Whether they’re called talent management, people analytics, or good old-fashioned human resources, most forward-thinking companies have a team dedicated to adjusting to the “future of work.” And as organizations think about the future of their business and their workforce, they are not only asking what kind of people to hire, but increasingly what classification of employee to bring on. Usually, this refers to the blended workforce triumvirate: full-time, contractor, or contract-to-hire?
If the stats are anything to go by, the answer is contractors. In 2015, the Government Office of Accountability (GOA) announced that 40.4% of U.S. workers were contingent, which the GOA defined as agency temps, on-call workers, contractors, the self-employed, and standard part-time workers. More strikingly, according to an Intuit report, by 2020, over 40% of U.S. workers will be specifically independent—freelancers, contractors, and temporary employees.
In their 2017 Global Human Capital Trends report, Deloitte announced, “Our research clearly shows that one of the new rules for the digital age is to expand our vision of the workforce; think about jobs in the context of tasks that can be automated (or outsourced) and the new role of human skills.” Indeed, nearly half of HR professionals worldwide surveyed by PwC predict at least 20% of their workforce will be contractors or temporary workers by 2022.
Incorporating freelancers provides diversity of thought, flexibility, cost savings, and opens the org up to a larger talent pool. Furthermore, because contractors can end up being full-time hires, they can give an organization valuable time to find the right full-time person without the expense of a hiring mistake. Sounds great, right? Well, the land of a blended workforce is not all sunshine and rainbows.
Unfortunately, no clickbait list of solutions can address all the potential difficulties of incorporating contract workers into your business. This is, in part, simply because there are so many ways to use them, from the type of work they do (writing, designing, consulting, accounting, and so on) to where they do it (on-site, remotely, or virtually) to how they’re compensated (through a staffing agency, a direct invoice, or by salary).
Nevertheless, even if you haven’t already started using contractors to flesh out a team or complete a project, the likeliest pitfalls aren’t hard to conjure, and they can have a significant impact on the value the business gets from hiring contingent workers.
Problems can arise on both sides of the aisle, so to speak. Contract workers who don’t feel appreciated or part of the team aren’t doing their best work. And if you’re bringing people in on a contract-to-hire basis, you won’t be able to hire a contractor who’s had a bad experience at your company. Meanwhile, full-time employees who see contingent workers swelling the ranks may feel their employment is becoming unstable or their own work (or loyalty) isn’t being valued.
Because communication is a two-way street, it can get clogged at either end, or both. Freelancers and their direct reports or team members may have different ideas about what needs to be communicated—or when. If contractors and regular employees are on different schedules, be it different time zones or simply different work hours, coordinating will get bogged down.
Issues like employee classification can be complex. How an employee is classified determines, to some extent, how you can work with them, including how much control you have over their day-to day work, including when they work.
Freelancers who do high-quality work don’t come cheap—nor should they. Working with contractors can save money, but hiring cheap labor isn’t cost effective when the work is sub-par or has to be redone.
Unfortunately, it can be difficult to keep track of what fair compensation is if you have several different types of employees who are paid differently (salaried, hourly, per diem, per project, e.g.). Salary data can help to determine what “fair pay” looks like in a given context.
Any one of these problems can reduce the benefits of hiring contingent workers, by hurting productivity, the quality of work, and general company culture and morale.
"Amy, I don't want to be buried under the deluge of issues occasioned by an improper blended workforce ramp. How do organizations successfully navigate these impending challenges?"
Glad you asked. Here are a handful of areas you can focus on to ensure your blended workforce merges seamlessly with your existing teams.
The Small Business Association has a helpful introduction to the distinctions between an employee and an independent contractor. For more information, tax implications, and relevant forms, you can check out IRS’s “Independent Contractor or Employee?” page. Indeed, it’s best if there’s someone available as a resource for both the company and contingent workers, ideally someone who understands both relevant company policies and legal issues. Jeff Nugent, managing director of a contract worker classification firm based in Toronto, has found that companies with centralized management of contingent workers often have the best results.
Josh Bersin, principal and founder of research and advisory firm Bersin by Deloitte, most commonly encounters the freelance arm of a blended workforce being underserved in terms of training and pay. He argues that companies “that simply treat them as vendors and do not manage their performance and environment lose out.”
In an overview of recent studies from SHRM, the authors unsurprisingly note “temporary workers were more committed to organizations that provided them support and treated them fairly.” Despite the stereotype of freelancers as by definition disengaged from companies for whom they work, studies find that this isn’t the case. Rather, the SHRM report argues, “their responses to the organization appear to be shaped by the terms of exchange between themselves and the organization.” The report points to a study that found temporary workers identified more with a majority full-time employee team “because [contingent workers] see this as a sign of being valued in the organization.” A sense of belonging is also inspired by the “amount of interaction they have with co-workers and the amount of information they receive about the organization over time.”
Just because people aren’t full-time, or aren’t coming in to the office every day, doesn’t mean they have one foot out the door. To the contrary, they can be made to feel as included and connected as the organization wants them to be. Treat gig workers as if they’re part of the team, because that’s what you want them to be. Make sure they have the tools they need to do the best job they can. Offer bonuses, if you can. Invite them on company outings, if they’re local. Recognize full-time employees’ and freelancers’ birthdays the same way. Ask contractors for feedback about their experience.
Determine how independent contractors will communicate with the team, taking into account the kind of work being done and how the contractor and the team work together. Is the contractor on- or off-site? Is the contractor working the same schedule as the team? How often do the two parties need to check in? What kinds of documents will they need to share? There are a raft of options now, from old school email to Slack, as well as project management software.
If you can avoid it, don’t communicate solely via email. It can make a big difference to someone working off-site to hear (and see) the folks they’re working with. Feedback is more meaningful if it’s coming from a real person, and live conversations are more likely to spark new ideas than email or even instant messaging.
Need your newly integrated team to hit the ground running? Establish ground rules before you start. As Mary Shapiro, consultant and executive trainer, points out, “Rules of conduct will form and evolve whether you talk about them or not,” so it’s best to be thoughtful about them.
In bringing one or more contractors onto a team, you’re essentially merging two different teams with their own (likely unwritten) sets of rules. Shapiro recommends establishing a “third, overarching set of rules... that includes: respect and trust; meeting discussions and decision making; dissent and innovation; feedback and reporting; and conflict resolution.” No need to reinvent the wheel here, there are plenty of examples around the internet from people who have encountered these challenges before.
Before any contingent workers join a workgroup, have your team identify their working methodology ahead of time—a sort of cultural audit that addresses how work gets done and how coworkers interact. This helps both groups acclimate to their new, blended team. And, Shapiro notes, it can be done “quarterly or each time you close out a project” in order to keep “the rules relevant as tasks and timelines change.”
The audit might include setting work hours, defining standards, and agreeing to a meeting schedule and meeting structure. It is imperative, however, that everyone’s responsibilities are clear, including who has the last word if there’s a dispute.
It’s time to prepare your organization for what appears to be the inevitability of a blended workforce. If you aren’t hiring them now, odds are you will be soon, and it’s never too early to prepare for the talent challenges of the future workplace.