What is Workforce Management, and How Has it Become a Competitive Advantage?

The chances are, your workforce management requirements have changed dramatically over the past few years – whether you realize it or not. Today’s workforce is nothing like the traditional paradigm, where businesses had a number of employees on their payroll and managed them all internally. Today, 68% of independent workers feel more secure than they would at a 9-5 job, and more people are leaving the traditional workforce to become self-employed than at any time in history.

For businesses, this is a huge win. By leveraging freelance talent, the Gig economy, and non-traditional working pools such as contractors and agency talent, organizations can rapidly adapt to changing needs, work with greater agility, and increase productivity, too.

To gain these benefits, companies need to be able to manage a non-traditional workforce effectively, one which by 2025 is likely to be more than 50% freelance.

This article is part of our guide on workforce management.

What types of workers will be covered by the future of workforce management?

Let’s briefly describe what we mean by non-traditional workers. Unlike a payroll employee who is usually hired for a set number of hours to do a broad range of tasks under a specific job title – a freelancer or independent contractor has a niche set of skills. Whether they are a web developer, an accountant, or a graphic designer – they are highly skilled in their area of expertise, and are hired per project to complete a finite task or set of tasks. They remain off the company payroll, and usually set their own rates and working arrangements.

You can engage a contractor or an agency for a single task and then never speak to them again, or you might form a long-term relationship where they become part of your long-term business strategy for that kind of work, pulling them in when you need them so you can pay for exactly the services you need, when necessary.

The benefits of a strong workforce management strategy

There are many reasons why payroll managers are looking to work with a non-traditional talent pool, and therefore why they need a strong workforce management strategy that includes freelancers and independent contractors. Here are 5 of our favorites:

  • Filling the skills gap: 61% of businesses lack the people or the skills to complete all of the work that’s currently on their plates. Freelancers are a smart solution, as they can work for more than one company at the same time, and have niche expertise in exactly the areas you’re lacking talent.
  • Time to value: What’s your standard time to hire? According to recent data from LinkedIn, in high-tech, the median time to hire for highly-skilled roles might shock you. In Engineering, it’s 49 days, while even the lowest end of the scale is administrative roles which take 33 days to fill. With freelance talent marketplaces, you can find, onboard and see value from a freelancer all on the same day.
  • Access to remote talent: Newsflash: not everyone works in Silicon Valley. If your business isn’t in an “up and coming” area, it can be tough to get the right candidates to sign on the dotted line, not without a huge monetary incentive anyway. The trend towards remote work, and with it – the ability to attract fully remote freelancers means that location is no longer a differentiator. Your workers can clock in from anywhere in the world, and you can pay standard rates – it’s a win/win.
  • Greater agility: A strong external workforce gives you a lot more flexibility than a traditional on-payroll staff. You can start freelance work overnight, pause relationships, and even terminate a freelance arrangement far easier than you can when you hire for a full-time role. As freelancers by nature are working for more than a single client, as long as you’re being transparent about your needs – there’s less heartbreak when the relationship is over, too.
  • Reduced ongoing costs: Think about the cloud model of OpEx vs CapEx. That’s exactly the benefit you get from leaning on a freelance talent base. Instead of spending on pensions and healthcare coverage, employee tax contributions and office space, you’re just paying for what you need, even if that skill comes at a premium price. You can expect to save anywhere from 20%-30% when you leverage freelancers instead of full-time employees.

I’m sold – I want to work with freelancers! But why do I need workforce management?

It’s important to recognize that working with independent contractors is not the same as working with employees in-house. You’ll need to consider how you’re going to remain compliant with your tax and legal requirements, for example filing the right independent contractor forms, and getting all the information you need on record.

This can be quite a challenge as most companies do not have any non-employee workforce tools and processes.

As they aren’t on payroll, freelancers need to be managed using a separate system for payments, ensuring they are paid on time and accurately, despite their invoices likely being for different amounts each month, and often being one-off workers.

Another consideration is how you’re going to stay on top of their deadlines and milestones, tracking the work they are completing and keeping all stakeholders in the loop. Will you onboard them into your internal systems like productivity management tools or communication platforms? Essentially – will they want to manage the credentials and overhead of using these tools in the first place?

Ultimately, while these non-traditional workers are freelancers, they are still handling your company’s sensitive data and perhaps your customer information, too. You want to make sure that you have covered all of your bases in case any legal issues come to the fore. This means signing the right contracts, including an NDA or intellectual property agreement where the industry dictates that’s necessary.

Without workforce management, you can end up wishing you weren’t working with freelancers at all. Late payments can lead to unhappy freelancers and heavy turnover, while even unintentional misclassification or data leakage could cause you steep fines and legal disputes.

Leaning on the right technology for strong workforce management

Manually managing what will soon be 50% of your workforce just doesn’t make good business sense. It’s time consuming, and it’s error-prone, too. 66% of respondents to our recent survey are still relying on manual processes like Excel spreadsheets and emails in order to do this essential work. No wonder hiring managers feel every aspect of contractor management still poses a challenge.

A freelance management system (FMS) is software that is designed to manage this overhead on your behalf, simplifying the way you onboard, manage and maintain freelancer relationships. It centralizes all of the necessary information related to non-payroll employees, makes onboarding quicker yet more compliant, and supports hiring managers in tracking deadlines and milestones. When it’s time for payment, this is handled in a single click through the platform, keeping freelance relationships strong.

Written by
Stoke Talent

Team

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