Why current contingent workforce programs are not adapt to the modern workforce

Organizational agility is critical in today’s fast-changing and unpredictable global business environment.

However, most contingent workforce programs are stuck in the past and don’t have what’s needed to maximize the potential of their organizations’ evolving workforce, which includes a growing percentage of non-employees. 

Traditional contingent workforce programs are typically built around a company’s temporary staffing workforce, which leaves out all other categories of non-employee workers, such as independent contractors, consultants, SOW-based workers and gig workers. 

While these categories make up most of an organization’s contingent workforce today, in contrast to 10 years ago, most programs’ structure and goals haven’t changed to adapt to the modern contingent workforce.

To leverage today’s talent pool, where about one-third of the US workforce is a freelancer, contingent workforce programs must evolve to support all categories of non-employees.

How the workforce is changing 

Today, 33% of the US workforce is freelance workers, and by 2027, that number will grow to more than 50%. 

Tech talent is the fastest-growing segment, with new generations joining the workforce as freelancers, and also, established workers shifting from traditional full-time employee status to freelancers. 

Companies which fail to offer flexible work arrangements (hybrid or remote, full or part time, traditional employee or contractor) will lose out these freelance talent, providing their competitors a winning advantage. 

These companies will also need to pay higher salaries, offer better benefits, and increase perks to compensate for their lack of flexibility to gain top talent.

Some of the sweeping changes occuring in the labor market include :

#1 new generation joining the workforce

The makeup of the workforce is changing as younger generations continue to enter the world of work. Generation Z will be 30% of the workforce by 2025, and they are bringing with them different expectations when it comes to freedom, flexibility, and autonomy. 

This means companies have to change what they offer with regard to culture and work arrangements. More and more workers are opting to be freelancers because it meets their desire to gain more control over their lives and careers.

#2 Rapidly-advancing technology

The advancement in technology is constantly creating new skills that are quickly becoming in high-demand. These new emerging skill sets are creating the technology skills gap so many companies are experiencing today, for example: product-led growth managers, blockchain experts, machine learning developers etc.

Many new technology skills can not be taught by colleges and universities, so companies can step in and become the source of education and training. Companies can train their workers, partner with third party organizations to provide training, or support workers to learn on their own. 

#3 Breaking down barriers with tech

Technology is removing barriers around how work is done and who can successfully complete work. Previously-inhibiting factors like geography, education levels, economic status, physical disability, and neurodiversity no longer create difficulties for many workers seeking freelance roles. 

#4 New work-life balance

Remote work is now expected as a vital component of work-life balance. The global Covid-19 pandemic forced many companies to adapt and become remote or hybrid, and now about 80% of workers who worked out of the office are demanding to continue working from home at least three days a week. 

Legacy contingent workforce management programs need to change (a lot!)

Companies that refuse to be left behind grasp these new dynamics and are starting to act.

They know the traditional VMS/MSP/staffing agency supply chain can no longer deliver the worker experience companies must offer to top freelance talent, and the demand for that talent is only increasing. 

The VMS/MSP/staffing solution model also makes it difficult for teams to rely on freelancers to be true extensions of their teams, and it includes outdated compliance processes for knowledge workers.

Companies that are either moving slowly (or are in denial) have contingent workforce management programs that fall short because they are:

  • Too narrowly focused and lack visibility into and control over most of an organization’s non-employee workforce
  • Unable to manage organization-wide contingent workforce budgets and compliance
  • Not capable of engaging contingent talent through multiple sourcing channels and work arrangements
  • Behind in implementing technology that supports those alternative sourcing channels and work arrangements 
  • Lacking powerful data collection and analytics that can support tactical operations and strategic decision making.
  • Not able to provide an enhanced candidate and worker experience, talent curation, and worker redeployment

Companies that rely on outdated programs and technology lack agile workforces, which means it’s more difficult to make shifts when needed. 

They can’t meet seasonal needs, highs and lows caused by economic shifts, unexpected production changes, or anything else that requires a quick change to their workforces. 

To be successful, companies will have to set up modern extended workforce management programs built on modern technologies that address a multitude of worker types and work arrangements. 

Legacy tools, missing pieces, and modern fixes

Most organizations today manage their contingent workforces using a legacy VMS solution that may be slowly trying to adapt to the new reality. 

But poor user experience and system constraints imposed by legacy technology limit organizations’ responses to changing workforce dynamics and program management requirements. 

Increasingly, to complement and fill the voids in core VMS systems, innovative third-party solutions are being adopted. The critical gaps these new targeted solutions can address include:

  • Lack of visibility into contingent worker spend and numbers of contractors engaged through “unofficial channels,” which increases rouge spend and risk
  • No capabilities to source and manage all categories of contingent workers and their new expectations 
  • Out-of-date user experience that saps productivity and quashes satisfaction for program managers and workers 
  • Inadequate data and analytics, whether purely operational or insights around contingent candidates’ and engaged workers’ performance, skills, and worker satisfaction
  • Lack of support to sustain direct relationships with or redeploy top contingent talent that can help to avoid talent shortages, higher talent acquisition costs, and bad hires

And the list goes on. 

Substantial improvements in program performance and return-on-investment (ROI) can be achieved with targeted, cloud-based solutions that require far smaller investments of time and money to implement and operate than overhauling existing VMS systems or MSP and staffing providers. 

These solutions can quickly drive material benefits and provide an improved internal stakeholder experience while setting the stage for broader digital transformation.

Across the board, one of the largest problems that can now be tackled is gaining visibility into and managing the rapidly-growing population of independent workers across categories and departments.

 At many companies, the number of these workers and the associated spend exceeds that of temporary agency workers that are already tracked in a VMS. To put a dent in this problem, program managers need a purpose-built solution to manage all aspects of their organization’s independent worker engagements. 

A best-in-class, modern freelancer management system (FMS), for example, can address many of the gaps current VMS platforms can’t (or try to, but are ineffective and inefficient). An FMS enables an organization to maximize value and minimize costs of its independent workforce across the engagement life-cycle with:

  • Deep and far-reaching visibility that includes details like cost, worker profile information, and worker classification status
  • Capabilities that enable managing relationships with and meeting expectations of today’s independent workers
  • A world-class, consumerized user experience for hiring managers and workers, which boosts user productivity and satisfaction and encourages adoption
  • Life-cycle data and analytics aligned with the engagement, compliance, and optimization of an independent workforce, including real-time dashboards, business intelligence, and artificial intelligence-based applications.
  • Talent management capabilities, such as private talent pools and freelancer marketplaces, that ensure required talent and skills can be redeployed or tapped to meet future needs. 

Freelancer management systems, and other add-on technologies, are excellent first options to advance contingent workforce management programs beyond the status quo. And they do so with minimal effort, not like the nightmares of implementing and operating a VMS. 

Work will never be the same. It isn’t being done the way it was even a couple of years ago and the changes keep coming, even as contingent workforce procurement programs struggle to keep up. And keeping up is becoming the minimum requirement for extended workforce programs – and overall business – success. 

Businesses have to evolve to meet today’s workforce. They have to capture and manage more contingent workforce spend, enable a wider range of work arrangements, offer unmatched candidate and worker experiences, and provide more value to stakeholders across the business. For procurement to deliver, programs have to modernize and expand their scope by adopting targeted, efficiently implemented and operated pointed technology solutions like freelancer management systems.

Written by
Stoke Talent

Team