Why You Need to Look at the the Total Workforce

Thomas Otter, a 20-Year HR Tech veteran, explains why enterprises need to look at the total workforce, both employees and contingent workers.

Employee engagement almost sounds like a straight to DVD Billy Crystal Meg Ryan movie title, but it is the hot topic at the moment in HR tech. It is remarkable to see the funding flowing, impressive products and even more impressive marketing turn this into HR Tech's big thing. It seems that every conference is full of ways to use software to engage your employees. The premise makes a whole lot of sense. Exciting times.

Hiring employees has also undergone massive change. The arsenal of technologies available to recruiters expands and changes at a rapid pace. It has become a highly complex and specialized field. Over a billion dollars of VC money flowed into recruitment software in 2018. New solutions onboard those employees to help make the days before, the first day of work, and the first few weeks of work more enjoyable and productive.

The mechanisms to train employees have transformed dramatically, with employees receiving microlearning via mobile devices, and Netflix-like learning delivery. Compensation tools are at last replacing Excel, and, after decades, HR analytics is finally starting to fulfill its promise. Even payroll is changing, with better global aggregation and more flexible pay methods.

Today is a great time to be in HR Tech, the HR line of business is able to and interested in investing in technology, employees demand better user experience, managers want better tools too. Yes, there is snake oil, and hype, most Machine Learning/Artificial Intelligence has very little learning or intelligence, and some of the vendor claims lack any grounding in earthly reality, but this HR transformation thing has got legs. For HR and the vendors that sell to them, this is a boom time.

There is a but coming. I’m never this gushingly positive. The problem is the word "employee." HR Tech and the people that buy it, are largely ignoring a big chunk of the workforce. HR departments have been buying technologies to manage their employees, not the whole workforce. Investments in tech to manage the extended workforce have been driven through procurement, and it shows.

No recruitment tech vendor has done an even passingly good job at contingent labour hiring. Core HRMS systems can sometimes track non-employee data, but they do so reluctantly, and awkwardly. Learning management systems are marginally better at including non-employees, but it Is typically a kluge. Almost all these systems price by employee, and often have employee in the product name. Even the ones called “worksomething” are almost entirely employee centric.

In essence then, there is a two-tier system. Massive investment in tools that help manage employees, and relatively little focus on the tools that manage the rest of the workforce. There isn’t even a coherent naming convention for workers that aren’t employees. Contingent workers, casuals, contractors. Ask any manager that has to do both. The tools landscape for the extended workforce consists largely of marketplace type solutions (for instance Upwork and Gigster) , and ageing vendor management systems. It is high time for some disruption and innovation in the contingent workforce space.

Now some of the HR folks reading this are saying, yeah but what about co-employment rules, and yes, you can’t treat your extended workforce exactly the same as you do your employees, but I’m not sure the law says anywhere that you need to treat them in the same way that you manage office supplies.

The research, academic or otherwise, points to a massive growth in the gig economy. Either through necessity, or choice, more people are earning their daily bread working for themselves. The Bureau of Labor Statistics reported in 2017 that 55 million people in the U.S. are gig workers. This accounts for approximately 34 percent of the U.S. workforce, projected to increase to 43 percent in 2020. And Deloitte research recently found “When asked to forecast the makeup of their workforce in 2020, 37 percent of survey respondents expected a rise in contractors, 33 percent foresaw an increase in freelancers, and 28 percent expected growth in gig workers.”

The gig economy has seen massive innovation and valuations with the likes of Uber, and we see a growing number of marketplaces for gig work. However, the core systems and processes for managing the contingent workforce inside the enterprise still treat those workers as purchase orders. The term vendor management system is telling. Line managers manage employees in one way, and the extended workforce in another.

Even if you aren’t convinced about the relevance of the gig economy to your enterprise business, have a look around your office today at the team working on your employee engagement project, your flagship multi-million dollar endeavour. 15 of them work for Accenture, three from the software vendor, and four you aren’t quite sure as they have been in office for years, but they aren’t on your org chart.

It is time that HR leaders really thought and acted holistically. More and more of the people that are responsible for your organization’s share price and success aren’t on your payroll. If I can bring up that old chestnut of "business relevance," HR had better understand the total workforce, not just those for whom you calculate income tax.