New Ways to Manage Human Capital
October 1, 2019 – At a time when the human cloud is rapidly expanding, work mobility is rising and on-demand talent is everywhere, companies can no longer adhere to conventional methods to manage human capital. Now more than ever, embracing a total talent philosophy is the most effective way to gain speed and agility.
Most companies, in fact, plan to transform their workforce over the coming months as they face a host of business challenges, according to a recently released Randstad Sourceright report. Activating a total talent approach – either through internal transformation or with an external integrated talent solution – is a priority for most of the human capital and C-suite leaders, concluded the “2019 Talent Trends” study, which surveyed more than 800 talent leaders in 17 markets around the world.
More than three-quarters (76 percent) of those surveyed said they definitely or probably will move toward a total talent model over the next 12 months, said the report. Forty percent (40 percent) cited the need to bring strategic planning into HR as the primary driver, and 38 percent said adoption is needed to better align HR with business strategy. Nearly as many (39 percent) said they will do so to get a competitive advantage by attracting higher quality talent.
If strategy is less of a concern than the day-to-day management of talent acquisition, a holistic approach can also help address a company’s everyday needs, said the study. Many talent leaders (39 percent) said they will adopt this model to create efficiencies, and 36 percent said their focus is on alleviating talent scarcity, while 34 percent said it can reduce time to fill.
Total Talent Management
Total talent management is defined as a model of talent or workforce management that includes an organization’s acquisition and management of all human talent in the broadest sense, including “permanently hired” workers and all types and sources of “contingent” workers, as well as non-human talent including robots, bots, software and automation. Spurred by organizational bifurcation and the rising importance and preferences of contingent workers, this model seeks to integrate the respective management of permanent hire and the contingent workforce by HR and procurement functions.
“An integrated or total talent model helps businesses determine the resources most appropriate for their needs, regardless of worker classification, before going out to acquire them,” said the Randstad report. “It changes mindsets by considering every type of talent — permanent, independents, temporary, statement of work contractors and even machines — as important resources for supporting the overall business mission.”
By hiring for the work and not the job, said the report, the employer gains significant benefits: broader access to talent, faster delivery, higher hiring manager satisfaction, greater transparency, cost effectiveness and more precise workforce planning. Skeptics might question how this is possible, but companies that have embraced a total talent management strategy are demonstrating the numerous ways in which this is achievable, said Randstad.
A Look Into Who is Driving the Gig Economy
Today’s business environment is vastly different from just five years ago. Success is no longer measured by a company’s longevity or headcount. Today, the business currency is agility and innovation. Technology has forever transformed how work gets done, and the flexible workforce has changed who does it.
‘Talent Trends’ report data showed that among enterprise-level employers (companies with more than 3,000 employees), 28 percent said they definitely will bring total talent management into their organization this year, while 19 percent of mid-sized companies (those with 1,500 to 3,000 employees) expected to do so over the same period. An additional 48 percent of enterprise companies and 57 percent of mid-sized companies said they probably will implement integrated talent strategies this year.
The Randstad report asked why larger companies express more enthusiasm for integrated talent strategies. “Although companies of all sizes can benefit from adoption, those with many disparate business units, locations and talent needs would see the highest returns for their transformational efforts,” the study said. “A total talent approach would introduce more order to chaotic and decentralized structures, which often describes the workforces of larger organizations.”
Their history of acquisitions, adoption of various processes and rogue hiring practices result in larger organizations having less control and visibility than mid-sized businesses. More importantly, talent leaders at large enterprises also perceive talent differently, with 83 percent surveyed believing that the right person for a job can be permanent, contingent or a contractor anywhere in the world. Although a majority of human capital leaders at mid-sized companies agreed, a smaller percentage (70 percent) felt this way.
‘Talent Trends’ report data also showed that for both enterprise and mid-sized companies, 25 percent expected to convert more permanent jobs to contingent this year. Most (79 percent) mid-sized companies said the use of gig and freelance workers has at least the same, if not more, impact on their talent strategies. Just about the same percentage (80 percent) of enterprise talent leaders held the same outlook.
“Companies are increasingly embracing gig workers, and even robots, in their overall workforce to address the increasingly tight labor market in the U.S. and around the world,” said Rebecca Henderson, CEO of Randstad Sourceright. “While in the last decade contingent workers have been viewed very differently as compared to full-time positions, today’s companies are welcoming the opportunity to employ a more agile workforce, particularly as a greater number of gig workers embrace flexible work practices as well.”
Other Experts Weigh In
All companies of all sizes use gig workers, said Jeff McMahon, managing director at North Highland. “That’s not new,” he said. “What is changing is the fact that a sizable, semi-permanent gig workforce is becoming the norm. As companies master the art of onboarding and integrating gig workers, they are discovering that the greater flexibility and lower costs more than offset the increased risk and burden on management. That’s a big reason why more than six in 10 respondents see their companies making greater use of the gig workforce over the next five years.”
Gig Jobs Continue to Gain Traction
Today, a growing number of workers are opting for alternative employment models over traditional, full-time, permanent roles. Part-time, contingent, contract, temporary, freelance, independent contractor, on-demand online and platform working – call it what you will, they are all on the rise.
Jonas Prising, chairman and chief executive officer of ManpowerGroup, said that the gap between the skills people have and those employers need is widening, polarizing workforces and populations around the world. “Companies have to find talent from new sources and do more to develop and keep their people engaged,” he said. “At the same time, what people want is changing. They are working longer, learning more and seeking a better balance between work and home.”
Gig Economy’s Impact on Executive Search
John Thacker, partner at Beecher Reagan Advisors, said that the gig economy has created opportunities for individual consultants to pursue independent project work, providing them with a more flexible work schedule. “In addition, digital platforms have emerged enabling a virtual marketplace for consultants to select project work without having to source or sell that work,” he said.
“Many more consultants today, particularly in the middle of the pyramid (manager, senior manager equivalents), are electing to work independently,” said Mr. Thacker. “A gap in the middle of the pyramid is not a new phenomenon, but this gap will widen as a result of the gig economy. This will make it very challenging for consulting partners to effectively plan for and efficiently staff their projects.”
Mr. Thacker said that 20 percent more search consultants elect to work independently today than they did just five years ago, creating a larger gap in the “middle of the pyramid” for consulting firms. “The short-term impact for consulting firms is the potential loss of project work and revenue to independent workers,” he said. “Some firms have already begun to address this by building communities of independent workers whom the firms can leverage for project work. However, we feel the long-term impact of the gig economy will be much more significant.”
If more consultants continue to leave traditional consulting firms, the gap in the middle of the pyramid will manifest into a gap at the partner level, or the top of the pyramid, said Mr. Thacker. “This will create free agency at the partner level and we expect to see more movement of partners from one consulting firm to another,” he said. “It will be increasingly important for consulting firms to have trusted executive search partners, who are well networked and educated on the consulting market, to help them navigate this change.”
When asked if there is anything that can be done to help prepare senior leaders for managing temporary or gig talent, Mr. Thacker said that leaders must understand their employment brand and move from a time and material business to an outcome-based model. “This will alleviate the pressure to have the perfect pyramid,” he said. “Lastly, they should embrace free agency and look to adapt to a world where W-2 employees and contractor labor have more currency. It may seem daunting but if you do the above, you will win.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media
