Contingent Workers: What Employers (& Employees) Should Consider

i4cp's recently published study on the contingent workforce, Beyond Uber: Driving the Evolution of Work, pointed out the many factors are driving firms to relook at how and who they employ. Companies have learned through recessions and intense competition that they need to be agile, flexible, and fast. Among the factors that can impede these is having a large, traditional workforce with skills that are often outdated or inadequate. Uber, Airbnb, and numerous other startups have already embraced small regular workforces with the majority of workers serving as independent contractors. While there are many legal and ethical issues related to this, workers continue to choose independence because it offers flexibility and choice in when and how long one works.

Traditional firms have begun to ask which jobs could be turned over to an independent worker and which are the strategic or critical ones--the ones that keep the company innovative and successful, that protect intellectual property, and bring in the profits. Obviously, everyone has different opinions and philosophies, and companies are struggling to find the right formula.

Who is core?

Every firm looks at this differently but all firms want to keep a core of workers who contribute significantly to profits or are key in some other way. The positions that are not typically outsourced or turned over to contingent workers include those that invent or design the product or service, are skilled at customer relations or that have knowledge that is proprietary. Sales people are generally considered core, as are those with political or business connections that are vital to sales.

Roles that are more easily converted include any role that primarily supports the activities of these core people or that only contributes indirectly to success.

Often hourly workers are the first to be hired as part-time or temporary workers or outsourced to a third-party. For many years, janitorial and security services have been outsourced to firms who specialize in just those things, but increasingly professional functions are as well. Positions such as corporate attorney, administrator, benefit specialists, controllers, and most IT staff are being transferred to contractors or also outsourced entirely to a third-party.

Human resources administrative services are often outsourced to firms who specialize in administering benefits or in paying employees. And, a growing number of specialty firms are now offering everything from counseling services to training and development as an outside service, reducing the need for internal people.

Legal firms are being retained to represent the organization when needed, and many services such as data processing and analysis are being handled in the cloud by a third-party such as Amazon or Microsoft.

Startups are often choosing not to add staff for administrative services or highly specialized functional staff unless those positions are critical to the strategic objectives of the firm.

Employee engagement

A reason a smaller workforce has become popular is the belief that they tend to be more agile and better able to develop products and services that succeed in the marketplace. These firms also have engaged and excited employees who do not have to overcome bureaucratic hurdles or follow strict HR policies. They have been empowered to make decisions, take control over budgets and eliminate bureaucratic requirements by themselves.

Information flows faster and is more accurate when there are fewer layers of management. Many firms are experimenting with new organization structures that eliminate most management positions, encourage collaboration and provide a high level of employee autonomy. Among these are Zappos, which switched to a Holocracy, a more democratic form of organization.

Empowerment and engagement also increase when positions whose function is to control, document, or report are eliminated or when those functions become automated.

The employee perspective

Workers will need to ask themselves where they fit into the organization and how their role can be more strategic or better focused on directly contributing to profitability. Some questions to be considered in determining if their role might be outsourced:

1. Do you directly contribute to developing or designing your firm’s products or services? Are you privy to proprietary information or patents? If so, your job is probably not only safe, but also one that will become more important over time. Lots may be expected from your team as controls loosen and everyone is expected to be deeply involved in sharing and working together to a common goal. The most benefit will come to those who excel at teamwork and who learn how to share responsibilities.
2. Do you sell or market the product and is that the primary way your product or services get to a customer? If your firm sells directly to clients using face-to-face sales people, and this is key to successful selling, then you are fine. Sales goals will increase and you will need to have expert knowledge about the products services. You may have larger territories to cover as software and automated tools expand your reach and capabilities. But, if your product or service could be sold indirectly using the Internet or a third-party reseller, then your job may be one of the ones eliminated. Don’t assume this isn’t possible. The growth of virtual reality and the ability to research products deeply using the Internet may cause firms to abandon direct sales. Be sure you are clear about how what you do is critical to sales success.
3. Do you administer, report, or control budgets, projects or people? If so your position is very likely to be automated or outsourced. These positions are targets as firms shrink and try to eliminate jobs that slow down innovation or that prevent employees from experimenting or sharing. While there has to be some reporting and oversight, very often the amount can be reduced with no liability. Develop other skills that are less likely to be automated.
4. Are you in a professional service role that could be done by a consultant or retained expert? This may be the case if you are an HR professional, a recruiter, a trainer, a lawyer or even some types of engineers and project managers. Many of these positions are being offloaded to retained consultants or part-time experts. You expertise is valuable and can be leveraged across several employers as a consultant rather than focused on a single employer. This could be a positive development for you if you are willing to take on some risk for the opportunity to make even more money, have greater variety of experiences, and perhaps travel.

The corporate world is getting smaller and even though you may not have seen evidence of this yet, you will over the next few years. Better to be ready for it now than surprised by it later.