For CPOs who are responsible for the contingent workforce within their organizations, the evolution of that workforce means a purpose-built...
The Extended Workforce Needs a Dedicated System of Record
The sheer size and complexity of today’s extended workforce requires a purpose-built technology to support it. Historically, HR systems were built for relatively static employee hierarchies. Procurement solutions that follow an end-to-end workflow are good at tracking cost and spend, not talent. These systems were designed for entirely different use cases. Extended workers, however, are constantly in flux in high-demand, high-volume, high-growth environments with unique needs. They should be the fundamental object around which a dedicated platform is constructed. If not, it creates the dreaded square peg/round hole scenario – not only for organizations, but for the talent they rely on.
Because of the risk, size, and complexity of today’s workforce, organizations must invest in scalable, flexible technology built specifically to manage the various classifications of workers and unpredictability in the market.
Today, there is much complexity in how and where (from anywhere and global) work gets done. There is complexity on how work is paid for, and the data must be tracked and reported. HR and Procurement systems aren’t architected to manage the permissions, worker types, payment terms, job profiles, and data security required.
Contingent labor or staff augmentation account for ~10% of the extended workforce, leaving ~90% of workers who fit a different classification. This means that an extended workforce system that supports all categories of labor must account for a variety of situations, including but not limited to the following:
- Provisioning complex supplier roles (e.g., LLCs that are workers and employers of other workers)
- SOW-based projects that aren’t designed for typical employer/employee relationships (and will never align with HCM job profiles)
- Consultants who perform tasks for multiple managers, working on different projects, and in different roles in a given week
- Gig-workers who never come on site, but perform work for managers (and need to be counted when assessing how work gets done)
HR and Procurement systems weren’t architected for this type of flexibility, nor were they meant to handle the variability in how work gets done today. It’s clear a system dedicated to this population is required.
Additionally, detailed analytics around how long it takes to hire talent, worker performance, pay, and tenure across locations and geographies (e.g., global rate cards) will only continue to grow in importance as organizations seek a total talent view of their workforce.
The concern over risk and compliance with new ways of working – be it SOW-based workers, freelancers, independent consultants, gig workers, contractors, and more is only escalating. More and more industries and government bodies require reporting on who works for you, what they are doing, how much they are being paid, and whether taxes are being paid properly. The fastest-growing part of the workforce is the one that is currently not being tracked, which poses huge challenges for organizations.
Having a purpose-built system allows an enterprise to de-couple employee from non-employee data in a much cleaner manner, especially when it comes to personal identifiable information, mitigating unnecessary risk. Tracking the data is one thing; being able to properly store and encrypt that data (and the willingness to do so) is another.
When we’re talking about more than half of a company’s population, being able to report on things like diversity status, geographical considerations (e.g., ex-pat versus local), certification or educational status, and other worker-specific details is critical. You can’t run a compliant, scalable business with only a partial view into who is doing the work.
Speaking of size, non-employee labor is set to exceed traditional full-time employment in the workforce by 2023. When it comes to managing this population, however, the news is sobering. According to the Sapient Insights 2020-2021 HR Systems Survey, only 9% of companies believed they were "excellent" at managing gig or contingent workers, while 17% said they were "poor" at managing that segment of the workforce.
Given non-employee labor is a $4.5T a year industry, it’s staggering that only 6% (or $270B) is currently being managed through legacy Vendor Management Systems (VMS) like SAP Fieldglass or Beeline. In addition to missing 94% of the spend, legacy VMSs also lack numerous capabilities for engaging and managing the extended workforce. An enterprise needs a platform that understands today’s market and the demand for a more flexible workforce. They need this platform to be able to support the ongoing evolution of the way work gets done.
Utmost was designed for the extended workforce from the beginning. We are a platform, not a point solution, and we will continue to innovate beyond traditional systems to meet the needs of this ever-changing population. Our collective goal is to enable a network of participants (which I will expand on in my next blog) to seamlessly work with the extended workforce, allowing them access to the tools needed to get work done.
To learn more, please visit utmost.co.
Annrai O'Toole, CEO and Co-Founder
Annrai has a strong history founding and leading successful companies. His role as CEO is rooted in deep industry knowledge, backed by years of leadership, technical innovations, and successfully aligned teams. Prior to co-founding Utmost, Annrai served as European CTO at Workday, where he held several positions in both Product and Sales since becoming part of the team in 2008.