Developing Your Contingent Workforce Strategy in the Gig Economy

Updated: Jul 16, 2018

As we enter an era that some have coined the Fourth Industrial Revolution, a time that will be remembered for the accelerated pace at which technological advances are being made, HR and Talent Acquisition experts are struggling to identify what skills tomorrow’s workforce will need.

Many of us have read the doomsday reports stating that robots will take one third of British jobs by 2030.[i] In the meantime however, certain industries, particularly in the engineering space, are suffering from talent shortages. STEM Learning has found that these shortages are costing businesses £1.5 billion a year in recruitment, temporary staffing, inflated salaries and additional training costs. [ii]

Furthermore, the uncertainty surrounding Brexit means UK businesses are unsure whether they’ll be able to access the European talent pool quite so easily, especially if the UK leaves the EU Single Market.

Despite the reported talent shortage, efforts to lobby government for assistance appear to have been successful in increasing the number of engineering students. The Higher Education Funding Council for England (HEFCE) reported a 32% increase in the number of entrants to full-time first degree courses in science, technology, engineering and mathematics (STEM subjects) since 2007/8.[iii]

If efforts to lobby government and educational institutions over the past several decades have been successful, why are UK businesses still yelling about talent shortages?

Firstly, it might be worth noting that UK businesses have been beating the talent shortage drum since the end of WWII. The fault may be their own however, as research shows that businesses respond to changes in the business cycle by making dramatic staffing changes. Economists have noted that over the past six decades, whenever the UK experiences a hiring surge in engineers and skilled workers, it is often followed by huge layoffs during economic downturns.

It therefore stands to reason that talent shortages will remain an ever-present theme for UK businesses over the next few decades. While many businesses continue to lobby government for help or simply sit tight, others are taking advantage of a growing trend in the labour market.

The Gig Economy

The Gig Economy has been characterised by a rise in freelance and non-permanent labour forces over the last decade. Data from the Office of National Statistics show that the number of British people working for themselves grew from 3.8 million in 2008 to 4.6 million in 2017.[iv] This trend is showing no signs of slowing down and Staffing Industry Analysts (SIA) has noted that businesses are still sourcing 58% of their contingent labour through staffing agencies.

Whether you’re trying to limit your use of contingent workers across your company -- or questioning whether you should consider engaging with them at all -- there are a variety of ways businesses can benefit by accessing workers from this growing labour market. The use of non-permanent workers allows businesses to address issues like increased project demands, tight turnarounds and a shortage of niche skills sets, all while taking advantage of fewer employer obligations.

Develop a Strategy

It might be tempting to sit back and rely on new talent to rise through the ranks of the educational system; however, for most businesses inaction is too risky a strategy. If you want to successfully take advantage of the Gig Economy to avoid talent shortages, your business needs to develop a strategy to attract and retain contingent workers.

-         Ownership – Decide who is going to own your contingent workforce. I have consulted with numerous businesses in 2018 and always find it surprising to see how many don’t know who owns their contingent workforce. Often it is a blend between Procurement, HR and Talent Acquisition, and Project Managers. Having a single point of ownership will help you manage your contingent workforce strategy and establish respective responsibilities.

-         Employer Branding – Most 21st century businesses understand the value of strong employer branding; however, many businesses focus on developing their branding for permanent employees, often ignoring it for their non-permanent workers. Identify different opportunities or possible perks for your contingent workers to encourage them to engage more with your business to build a stronger talent pool. If you are hiring from tight talent pools, your reputation among contingent workers can make all of the difference and prevent you from having to pay above-market rates for niche skills sets.

-         Supply Chain Engagement - If you rely on agencies to attract contingent workers, how are you engaging with them? It’s not uncommon to hear businesses complain about poor standards from recruitment agencies. Be sure to provide them with regular feedback to ensure that they know exactly what kinds of standards they should be meeting. Consider how you can build a regular feedback cycle into your supply chain.

-         Update Your Supply Chain – If you have been engaging with your supply chain and continue to receive poor service, why are they still on your preferred supplier list? Don’t fall into the trap of maintaining old business partnerships simply because that’s what has always been done. Challenge the status quo.

-         Audit Your Process Regularly – Your talent strategy should not remain static. It should be something that you can adapt in accordance with external developments (GDPR, IR35, changes in legislation) and internal needs (projects and changes in business needs). Too often I see businesses implement new technology or take on a new process and try to make it stick for as long as possible. Rapid change is going to remain a constant in the labour markets of the future. Create a process that allows your business to change with it.