Managers Must Know How to Manage the External Workforce
We’ve spoken before about the concept of “buy, build, and borrow” as a recruiting strategy. “Buy” means hiring employees from the outside. “Build” means developing talent from within the organization. And “borrow” is focused on hiring freelancers, contractors, and external service providers (i.e. the external workforce).
For organizations to be successful in the talent space, they need to do all three. More specifically, they need to be very clear on when and how they will borrow. The SAP Fieldglass report “Services Procurement Insights 2019: The Big Reveal” shows that the external workforce represents 42% of total workforce spend. Organizations are using an external workforce to help them to bridge the skills gap and maintain their business competitiveness. In fact, most executives (59%) say the external workforce helps them compete in a digital world.
2 Ways for Organizations to Utilize External Service Providers
Organizations need to manage all of their resources well. But because the resources dedicated to the external workforce are significant, it’s even more important to understand the best ways to utilize external service providers. Here are two common ways for organizations to use the external workforce:
Project-based
This is probably the most common way organizations use an external workforce. When they need something done, instead of hiring a regular full-time employee, they bring in a contractor or external services provider to handle the task. When the task is complete, the contractor or external services provider is finished with the assignment.
Readers of this blog know I’m a fan of the Marvel Cinematic Universe (aka MCU). A project-based use of an external service provider would be like Captain Marvel. She shows up when you need her. Otherwise, she’s out saving another universe.
Extension of the department
This one isn’t as straightforward as the project-based scenario. The company needs a task done on a regular basis. It might be tempting to mash up a few tasks that need completing, call it a “job”, and hire a regular full-time person.
But here’s the challenge. That mash up tasks isn’t really a “job”. And we all know it. As HR pros, we need to design jobs that provide meaningful work that people want to do. That they feel some sense of purpose and connection. When jobs are designed poorly, employees will not feel connected to the organization. And they’ll leave.
So, that task that needs to be completed on a regular basis is perfect for an external service provider as they are looking for project-based work rather than a career path within an organization.
In the MCU, this would be like Falcon. When the Avengers need his skills, he “swoops” in to help the team. Sorry, couldn’t resist the bad pun. Which if you’ve been watching the Avengers movies, Falcon seems to help out a lot. And I don’t want to give away any spoilers, but it’s also possible that what starts out as the perfect freelancing gig could end up being a more regular role.
Regardless of whether the company hires a Captain Marvel or a Falcon, managers need to make sure their organizations are appealing workplaces for external workers. This is also true during assignments. Contingent workers along with external service providers want to stay engaged. The idea being that if Falcon and Captain Marvel feel positively about a company and the work they are doing, then when they get the call, they will make the company’s needs a priority.
The Manager’s Role in Engaging the External Workforce
Just like managers are a big part of keeping regular full-time employees engaged, they’re a big part of keeping external service providers engaged. Here are 4 activities that managers can do to keep the external workforce engaged with the organization:
UNDERSTAND the company’s external workforce engagement philosophy. This means that managers should understand how to best leverage contractors and external services providers – as well as supply chain technologies – to get projects done.
KNOW and actively manage the external worker’s agreement in terms of expectations, deliverables, time, fees, etc.
MONITOR the work products that external service providers deliver for value, timeliness, reworks, etc.
UTILIZE the contractor or external service provider cross-departmentally for greater collaboration since they know the organization. This might also get the organization better rates.
As the talent market continues to challenge us, organizations need to look at the external workforce to get things done. But managers must be prepared to invest in helping the external workforce feel connected to the organization.
To learn more about how your organization can more effectively manage the external workforce, download the SAP Fieldglass report that I mentioned above and check out this video conversation I had at SAP Ariba LIVE in Barcelona with Molly Spatara, global vice president of brand experience for SAP Ariba and SAP Fieldglass.