Trends and Drivers of the Evolving Contingent Workforce

How, why, anHow, why, and where we work has changed; we are in a new industrial revolution, and there is section of our workforce being hotly debated.  This time it’s not the perils of child labor, but the substantial growth in the contingent workforce (defined as external talent contributing to an organization; consultant, independent or non-employee).  The contingent workforce is considered part of today’s “gig economy”; a freelancing work model where individuals engage in project work for multiple clients in mobile and dynamic work projects.  While the Department of Labor and BLS struggle to accurately count this emerging workforce, it is estimated that as much as 35% of the current overall workforce can be defined as contingent and that by 2020 over half our global workforce will be external and engaged in flexible, limited term engagements.  Businesses today are focused on retention and satisfaction of their permanent workforce, but this is a gray area for the growing contingent workforce.

There is a major shift happening that is moving many away from having one job and staying in it for decades. Labor Statistics’ (BLS) 2010 report found on average that workers aged 18 -44 held an average of 11 jobs between 1978-2008 and the average worker stays at his or her job for 4.4 years. The expected tenure of the youngest in the workforce is about half of that and the Millennial generation whom gravitates towards flexible and entrepreneurial careers increases to half of total workforce by 2020. Social behavior and the workforce mix have changed the way people work; accepting this new normal will provide a competitive edge.   Workers are willingly forfeiting traditional “protections” to enjoy more flexibility and opportunities to spend time with their loved ones and looking at greater work-life balance.

Politicians have chosen to make a platform out of these changes; workers’ rights, regulating the gig economy, unionizing these workers, state governments claiming “billions” in unpaid taxes from the on-demand workforce.  The recent rulings at Uber and Lyft have upheld the Independent classification and acknowledged the shift in the workforce landscape of the on-demand economy. This workforce is here to stay and for many organizations, a critical part of workforce strategy.  They are often working on mission critical, highly visible projects and much of the specialized, niche top talent are only interested in engagement through this non-traditional model. In addition, the ability to ensure paid sick time and affordable independent healthcare options empower career mobility in a way previously unknown to the American workforce.

The contingent workforce, particularly the higher skilled talent (ie those in STEM related professions), are willingly choosing these opportunities because they offer more prestige and the ability to establish ones’ position as an industry expert -  leading to additional project work for different clients. This talent seeks a more entrepreneurial and mobile approach to their careers and greater flexibility to accommodate life’s demands – the ability to work remotely for a portion of the full extent of the project (i.e. to allow for dependent and senior care) and the flexibility of modified work hours per week.  Organizations trying to mitigate the talent war are responding by letting geography take a back seat to skills and ability and accommodating these requests.  It appears to be having favorable effects;  Per Business & Legal Resources (BLR) data found that “Contingent workers have greater job satisfaction (86 percent) compared to (73 percent) of permanent workers. The majority (54 percent) also feel “I’m paid what I’m worth” compared to (42 percent) regular workers.

Central to the discussion is the need for identification of which stakeholder(s) (HR, Procurement, or Supplier Partners) are best to own the performance, mentoring, career path, development and training of this workforce. How are these workers, now “brand ambassadors” for organizations, conveying the brand and image of the organization to the public via evaluations on Glassdoor and social networks? Company brand and reputation is now touted one of the biggest draws for this generation’s workforce. 

All stakeholders involved need to look at strategy for the creation of meaningful engagements, worker satisfaction, productivity and performance of the non-permanent workforce; it is becoming an integral part of a company’s overall talent blend. This is a substantial shift from 10 years ago when organizations utilized the contingent workforce primarily in non-strategic roles, or as “fillers” and managed via an ad-hoc approach. Over the years, centralized third party intermediary programs like MSP’s, lead primarily by enterprise HR and Procurement leaders were developed to provide visibility, compliance, and cost controls around this workforce. What we are talking about goes way beyond “Total Talent Management” (an often overused and aspirational concept).

The discussion must start with the supplier partners, MSP’s, IC’s and other talent supply chain partners involved with contingent workforce management.  All parties must collaboratively decide not only how this workforce will be counted and utilized, but how they will be treated, engaged, mentored for the greater good of the worker and the organizations whom employ them. This falls outside the typical risk mitigation of joint-employment and contract language, issues of “control.”

Organizations are utilizing the external workforce as key, strategic talent despite today’s political environment is   emphasizing benefits and protections. From an organizational perspective, all stakeholders involved in the strategy and execution of total talent management must begin to create space at the table for the contingent workforce, and talent supply chain partners to ensure that premiere talent is not only attracted, but retained, mentored and inspired as part of an organizations total talent strategy.  The first steps in a new industrial revolution.


Leslie Marsh, Hire Talent

Terri Gallagher, Gallagher and Consultants