If Talent Acquisition is going to take the lead on strategic talent sourcing, the function needs visibility into all the talent demand from hiring managers.However, today, this talent demand is expressed through processes that are managed across a multitude of different systems (applicant tracking, contingent workforce management, procurement for RFP-based hiring for projects or outsourcing). This is certainly not efficient for hiring managers. Not only do they have multiple places to go to request talent, but they also have to know which system will glean the best type of talent for the jobs they need to fill. Should they hire a full-time employee or a contractor? Hiring managers do not really know (nor should they necessarily).
This situation is made more complicated by increasing regulation of non-employees (AB5 in California and IR35 in the UK, for example). Identifying who is a contractor or not is a moving target and the cost of non-compliance can be high. The status quo is just not tenable anymore. These request/requisition processes need to be re-imagined to make it simple for hiring managers, enable sourcers in Recruiting to have a full picture of talent demand, and enable proper classification of workers to comply with regulatory requirements.
Making it Simple for Hiring Managers
Hiring managers really do not care too much where talent comes from as long they can do the job (have the right experience, qualifications, and agility) and it fits into their budget. Yet, today, we have multiple different processes embedded in multiple different systems that a manager needs to navigate to create the right requisition. Why do we even call it a requisition? That is jargon. They have a request for talent that they need fulfilled and they do not necessarily want to be burdened by the particulars. So, why can’t it be that easy?
The hiring manager should describe his or her need and the system should be smart enough to help guide them to the type of talent they need (full-time employee, contractor, project-based, etc.), requesting only additional information as they progress through the process. Then, the fulfillment of that hiring need can be done in the appropriate system with the appropriate controls. Basically, the process of creating the right requisition for the right source is automated for the hiring manager. They don’t have to worry about doing it the ‘wrong way’ and wasting time. They don’t need to learn every rule to every process just to request help or talent. It’s a modern intelligent process that triages speedily and compliantly.
Visibility for Strategic Talent Sourcing
Today, it is very difficult for organizations to see the full picture of talent demand because it is spread across so many systems. HR tends to focus on where it has the data -- typically recruitment.
However, that does not provide a full picture of talent demand. Even if an organization tracks contractor data in the HR system, it is likely still missing demand data for consultants (on projects), gig/freelance workers (that never work onsite), and outsourced work (that is awarded through a formal RFP process). A common request process provides full visibility. This information is invaluable for workforce planning.
Few organizations have a comprehensive view of their workforce that includes their employees and extended workforce (contractors, contingent labor, consultants, gig/freelance workers). To do good workforce planning, the first step is to bring all of that data. It is important to understand the demographics, skills, and costs of the workforce so that you understand your supply of labor.
You also need to understand the demand for labor as well. Good workforce planning is business-driver based. We are working with a client that has multiple business units where different business drivers impact the demand for people. For example, one business unit has work that is more project-based, so they plan that business based on their current project backlog and pipeline for new projects.
Another business unit is more product-oriented (manufacturing), they have a different set of business drivers. They look at existing contracts, expected sales, logistic costs, productivity/output, and location (they are a global organization serving customers all over the world) to understand their resource needs. Both business units make assumptions on support resources they need (HR, Finance, Facilities, etc.) based on their frontline headcount. This organization, especially in their project-based business, uses contractors fairly extensively, but less so in their manufacturing business. So, they are looking at their extended workforce to some degree.
This organization then matches up the supply (employees and contractors) against the expected demand to help drive hiring plans. This is the minimum amount of workforce planning an organization should do: understand your labor supply, plan your labor demand, identify gaps, and create a plan to fill the gaps. However, to add even more value, especially in uncertain economic times, requires modeling different scenarios.
Ever-Changing Employment Classification Compliance Requirements
New regulations like AB5 in California and IR35 in Europe for independent contractors and the variety of employment classification schemes around the world point to the complexity of compliance, especially for global organizations that want to take advantage of all of their sources of talent. Today, that knowledge is primarily in the heads of the people doing the sourcing and recruiting (and procurement) work.
However, it is a moving target and it is hard to keep up. In the future, more of that knowledge can be captured in systems and applied in a consistent way across the full workforce so that organizations can be proactive in complying with employment classification regulations.
The cost of non-compliance can be high. Here are some recent examples in the U.S. of class action lawsuits that have settled just for misclassifying independent contractors. In October 2019 alone, these cases settled:
- Macy’s and XPO Last Mile settle IC Misclassification Class Action by Delivery Drivers and Helpers for $3.5 Million
- XPO Logistics Receives Final Approval of $16.5 Million Settlement of IC Misclassification Case Brought by Appliance Installers / Delivery Drivers
- Dental Consultants Settle Class Action IC Misclassification Lawsuit for $3.4 Million
Settlements like those do not even paint the full picture of employment misclassification risks. There are fines, back taxes and benefits, and more that can also be part of the cost of non-compliance.
In How to Avoid Blindspots in your 2020 Talent Management Strategy, the first blog post in the series, we discussed how organizations do not have good visibility into all of their talent because the data is in many systems both inside and out. Next, Experience for All Workers: Broadening the Talent Lifecycle dives into the challenges of talent management when you add the extended workforce into the mix. Moving from One-Dimensional Recruiting to Strategic Talent Sourcing focuses on the specific challenges of talent sourcing and makes the argument for Recruiting taking a much larger role, collaborating with Procurement/Vendor Management, to drive a more holistic view and approach. We wrapped up the series with this post which makes the case for new solutions that can not only simplify the manager experience for requesting talent, but also lead to stronger compliance/risk avoidance and visibility into talent demand for workforce planning.
We hope you have enjoyed our journey into how organizations should start to think about their extended workforce and the new solutions needed to take advantage of this new and ever-changing world.
About the Author
Jim Holincheck has more than 25 years of experience in the HCM technology industry and is the Vice President of Advisory Services at Leapgen. Before joining Leapgen, Jim gained experience as a vendor (Workday - Services Strategy and Product Management), an industry analyst (Gartner and Forrester/Giga), and a consultant (Accenture).
Jim has spent his entire career working with customers to strategize, select, implement, support, and optimize their usage of enterprise applications. Helping customers successfully get the most out of their enterprise software investments is something Jim is very passionate about. He launched his career in Chicago at Andersen Consulting (now Accenture) in its Software Intelligence group, where he worked on the full lifecycle of Financial and HCM application projects, including application strategy, requirements definition, software selection, implementation, and production support.
After ten years at Andersen Consulting, Jim moved to Giga Information Group (acquired by Forrester), where he was an industry analyst covering ERP applications. In 2000, he joined a startup, IQ4hire, to create a consulting marketplace around ERP and CRM applications. In 2002, Jim joined Gartner as an analyst covering the HCM market, where he also managed the research agenda for Financials, HCM, and Procurement applications. Jim graduated from Washington University with a BS in Electrical Engineering and an MBA in 1988.
Leapgen is a global digital transformation company shaping the future of work. Highly respected as a visionary partner to organizations looking to design and deliver a digital workforce experience that will produce valued outcomes to the business, Leapgen helps enterprise leaders rethink how to better design and deliver workforce services and architect HR technology solutions that meet the expectations of workers and the needs of the business.