The rise of the contingent workforce

As the contingent workforce increases across Australia, the employment market is changing. This means recruitment and HR professionals must adjust their approach to attracting and managing increasingly transient talent.

The term ‘contingent workforce’ describes the growing group of workers who are engaged by companies on a non-permanent basis. They may be freelancers, independent professionals, temporary contract workers or consultants; however, they are generally united by a desire for more variety in their work and more control over their career. While the millennial generation has largely led the charge, the trend is spreading across a broader range of skilled professionals.

This increasing casualisation is suiting more employers too. Companies have significantly increased their engagement of contingent workers over the past decade as a means of managing rising labour costs, supplementing workplace talent and building their agility in a rapidly changing marketplace.

Results from Deloitte’s 2015 Global Human Capital Trends report indicates that eight out of 10 respondents believe demand for skills is driving a trend toward greater use of contingent workers. Countries such as the US are leading the way. A recent report from the US Government Accountability Office estimates that just over 40% of the country’s workforce is made up of contingent workers and this is expected to grow to 50% by 2020. Meanwhile, in Australia, contingent workers are believed to comprise around 30% of the market.

David Brown is a partner of Consulting at Deloitte and leads the Human Capital Practice nationally. He says that while companies set to benefit through reduced fixed costs and increased flexibility, a changing attitude among employees is also driving the contingent workforce trend.

“We used to talk about the career ladder, then it became the career lattice and now it’s about the career experience,” he says. “There is a move toward shorter-term experiences, and a desire for mobility and flexibility among many workers. This suits organisations as well as they can move a chunk of their labour force off balance sheets and have the flexibility of being able to turn on and turn off resources as required.”

Brown says the contingent workforce is an increasingly important part of Deloitte’s own business. “It reflects what the talent market is looking for,” he says. “Expertise lies in the broader talent market.” Brown adds that Deloitte aspires to move toward a 30–40% of contingent workers within its workforce across the country. “We’re not there yet, but we’re well on the way.”

With more workers looking for new career experiences, recruiters and HR professionals must consider how they can attract the best contingent candidates. “People who are highly skilled want to take control of their own career,” says Toni Jackson, Director APAC at SAP Fieldglass, a company that draws on a contingent workforce while also providing the technology to help other businesses manage their own casual workers. “They want to be their own boss, so you need to work to attract the best talent and your brand has never been more important.” This also means ensuring your workplace culture is visible from both outside and within. “If you can be clear on the culture that you are creating, people will know what the value proposition is,” says Brown. “Nike, for example, has a product innovation culture. Ritz Carlton is a customer-centric culture. McDonald’s has an operational efficiency culture. I think it’s important that companies are clearer about the cultural context they are creating.”

Once you attract the best talent, encouraging them to return for the next gig is another challenge. “It’s a two-edged sword in that you build up a strong capability and competency in a set of the people, but that corporate memory is walking out the door every time you churn,” says Brown. “I think what the better employers are doing is trying to create a stickiness – while they will use contingent workers, they still want them to stay connected to their organisation, so that after moving on to another gig, they will keep coming back.” Dylan White, Senior Partner with recruitment firm Denovo, says recruiters and HR professionals must build clear processes and policies around planning for and managing contingent workers. “The model needs to be about generating revenue based on the utilisation of skills,” he says. “There needs be a strong understanding of business objectives so you can move quickly to bring in the relevant skills to match a scope of work. This requires a mindset shift.” When a percentage of the workforce becomes more transient, it also requires an adjustment to training and induction policies. “This should be built into the model,” adds White. “Induction is still important so you can instill company policies and values, but it needs to be streamlined and standardised.”

Technology can also assist in the planning and managing of contingent workers. “Increases in workforce analytics can ensure processes run smoothly,” says Brown. “We’re seeing the big HR cloud platforms, like Oracle, significantly enhancing their workforce analytics platforms.” Jackson adds that technology also creates greater visibility around the work of contingent employees. “People can come and go within an organisation and all their data from their performance is kept inhouse,” she says. “It’s also important to remember quality control. The interviewing process hasn’t gone away but, when looking for contingent workers, hirers generally only want to see the top three resumes.” As more companies strive for greater agility and workers look for more career experiences, White says recruiters and HR professionals must shift their thinking in order to capitalise on the contingent workforce. “More people are choosing to work flexibly and it can be very good for business, so you need to create an environment that supports that.”