Oct. 2018 Zachary Chertok Research Analyst, Human Capital Management

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UNIFYING THE MULTI-CHANNEL WORKFORCE

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Employment types today are more diverse than they have been in the last 40 years. The rise of contingent employment characteristics into the mainstream workforce is challenging employers to change how they think about, manage, and engage the workforce. Employers struggle, however, to unify the workforce behind one central management strategy that does not neglect the achievement of management goals.

The Multi-Dimension Workforce by the Numbers

Workforce characteristics are changing. In the fallout of the financial crisis of 2008, companies reconfigured by cutting back on spending, thereby reducing the amount of risk they would take in full-time hiring. During this time, the labor market experienced the fastest growth in contingent workforce hiring.

Figure 1: Employment Type Hiring 2006-2018

Figure 1 shows how hiring trends changed between contingent hiring and full-time hiring from 2006 to 2015. In this time, contingent hiring rose by 32% and the gap between the two employment types shrank. Today, the rise of alternative classes of employment into the mainstream presents a central management problem for employers: How can the same levels of productivity, engagement, and innovation be driven in a workforce with a growing risk of transiency and short tenure?

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Contingent Full-TimeSource: World Bank, UN ILO

The Aberdeen maturity class framework is comprised of three groups of survey respondents. This data is used to determine overall company performance. Classified by their self-reported performance across several key metrics, each respondent falls into one of three categories: ► Best-in-Class: Top 20% of respondents based on performance ► Industry Average: Middle 50% of respondents based on performance ► Laggard: Bottom 30% of respondents based on performance Sometimes we refer to a fourth category, All Others, which is Industry Average and Laggard combined.

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How Two Employee Classes are Managed

Aberdeen has found that despite the number of contingent employees rising from 2008 to today, 40% of companies use separate management infrastructures to understand how these two classes of employees plug into management goals and fulfill tasks.

Table 1: Short-Term and Long-Term Engagement Contingent Full-Time

Workforce management 56% 40% Recognition 53% 52% Performance management 40% 70% Rewards management 37% 61% Learning management 32% 60% Career development 19% 50% Wellness 11% 58%

N = 274 source: Aberdeen, June 2017

Table 1 shows the typical functional areas used to manage contingent and full-time employment. Contingent workforce management is still time-based in terms of holding these employees to a time sheet relative to the tasks assigned to them. Aberdeen has found that for more than half of companies, contingent workforce productivity is managed on a time-to-completion basis, while engagement is measured by the strength of the manager-employee relationship.

Along these lines, the top measures in use for contingent employee management are:

Workforce management: Time and attendance, scheduling, absence and leave management, accruals, approvals, and eligibility checks for benefits and compensation management.

Recognition: Manager-led resources enable employees and managers to communicate praise for work well done, and for managers to track cumulative — or lack of — praise.

40% of companies use separate management infrastructures to understand how the contingent and full-time workforce classes plug into management goals and fulfill tasks.

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Performance management: Periodic check-ins are set and conducted by managers, and mandated per the contract process, that quantifiably assess contract fulfillment and qualitatively assess workplace culture fit.

Meanwhile, for full-time employees, the resources for management are more engagement-based. Management’s focus is on employee retention, enablement, and growth, rather than on contracted productivity management. The measures for full-time employee management include:

Performance management: Managers routinely analyze a host of employee-participation and resource-consumption metrics (gleaned from rewards management, wellness, innovation management, well-being, recognition, and other engagement resources) to learn more about how employees are fulfilling their goals while participating in management objectives per productivity expectations.

Rewards management: Managers initiate campaign objectives or set benchmark goals that facilitate short- to medium-term payouts to employees in exchange for productive achievements.

Learning management: Managers develop and facilitate employee development resources to guide stronger alignment between employee goals and the goals of the organization per the longer-term need to fill emerging skills gaps and drive growth-based employee retention.

These two ecosystems have very different focuses, in terms of the metrics they aim to manage or facilitate. More than 65% of employers who hire contingent workers are either filling immediate position needs or adding headcount above and beyond what the department can readily afford to allocate. Employees hired in this classification are rarely considered for long-term employment during the hiring process, but for almost 30% of companies, more than 50% of their contingent hires qualify for longer-term hiring before the initial contract is up.

How to Reconcile the Management Infrastructure

Best-in-Class companies were 2.6x more likely than All Others (26% vs. 10%) to find that more than 50% of contingent hires qualified to move into full-time positions in the past year. Given 76% of companies find they are failing to recruit and hire top quality talent, this is a significant metric. Contingent employees get trained on internal systems and in internal protocols for management and goals fulfillment, so as candidates for hire,

More than 65% of employers who hire contingent workers are either filling immediate position needs or adding headcount above and beyond what the department can really afford to allocate.

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these employees are a great resource for front-line employment potential when full-time positions open.

Best-in-Class companies are realizing this potential and are working to reconcile disparities in their management infrastructure so that the two classifications of employees are managed as one, central workforce. The Best-in-Class are 6.4x more likely than All Others (32% vs. 5%) to implement a vendor management system (VMS) to handle contingent placement services for short-term contracts and facilitation into full-time hiring. Best-in-Class companies are also 3.1x more likely than All Others (64% vs. 21%) to link data from talent acquisition into early performance management for the entire workforce, and they are 29% more likely than All Others (72% vs. 56%) to extend the rewards management ecosystem to the entire workforce.

The Best-in-Class are extending to the contingent workforce the same communications and goals-management systems used to stimulate, engage, and advance the full-time workforce. In this way, these organizations are centralizing productivity management while extending internal resources to the contingent workforce in a way that entices them to stay with the organization for contract renewal, or if full-time work comes available.

The Bottom Line

Today, the Best-in-Class are 5.7x more likely than All Others (86% vs. 15%) to be able to fill more than 50% of the contingent job openings they have. For short-term hires, the Best-in-Class are 6.6x more likely than All Others (93% vs. 14%) to be able to fill positions more than 50% of the time. And, as noted earlier, Best-in-Class companies are 2.6x more likely than All Others (26% vs. 10%) to find that more than 50% of contingent hires qualified to move into full-time positions, and the majority of those that qualified applied or were hired in that capacity.

Centralizing the management infrastructure is removing traditional barriers between the bisected classification framework of the workforce that treats contingent and full-time staff differently. In this way, management is more effectively overseeing resource management, while better integrating employee engagement strategies.

Best-in-Class companies are 6.4x more likely than All Others to implement a VMS to handle contingent placement services for short-term contracts and facilitation into full-time hiring.

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About Aberdeen Group

Since 1988, Aberdeen Group has published research that helps businesses worldwide to improve their performance. Our analysts derive fact-based, vendor-neutral insights from a proprietary analytical framework, which identifies Best-in-Class organizations from primary research conducted with industry practitioners. The resulting research content is used by hundreds of thousands of business professionals to drive smarter decision-making and improve business strategies. Aberdeen Group is headquartered in Waltham, Massachusetts, USA.

This document is the result of primary research performed by Aberdeen Group and represents the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group.

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