To corporate outsiders, the storylines might appear like farfetched, cruel punishment; but to the rest of us (who’ve worked with a ‘Dwight Schrute’ or for a ‘Michael Scott’) it isn’t just funny, it’s validating. Much of corporate life (not your company, but the rest) has become synonymous with monotony. Though The Officemanages to twist that into comedy, real life corporate bureaucracy isn’t amusing.
Economics 101 taught us that the price should equal what the market will bear. Today the market for talent comes at a very different price than in generations past. So-called full-time employees (FTE) were once willing to bear the tedium exemplified in The Officeas well as other demands, because the paycheck, health insurance, promise of advancement, and the gold watch-pension (the price) were reliable. Today the world includes crashing economic markets, legislative swings and mergers that all can dismantle or create companies seemingly in an instant. In times of flux, labor-spend is often reconsidered, meaning the reliable promises of yesteryear can now disappear quickly. This fickle relationship with employers has disenfranchised a traditionally loyal workforce, and given way to the term, The FTE Myth, which states that the agreement of full-time employment guarantees the worker little if anything more than a two-week severance.
The good news for workers is that health insurance and retirement plans are now mobile. This lessens the dependency on traditional employment and is enabling workers to change ‘the price’ of their engagement. This disruptor impacts the largest staple of the workforce and is the number one societal contributor its changing.
Second to be disrupted is contract staffing, a long-time staple in the US workforce, especially in technical environments. In 2016, 20% of organizations were comprised of 30% or more contingent workers, and IT departments slightly higher at 32%. In the nineties staffing firms boomed right along with the economy, opening a massive market starved for innovation and regulation. Egregious labor-spend during the contracting heyday leading up to Y2K would soon be met with Staffing-Managed Service Programs (MSP) that utilized Vendor Management Systems (VMS). Many MSPs instituted process controls that limited contact between firm representatives and hiring-managers. This is significant because though the measure protected the company against improprieties, it also diminished the capabilities of its true partners. Each firm now had to compete on a new platform and do so via an intermediary. At a macro level, staffing firms suddenly all started to look similar.
In a perfect storm of industry change, around the same time new technologies emerged and removed the last significant differentiator between firms, their coveted internal candidate databases. Popular job-boards like Monster.comquickly gave every subscriber the ability to reach far more, and better-quality talent. LinkedIn.com,though later would enter the recruiting space, changed the landscape long before by making nearly every professional visible on one platform. For the first time, recruiters could see the talent within organizations everywhere. These advancements took firms that looked similar and made them even more indistinguishable. Though understandably firms would likely disagree with being labeled indistinguishable, it’s hard to deny that they had been commoditized.
Industry changing innovation is not new, just look at Uber, Netflix, or Amazon. This change to the staffing industry, however, holds significant importance because recruiters often shape the first impression potential workers will form about an employer. In the evolving war for talent, every employee and contractor experience is important. Companies that care for both, or discount either will be known in their communities accordingly.
“Be careful what you incent people to do, they might just do it”; great advice shared with me long ago. Companies engage MSPs for several reasons, but most commonly to govern Cost, Speed, Quality and Compliance. Suppliers are measured, ranked and low performers replaced accordingly. Two of the four are simple to measure (Cost, Speed); the others are more subjective. This commonly results in a hyper-focus on those that are easily reported. Regardless of intent, the incentives to be fast and cheap had far reaching repercussions. Firms developed new, competitive tactics; some moved sourcing and recruiting functions offshore, and others built low-cost Recruiting Centers of Excellence (national recruiting call-centers). Technology loosely labeled Artificial Intelligence (AI) enabled recruiters to convert resume key-word searches in to massive blast emails (hundreds at a time). Whereas a decade ago a good recruiter might review and call or email fifty potential candidates in a day, today fifty emails takes no more than a few minutes, and the phone seems to be little more than a paperweight. Over time the hyper-focus to be fast and or cheap drove these changes and others that led to contractors to feel commoditized, similar to the firms trying to recruit them. The impact of the commoditization of both staffing firms and contracted talent is hard to measure but is surely large. As such, it is the number two societal contributor to the changing new workforce.
Finally, it’s when the first two contributors, ‘The FTE myth’ and the ‘commoditization of contract staffing’ collide with the third, ‘the changing nature of work’, do we see a new workforce emerge-Freelancers (aka independent contractors (IC), gig workers, Me2B, free agents). Though technically not a new worker classification, the energy behind it is new and gaining steam! 94% of workers claim they are open to non-traditional forms of work
Work changed; we are now in the 4thindustrial revolution, the advancing of the digital age. The amazing talent behind such things as: AI, machine learning, quantum computing, the internet of things (IoT), and robotics etc. does not exist in a bubble near Silicon Valley rather, they are a culmination of works from around the world, needing little more than a laptop, cell phone and decent internet access to come together virtually. The connectivity that enables remote work is more than a company perk, it has changed the nature of work by broadening the depth of available talent, and complimenting the current preferred development methodology, Oracle’s ‘Agile’. This method coordinates work into ‘sprints’ and relies on just-in-time talent (often not FTEs). The viability of step one must be proven before step-two gets a green light, succeed or fail quickly and adjust course often. This quick moving process leaves little time for talent acquisition, currently averaging thirty-three working days to find and hire an FTE in technology. This type of work has been popularized in the gig economy and has enabled a new workforce of freelance independent contractors to take root.
Meet this new workforce of independent contractors. To be an IC (IRS compliant) the service provided should be reasonably unique. By default, those that can be an IC are already a select group, and notably, they are consistently in the top third of their fields. They are comprised of a combination of workers but share many commonalities. They are drawn to freelancing as a career or as a side-hustle; either way, they typically have several clients (which lessen the odds of unemployment). They seek increased control in their work-life; the ability to support interesting projects and to throttle their workload up or down. Many take on a heavy workload for a period – then travel for a period. Many want to work remote, and most want to be measured by their contributions vs. hours logged. They do not subscribe to standard job seeker practices; they are not on job boards, or at job fairs. They avoid recruiters, including staffing firm recruiters.
Finding them is not hard; they are on social media – but difficult to engage. Remember, LinkedIn gives us (and everyone else) visibility to find good talent. The result is, the volume of contact requests can be overwhelming and easily ignored.
The interests and motivations of this workforce are known and align well with Agile environments. ICs are drawn to staffing models that are accommodating, and also to interesting work. Employers are drawn to getting great talent and only paying for what they need/use. Sweetening the deal, ICs have a vested interest in the success of client projects. After all their ability to get their next gig may hinge on the success of their current gig. Think about that for a minute; if a resource is anything less than ‘great’, you can opt for someone new next time. Try replacing a traditional full-time employee like that and see how long it takes your HR rep to call. The freelancer model enables Managers to engage great talent, to focus on their projects and spend less time on things like employee reviews.
Freelancing is not for everybody, and by no means is all top talent leaving the traditional workforce. It is however gaining interest and growing nearly twice as fast as the overall workforce.54% of those that choose to freelance, say they do not plan to return to traditional employment.Many organizations are expanding their use of ICs; 1 in 2 organizations report a significant increase in use of gig workers over the last five years.
Our advice to attract and win the proverbial war for talent is to embrace a flexible staffing model that cares for and includes FTEs, Contractors – and Independent Contractors. Occasionally the constructs of employment change, though infrequent, change is again not new. We are on the precipice of a shift, one that includes not only independent contractors, but one that normalizes frequent shifting of talent. It is ever important to attract talent to your organization to ensure that as talent moves to and from, that ‘to’ is never an issue.
FTEs, this classification of ‘employee’ will likely always be, and key personnel will likely always fit here. It is important to identify and develop this talent, and care for career paths knowing that as they mature, their value to you and other organizations also grows. Loyalties in the employee/employer relationship have changed for reasons that are well understood. Know that just as you recruit, or hire firms to recruit for you, your internal talent will also be targeted by other companies. Remember, though your employee may not be looking, their LinkedIn profile keeps them constantly visible to recruiters, and the tool itself pushes job opportunities directly to them. Nobody is off limits. However, create healthy environments, with good projects, technology and people, and you will do well to not only retain, but to also attract talent. Offer perks that cannot easily be found in contracting such as training, and longer-term goals/rewards, and retention will likely reflect well.
In traditional contracting, similar to caring for FTEs, it is increasingly important to be attractive to would-be talent. In the past it was common practice to shift the burden of gaining contract-candidate interest to the recruiting firm. As new legislation toughens and constricts the availability of foreign labor working in the US, demand for gig work and just-in-time skilled labor is increasing. Failing to attract contract talent could be catastrophic.
To mitigate the issue of a shrinking pool of candidates, help the firms you engage by being attractive to would-be candidates. Exercise care in your choice of firms and how they represent you in the community. Be mindful that a large vendor list can have adverse effects. For example: imagine you are a sought-after developer, and you decide to post your resume on a common job board at about the same time a company releases a single need to its (twenty) staffing vendors. You get a call for a position and think for a second, this worked great. While you are talking to the recruiter, there is a beep in your ear, another call. Its another recruiter, same position. For the moment you might think this is wonderful, you are in high demand. You hang up, log on to your email to send the recruiter your resume, and there are two more emails from recruiters waiting, same position. Now, you stop for a second to think things through, and ring-ring, a fifth recruiter calling. Now you may be little overwhelmed, having received five interpretations of one position. You fit this position well but know only one of the five firms you talked with is going to collect a fee for placing you (forget the other fifteen that have not found you – yet). And, now the games start (who do you know? Like? Which one took you to lunch? Who is paying more? Who knows the manager? Did anyone submit you without permission or double-submit?). In this scenario, just one-fourth of the vendors found you, and you were in plain sight for all to see. In many programs there are thirty, fifty or more firms participating, and if one-fourth of that group found you, how would you feel about working with staffing firms in general – commoditized? Next, your phone rings and it’s a recruiter, new position – different company. They are well informed and fair, and best of all, no second recruiter calling. Again, you do have a sought-after skill set, you have options. Based on your experiences, which opportunity is likely to appeal to you?
Last and likely most impactful, the gig economy is here in a big way, some polls claiming as many as 57 Million workers, 36% of the US workforce are already engaged in gig work. That is approximately the equivalent of the entire population of New York and California combined. Imagine recruiting on a national scale and not being able to hire talent from NY or CA – absurd right? In the same scenario imagine that NY and CA represent the top one-third of the talent in their fields, and you can’t hire them. Quickly it is easy to see how ICs are influencing hiring models. Add in that we have very low unemployment currently, 3.7% in October2018, 2.3% in Technology during the same period,and consider that talent you are accustomed to engaging today may opt to be independentin the future, and mathematically speaking the decision to not engage ICs could put you at a significant disadvantage. The good news is that the shrinking (FTE, Contractor) talent pool is not simply disappearing due to boomers retiring. Much of that talent can still be found, they just may be an IC.
There are great advantages to engaging ICs, and good reason for its growing popularity. They represent great talent and offer efficiencies that cannot be found in traditional employment models (better talent, reduced timelines, and pay only for the time/deliverable you need). There are risks of course, namely misclassification compliance, but that can be cared for with good-process. Classify workers correctly, and this problem can be minimized. Like many things in life, do what is required and the risks will be minimalized. i.e. drive the speed limit, and you are not likely to get a speeding ticket. Simply put, classify workers correctly, and you’re not likely to fail an audit. A quick google search will return numerous instances of gross misclassification. Read about them and it is easy to see where many went wrong. Once risks are cared for, enjoy the perks of the IC engagement model, which after all, saves employers money. The fact that so much of the talent pool suddenly wants to provide for themselves what employers historically handled is great for employers too. A few examples of things that no longer must be cared for with an IC (compared to an FTE): training, providing equipment, managerial duties like employee reviews, daily direction and approving time off – all gone. Starting to sound good, right?
ICs are largely comprised of remote workers, as a result the potential talent, and client pools are huge! When ICs that work remote look for new opportunity, it is important to remember that they have five plus million (US based) companies to seek employment with, vs. the hundred or so that might be within a twenty-five-mile radius of their home (pretty good odds). They are only limited by the reach of their network, and those companies that do not work with ICs (or remote ICs). Inversely, the companies that engage (remote) ICs, open their talent pool up from the hundreds in the local market to the millions in the IC market.As both client and IC have good options, be mindful that when you have a good match for a project, close the deal. Time will kill deals.
Last, birds of a feather do flock together. Make your company attractive to talent, and you will create a gravity that not only draws workers back time and again, it will draw new talent in as well. The current climate is one of very low unemployment, and very high demand for skilled labor. Be a great place to work, and you will enjoy good retention among FTEs. Be careful in your choice of staffing firms and they will function as an extension of your company to attract contract talent. Finally, embrace the gig economy and IC workers. They represent a large and talented portion of the workforce. Understand that each classification of worker is different and has different motivators. Be mindful of each and purposeful to attract talent, and your company will soon join the list of companies that don’t have to fight hard for talent.
*All references are included and hyperlinked in paper.
In the 15+ years Robert has worked in talent acquisition and supplier management, he has participated in the successful placement of thousands of people, built delivery teams and talent procurement programs. He has served as co-founder, operations director and program manager utilizing a variety of talent procurement technologies in support of clients in multiple verticals.
Robert holds a bachelor’s degree in Transportation and Logistics from the University of North Florida. He currently lives in Jacksonville, FL, with his wife Kristen, and their two children.