With 73% of U.S. hiring managers looking to continue or increase their use of independent professionals, companies are revisiting the benefits of a flexible workforce. As the number of contract workers continues to climb, now is a good time to think about how to extract as much value as you can from your workforce strategy.
After examining industry conditions, talking to clients, and looking at the research, we’ve gathered insight around what's head for the future of work. As you think about designing your workforce strategy, don't just consider the key benefits that a contingent workforce offers; consider optimizing the strategy to get the most value possible.
Here are the three of the biggest benefits of a flexible workforce:
Perhaps the most obvious reason to engage external workers is the ability to accomplish business objectives while controlling labor costs. Budget is always a consideration, but securing additional headcount entails a solid business case and can be difficult to get approved.
Leveraging talent from the outside, temporarily, allows companies to achieve multiple initiatives without the burden of long term costs. Add in the internal cost avoidance of payroll and benefits administration, as well as training and development, and it becomes that much more compelling.
Get More Value: If you really want to maximize savings, begin the arduous (but worthwhile) effort of consolidating spend with suppliers who can do more for you. Vendors with multiple lines of business who take the time to understand your business inside and out will pay dividends. In fact, research shows a rate of diminishing return after using more than 8 vendors.
If you just consider labor costs you’re missing the true ROI. One of the greatest things to happen when infusing external and internal talent is the compound interest of experiences and skill sets. Keep in mind that many contractors choose this type of work arrangement because of their desire to do the work they enjoy and gain exposure to many different cultures and initiatives.
A McKinsey study found that 57% of North American companies utilize contractors and freelancers to close potential skill gaps within their organizations. When bringing these experts into the mix, “power teams” can be created.
Get More Value: We can only harness this power by fostering open communication and team cohesiveness. Too often consultants are left in the corner to plug away without drawing out the ideas and perceptions they have garnered. Consider meshing your external and internal team members' ideas as frequently as possible and listen closely for the input that can come from diverse talent.
Leveraging contingent workers on-demand, either in the form of augmenting your staff or acting in a professional services capacity can help organizations in two ways:
Get More Value: With any major initiative like this, it starts with streamlining processes, analyzing spend and interviewing key stakeholders in your organization who are in a position to give feedback on supplier performance.
Look at consolidating spend in a strategic way, who are your best suppliers? Where are you allocating your resources, and why? The suppliers who understand your business inside and out and are willing to innovate right alongside you are the partners you want to grow with. You'll move faster and more confidently (and avoid costly pitfalls) by working with fewer but more comprehensive talent solution partners.
In addition to benefiting from volume discounts most vendors will offer, consider the internal cost savings derived from paying fewer invoices and interacting with only a few suppliers. The relationships that come from this effort will surprise you. Suppliers who have earned your loyalty should go to bat for you time and again.
The question always comes back to “so what?” If we do all of those things well, how will we be better in the end? One of the most clear ties should be overall organizational performance.
Think of it this way, if you are investing in relationships with your staffing and professional services partners, you should be getting top talent that they know will fit because they know you. They have access to the right skills and competencies that you need for your projects. When combined with the ongoing development of your internal employees, performance elevates across the entire organization. Financial performance should be positively impacted, too. Engaging talent on demand allows you to pay only for what you need, when you need it.
Designing the ideal workforce strategy requires significant effort; however, the benefits outweigh the risks by a landslide. Typically organizations are contributing just 1.5% of revenue to contingent labor, a small investment related to the return to the organization. With the unprecedented pace of change and uncertainty in business today, agility and performance while controlling costs is the name of the game.
Discover a path for successfully transforming to a modern flexible workforce model. View The Flexible Workforce, A Guide to Creating a Fast, Nimble Team.
Editor's Note: This post was originally published in March 2018 and has been updated for accuracy and comprehensiveness.