Going beyond flexibility to Workforce as a Service
In the 1980s contractors were all but unheard of in the New Zealand workforce. The vast majority of workers were employed in full time, permanent positions. Contingent workers or contractors as they are commonly known were generally brought in to organisations only on an ad hoc basis to replace low level, low skilled and administrative workers who were on annual or sick leave. Generally they were confined to roles which were not considered high risk to the organisation.
The use of contractors significantly increased in New Zealand during the late 1980s when the global equity crash hit. This crash caused a long and difficult recession and drove businesses to focus on wage-cost control. Contracting provided a timely risk adverse alternative to sourcing professionals when head-counts were being reduced. A similar trend followed the Global Financial Crisis (GFC), when the promise of a “job for life” became nothing more than a fanciful myth to the majority of employees. The impact of the GFC once again gave impetus to the number of workers who willingly or by necessity joined the ranks of self-employed contractors.
Contracting today is increasingly viewed not just as a “stop gap” between jobs, but as a legitimate career choice.
The number of workers opting out of permanent employment, in favour of contingent and project opportunities is growing significantly. We are also seeing the rise of the “slash worker”- so called because they see themselves as contractor / entrepreneur / parent / volunteer. The tendency to take on multiple activities, some of which are income producing and others which are not is becoming prevalent not only in New Zealand but worldwide, as the new generation of workers enters the workforce, with very different ideas of workforce norms.
According to the Contingency Workforce Index (CWI) published in 2014 by the Manpower Group, New Zealand ranks number one in the world for the most favourable regulatory environment for contingent workers, which looks at the lack of restrictions in the regulations governing contingent work. The report also lists New Zealand as number three for contingent workforce productivity, behind Singapore and the United States.
A report released in 2013 by Research New Zealand states that contractors now represent 8% of the total workforce of the average NZ hiring organisation. Although on the rise, this is significantly lower than the 26% reflected in the last Aberdeen Report in the US and is on a par with where the US was at nearly a decade ago. While the findings state an 8% average, in reality it could be much greater as many organisations have little visibility over their contingent workforce and cannot accurately report on the number of contractors engaged.
Whatever the present statistic, New Zealand is well placed to see this number of contingent workers increase dramatically over the next few years and is likely to mirror the situation in the US and Europe.
Some of the benefits to organisations in employing contingent workers include:
Access to specialist skills: The contingent workforce offers your organisation immediate access to an external roster of people with specific expertise that you may not have (or be able to afford).
Global Reach and Diversity: The contingent workforce is global. Many temporary and contract positions can be filled by remote workers. In tight talent markets, this greatly expands and diversifies an employer’s global reach and candidate pool.
Responsiveness and agility: when workloads spike unexpectedly or employee absences leave you in a bind, contingent workers can often step in on short notice, enabling you to respond quickly to unplanned fluctuations.
Flexibility: The combination of temporary, part-time and contract work with flexible work arrangements and the opportunity to work remotely allows your organisation to stay current with the changing needs of today’s work force. From job entrants to those nearing retirement, employees are looking for flexible options that enable them to work on different terms. Incorporating a variety of employment models makes your organisation more attractive.
Cost and time savings: tapping into the contingent workforce can often save both time and money, especially when it comes to short-term hiring needs. Maintaining a relationship with a contract worker who can come in as needed can reduce recruiting costs as well as certain expenses associated with adding a permanent employee. The contingent workforce can also makes it easier to match your employed workforce with your need for additional labour. This can be especially cost effective if your organisation experiences seasonal fluctuations or significant lulls between projects.
Extended evaluation period and ability to redeploy: Bringing in a contractor or temporary employee can offer your organisation the option of assessing performance over a period of time and redeploying the contractor to a different project if required, without having to disestablish roles and go through a redundancy process. Working outside the constraints of rigid job descriptions can also help clarify exactly what the role requires.
Opportunity for alliances: In today’s competition for skilled and knowledgeable talent, the relationship between a contingent worker and an employer can become more of a mutually beneficial alliance that spans time and geography, rather than being used as a tactic to push people into sub-optimal employment situations; temporary, contract and part-time positions can be offered to those who value flexibility and autonomy over traditional employment options.
The benefits for contingent workers and organisations are numerous, but current HR and management structures in most organisations are designed to support the majority of workers who are permanent and full-time. As many HR professionals will attest to, recruitment, HR and payroll systems for employees don’t easily translate into effectively managing a contingent workforce as well. Attracting and engaging a temporary and contractor workforce also requires an emphasis on different value propositions than those associated with permanent employees.
When shifts in the global workforce become trends, and those trends continue to gain momentum, it’s imperative that employers consider how they will respond. The growth of the Workforce as a Service (WaaS) is one such trend. Is your organisation ready to deal with a highly skilled workforce who are critical to your success, but are not your employees? In the past New Zealand organisations have put their time, energy and resources into managing full-time permanent employees and the time has come to focus on adapting or adding to these processes and systems to ensure that the needs of the growing contingent workforce are also met