Gig Economy or Contingent Workforce. What’s in a name?

by 02 May, 2017 0

The working landscape is forever changing and I hear a lot of terms being thrown around which attach labels to what is, to all intents and purposes, the same objective. Gig Economy? Temporary Labour? Contingent Workforce?

Personally, I think that Gig Economy is the term that I hear (over)used most during the last 12 months. I also feel that it has had a lot of negative connotation attached to it. Somehow jobs in the Gig Economy are perceived to have a lesser value than fixed term contract or permanent employment positions. As with supply of goods, the employment market is driven by supply and demand. Where there are jobs and no workers, companies will look at strategies to retain workers. Where there are workers and fewer jobs, companies will look to hire with minimal commitment. One can argue that both companies and workers are in a stronger position when there are less barriers to hiring and, in a buoyant economy, where there are less barriers to growth.

My parents generation told of being able to get a job in the morning, leave at lunchtime and have another job by the afternoon. I don’t foresee that happening again any time soon but whatever the market conditions, both sides of the process need to get smarter and more efficient at managing the hiring process.

Large companies have equally large obligations when it comes to hiring and dealing with regulations. In order to stay competitive, they need to be efficient in reducing cost, maintaining compliance and keeping the lifecycle of the hiring process to a minimum. There needs to be a consolidated system of hiring both contingent workers, typically on an hourly or weekly rate and contractors (Statement Of Work) who are on a fixed term contract entered around deliverables.

The growth of the Gig Economy has created a new landscape for employers. An incorrectly structured contingent workforce program creates increased risk and can be counter to operational goals. To take full advantage of this, there are strategies that should be implemented with, and without, external assistance.

Implementing a Vendor Management System (VMS). There are a number of VMS solutions on the market with varying levels of complexity depending on the needs of the company using them. They take into account the sourcing process, compliance at all stages of hire and eventual off boarding and highlight spend across the company and divided into cost centres. These systems add extreme value when implemented correctly. Implemented incorrectly, or at best under-utilized, they become counter productive. The implementation requires careful planning, preferably by people with experience and in depth knowledge of the specific VMS. They also require effective change management and communication to ensure buy-in within the organization prior to deployment.

Outsourcing to a Managed Services Partner (MSP). This is an option to bring in the expertise rather than hire internally and to avoid the need to also hire in the people needed to effectively manage the program on an ongoing basis. There is a clear risk/reward calculation to be made when taking this route and this is a calculation which doesn’t have a fixed formula. It very much depends on the specifics of the company, the  industry and markets that they operate in and the channels to reach the prospective hires. Avoiding conflict of interest, where the MSP has a  vested interest in hiring (only) the people they source can be an important factor to consider.

The trend in the VMS industry is heading more towards self managed solutions, particularly in less complex and regulatory burdened industries. Whatever the ultimate choice is, the first three rules to follow are:

1. Do not underestimate the value of implementing a robust VMS and Contingent Workforce Program
2. Do not underestimate the complexity, and amount of work required, to manage a VMS and Contingent Workforce Program
3. Do not embark on the Contingent Workforce Program journey without taking the time to do a comprehensive analysis of the requirements with expert input
from an experienced team who have “been there, seen it and done it” before.

Follow these three important rules and this will be the best cost savings exercise ever!