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BRANSON HUMAN RESOURCES DIRECTOR HCAMAG.COM ISSUE 11.09

SALARY SE JOBS GUIDE

SURVIVING DOWNSIZING

ENGAGING CONTINGENT

WORKERS

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FROMSTART TO GLOBAEPLAYE

LinkedIn's HR success story

ISBN 978 0-646-90956-

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TALENT MANAGEMENT / CONTINGENT WORKERS

BUI with a contingent workforce

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Businesses are using growing numbers of contingent workers, yet an 'us and them mentality still prevails in many organisations. Peter Szilagyi provides his tips on managing the complexities of a contingent workforce

Over the past decade businesses have dramatically

increased their use of contingent workers. The reasons behind this increase are many and varied. On the one hand, the need to reduce cost and improve productivity and flexibility has driven greater demand. On the other hand, contingent work is now widely recognised as an attractive career path both in the short and long terms. It can offer greater financial rewards and opportunities that may not be readily available through permanent employment.

CONTINGENT WORKFORCE GROWTH While there is no common definition of a 'contingent worker', this segment includes indivi-duals who work on a non-permanent basis and could be called independent professionals, temporary workers, independent contractors or consultants. The ABS estimates that up to 9% of the

workforce is classified as 'independent contractors', and this is only one type of contingent worker. Taking a more global view, a recent survey by Kelly Services found that in the US the number of contingent workers could be as high as 35% of the labour market. With such a large and growing workforce, are we doing the right things to manage and engage contingent workers in our own organisations? How can we improve the performance of this workforce without blurring the lines between employee and contingent worker?

KEEPING THEM FAR! DEFINING THE CONTINGENT WORKER... There are important reasons for differentiating between employees and contingent workers, the most fundamental of which is that contingent workers perform work under a contract for service as opposed to a contract of employment. This

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A broad category of worker who is self-employed and not committed to a particular employer for any long period of time

Typically not registered as a business entity. Exchange of service is usually through an invoice and not a formal contract

Independent contractors run their own businesses, hiring out their services to clients or other organisations

These individuals will typically be registered under a business entity

Exchange of service is typically through a formal contract for service

Agency contractors are sourced through an agency (eg Manpower) and work on behalf of that agency for the client

• They typically provide labour for temporary purposes (eg replacing head count until a position can be filled)

• A formal contact is between the agency and the client

• Consultants work on behalf of their company (typically in teams) to provide services to a client for a specific project or objective

• They typically provide professional services outlined below

Consultants are engaged through a formal contract for consulting services

Outsourced suppliers provide an ongoing/ operational service through a contractual agreement. Employees of these companies workfor the client to provide that service

This work is typically nontechnical and can relate to the local site or operations across sites (see below)

Agency contractor . .

Consultant

Outsourced su tier

Classification • ..

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Online examples:

Direct engagement Examples: Kelly Examples: McKinsey, Examples: Serco, www.odesk.com

(agency or individual) Services, Manpower, IBM, Accenture, Veolia, ADT, IBM, www.elance.com

CXC, Chandler Macleod Deloitte, E&Y, CGI, Accenture, Infosys, www.guru.com

KPMG

HP, Oracle, ADP

How procured? (samples)

HUMAN RESOURCES DIRECTOR

POTENTIAL CONTINGENT WORKER CLASSIFICATIONS

PO

TEN

TIA

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NTI

NG

ENT

WO

RK

ER

PRA

CTI

CES

Type of work performed? (samples)

Miscellaneous (refer to links below) could include administrative support, customer service, software development or translations services

Project management, systems integration and implementation, advisory services

Administrative support, customer service, specialist function roles (eg HR, finance and procurement support)

Strategy and planning project management, systems integration and implementation, other advisory services

Site: Security, cleaning services, onsite technology support

Operations: Business process outsourcing teams, off-site customer support, etc.

Possible business practices

Additional table rows could include: Approval process? Who directs their work? Responsibility to onboard and offboard? HR system classification (code)? Business system access? Contract ownership? Performance feedback responsibility? Engagement tips — communication/coaching/rewards etc.

distinction has different legal obligations in relation to employment law, superannuation, workers' compensation, health and safety, intellectual property and taxation.

If incorrectly defined and managed, the blurring of the line between employee and contingent worker could easily happen. For example, a line manager focused on the performance of their division could easily keep an individual contractor for longer than planned or pay someone contractor rates and call them a contractor without intending any employment relationship. Common law courts may treat custom and practice differently to a contractual agreement and use a variety of tests to determine whether an individual is a true contractor or in reality an employee.

For many reasons it is vital to have a clear contingent worker strategy. This strategy should have definitions of the different types of contingent

workers and outline business practices that sit under them. These business practices would include how these workers are defined, engaged (ie contracted), managed, reported on and exited out of the business. The table above shows an example of the range of different contingent worker relationships a business may face and the means to classify them.

Central to good business practice are clear contracts to cover the relationship between the 'employer' and the 'supplier' of the service (ie individual contractor, an agency or consulting firm, etc). Key provisions include the nature of the service provided, duration, rates, performance standards and termination provisions.

KEEPING THEM CLOSE? BUILDING CONTINGENT WORKER ENGAGEMENT... Notwithstanding the need to differentiate, there

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Did you know?

Baby boomers (1946-1964) are the largest segment of 'free agents' (ie contingent workers), making up 52% of surveyed workers. Gen Y (1965-1979), on the other hand, was surprisingly the smallest segment at 9%

Source: Kelly Services report, The New Workforce: Insights into the Free Agency Workstyle

TALENT MANAGEMENT / CONTINGENT WORKERS

are important reasons to build engagement. Research by Deloitte and Manpower shows the importance of contingent workers yet highlights that organisations could do a lot more to build engagement. A lack of engagement can result in inflated costs, poor productivity, and non-compliance with policy. Furthermore, the flexibility offered by contingent workers is not a one-way street. Contingent worker attrition is costly, both financially and operationally.

Building contingent worker engagement starts with understanding what is important for this workforce. If companies measure the engagement of their permanent workforce, and regularly action this feedback, there are opportunities to apply similar techniques to contingent workers. Interestingly, ask yourself whether contingent workers completed your organisation's last employee engagement survey. Based on the commentary above, is this a good thing? A risk averse method to gauge contingent engagement is to assess the leaders who are managing contingent workers. Do leaders on the ground feel they have the right contingent talent in place and are they engaged and motivated? Another approach is to survey the supplier account managers to understand engagement drivers.

The drivers of contingent workforce engagement will differ for many reasons, not limited to the type of workforce, skill base Cie niche vs transactional), generational factors, national culture, and years of experience. There are, however, key principles of employee engagement that apply, regardless of classification, including effective leadership, interesting work, opportunity and rewards.

The most important way the business can build greater engagement and productivity is to build the capability of line managers. Line managers need to understand the different types of contingent workers, their role in relation to them, and the risks of non-compliance. Ultimately, contingent workers will want to feel included and part of a productive team. Applying the same company values for employees to contingent workers (ie respect, teamwork, accountability, etc) is an essential starting point. The tools managers use on a day-to-day basis, including regular and open communication, coaching, feedback and delegation, should all be used for contingent workers.

Unfortunately, too often supplier arrangements are viewed in binary terms, as 'us and them'. The nature of a contractual relationship can easily

A quick win with respect to HR practices and consistency in line management behaviour is to build greater structure in the onboarding process

lend itself to this outcome. It doesn't need to be so. Engagement should not only be viewed operationally, and strong relationships need to be nurtured through the account management tree for both client and vendor (ie contract negotiators, account managers, line managers and operational staff on both sides of the contract). A good example of the impact of this relationship management is delivery of regular feedback and annualised feedback. Line managers should look to provide feedback to both the vendor and the contingent worker. Not only does this help course-correct and improve performance but it is also central to the concept of engagement between line manager, vendor account manager and contingent worker.

WORKFORCE PLANNING FOR CONTINGENT WORKERS Matching skills and interest to the requirements of the role is a crucial means of building contingent worker engagement. Many contingent workers are completing an assignment or contract to build a certain skill set.

From a strategic perspective, workforce planning plays an important role here. Workforce planning should not only forecast contingent worker numbers but also outline the process in which requirements are collected and provided to agencies procuring contingent labour. The more refined the requirements, the closer agencies can match capability and interest to business needs. This helps build the conditions for a motivated and engaged contingent workforce. From a practical perspective, managers play an important role here, and these requirements should be regularly calibrated, not set and forgotten. To do this, managers need to understand the contractual

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scope of work enough to make changes to better align interest and opportunity through an assignment. Again, strong engagement with the vendor account management teams is important.

A quick win with respect to HR practices and consistency in line management behaviour is to build greater structure in the onboarding process. As we know, the first three months of any worker's time in a role is crucial to success. If there are tools used for onboarding employees, these should also be leveraged for contingent workers. Too often contingent workers can be viewed as a 'temporary fix', and therefore they are not afforded the same opportunities to ramp up and become effective. This is particularly true for knowledge workers who need the right context, tools and access to perform effectively their roles. Inaction here can set the tone for poor engagement from day one.

REWARD APPROPRIATELY Finally, rewards play a crucial part in building engagement and motivation. As contingent workers

are under contract, there are opportunities to tailor terms to lead to targeted outcomes. One approach for individual contractors is staggering bonus payments to timeframes or outcomes. For agency contractors, utilisation of the vendor relationship is essential, and regular performance feedback should be provided. As always, the small things are the big things, and making individuals feel part of the team through invitations to social events and the like is important.

The contingent workforce is contractually unique but increasingly as critical as the regular workforce in delivering business outcomes. The trend of using contingent workers will only accelerate in the future. Managing the complexities of the contingent workforce requires an enterprise-wide approach with agreed accountabilities between the business, HR, legal and procurement. Ultimately, a contingent workforce strategy needs to be part of a broader workforce strategy. This strategy needs to balance legal compliance and business accountability with engagement and operational effectiveness. HR is in the driver's seat! MO

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Peter Szliagyi, CAHRI, GPHR, HRMP is an experienced HR Leader in talent management, transformation and change management

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