In 1997, the vast majority of working professionals worked for others on a company salary that was safe, predictable and regular. We freelancers were considered the renegades who rejected this good life, replacing job security with employment independence. Our counterparts on the payroll questioned our sanity and often queried when we were going to get a “real job.”
Having worn the mantle of Employment Lone Ranger for so many years, you can imagine my surprise–no shock–when I read that the Bureau of Labor Statistics (BLS) recently reported by 2020 more than 40% of the US workforce will be contingent workers. If this trend continues, we 1099-ers will soon equal the W-2ers in the workplace. Wow.
I find this statistic quite staggering in its implications for managing work and how business goals and strategies will be achieved. I find it also remarkable that this shift from permanent staff to contract worker is receiving so little press. Read below to hear my views of this workforce shift and what I believe that business leaders need to do to prepare for managing a workforce of highly skilled free agents.
— AliceAlice Waagen, PhD Founder, www.workforcelearning.com Email: firstname.lastname@example.org
TO TEMP OR NOT TO TEMP: THE RISE OF CONTINGENT WORKERS
By Dr. Alice Waagen
The BLS defines contingent workers as “people who do not expect their jobs to last or who reported that their jobs are temporary. They do not have an implicit or explicit contract for ongoing employment.” In 2014, contingent workers number 35.7% of the US workforce. If that number seems high, realize that the non-payroll workers include contract employees, day laborers, temps, on-call staff, and self-employed folks just to name a few. One company I worked for years ago used to call contractors “shadow staff” since their numbers did not show up on the payroll roster and were indeed difficult to track in the standard general ledger system.
Workforce analysts cite the impact of the Great Recession on promoting the increase in the contingent workforce. BLS reports that from 2009 to 2012 the contingent worker numbers increased by 29% while the private sector job growth hovered at less than 1%. But the lack of “regular” jobs wasn’t the only factor that encouraged people to head out on their own. Some other contributing factors include:
- Better and cheaper mobile technology freed workers from the office enabling them to work just about anywhere
- Increased high speed internet access. The technology that was once available only in corporate headquarters is now in people’s homes, public libraries, coffee shops, nearly everywhere
- Cloud technology allows collaboration and information sharing anywhere, not limited to internal corporate servers
- Views are changing on where work can be done even with regular employees who are being allowed to work remotely
- The Affordable Care Act is easing the burden of providing adequate health coverage for folks not accessing company benefits
Clearly, the above conditions are not going to go away. In fact, mobile and borderless technology continues to be available in more and more locations. In my humble opinion, the trend for workers to go off payroll and out on their own will only increase as the years go by.
So here is the thing that just mystifies me: why aren’t more business leaders and HR professionals raising concerns about their workforce evolving into more and more freelancers? Here are the top concerns I would have if I were in their shoes:
- Policies, procedures, and Standard Operating Procedures (SOPs) governing how work is accomplished and how employees and managers need to interact have all been written to manage internal staff. Policies range from somewhat superfluous like lists of paid holidays to mission critical issues such as prohibited behavior and harassment policies. Does your shadow workforce fall under these policies? Large contractor firms and temp agencies will have their own policies and employment guidelines but smaller contractors or solo consultants may not.
- How will you monitor and measure performance and make performance corrections and adjustments? I am no fan of cumbersome performance management processes but performance appraisals are the vehicle by which work is managed and outcomes ensured. Like internal policies, these systems and processes are generally not used with contingent workers. Contractors also need clearly defined goals and outcomes with ongoing coaching and feedback. Without open communication and feedback it will be difficult to ensure that the work is getting accomplished.
- Most important yet less well defined is the impact this fluid workforce can have on your company culture. Your culture is made up of the norms and values that hopefully reflect how you want your company to be perceived by others. Whenever you add a significant number of new players into the game, you are at risk of their values and behaviors influencing or even changing how your employees think and act. You may promote a culture of collaboration and inclusiveness, but your contract staff may simply want to work solo and are not interested in spending time and energy becoming part of the team. Watch carefully how your shadow staff interacts and integrates with your employees to preserve the culture you’ve built and promoted.
The bottom line: contingent workers, contractors, consultants, regardless of what they are called, are hired to perform certain work for your organization. They may be used to augment existing staff as in hiring additional accountants for your finance department or they may be used because they possess skills and abilities you lack in your organizations such as strategic planning or specialized recruiting.
As the volume of freelancers swell in your organization, so does the impact they have on your company. You can choose to strategically manage the impact by establishing ways to manage performance and enculturate them into your values and practices. They may be shadow employees because their numbers do not show up on payroll rosters, but they have the potential to significantly impact workforce practices and culture.