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Contingent workers challenge human capital management strategies

HR management strategies are being tested by the increasing use of contingent workers. Managing them as vendors no longer works, but software is emerging to address the need.

Human capital management strategies and systems are not keeping up with the shift to contingent, freelance and gig workers, Deloitte said in its annual assessment of human capital trends.

These workers, more often than not, are treated as vendors. They are managed by older vendor management systems (VMSes), or ad hoc systems, not equipped to deal with types of workers.

An increasing reliance on contingent workers is a key trend cited in the just released 2018 Deloitte Global Human Capital Trends report. It's based on a global survey of 11,000 business and HR leaders on their human capital management strategies.

Contingent workers: A growing part of the workforce

Contingent workers do not fit into one clear category. They may arrive through joint ventures or be hired as contractors or self-employed freelancers. They might be the gig workers making ride-sharing possible. Firms also use crowdsourcing or crowdworkers, people hired to complete specific projects.

But what these workers are becoming is a larger part of the workforce. In the U.S., more than 40% of workers are in alternative work arrangements, Deloitte reported. That percentage is expected to grow. Human capital management strategies and vendors are not always in sync with the shift.

The market is moving so fast that I don't think the vendors have developed all the products yet that companies need.
Josh BersinPrincipal and founder, Bersin by Deloitte

"The market is moving so fast that I don't think the vendors have developed all the products yet that companies need," said Josh Bersin, principal and founder of Bersin by Deloitte, the research arm of Deloitte Consulting's human capital business.

Many products in use today weren't designed "for this idea that we're going to pay you by the minute, we're going to pay you by the job, we're going to pay you by the piece, we're going to pay by the mile or whatever," Bersin said.

Contingent workers are often managed in older VMSes, Bersin said. "Most of the time, the HR people don't even know what's in [a VMS]," he said.

"All of the data about all these different types of workers belongs in the core HR system, not the vendor management system," Bersin said.

These workers are integral to the success of the firm, Bersin said. Yet, when Deloitte asked firms about human capital management strategies around contractors, only a third, for instance, track the quality of their work, and only 29% track compliance with the contract.

Vendors interested in contingent management strategies

There is growing vendor interest in addressing contingent human capital management strategies.

Bersin said a startup community is addressing this issue. Also, there have been acquisitions by the major vendors. ADP, for instance, acquired WorkMarket, a cloud-based contingent worker management system, in January.

In 2014, SAP acquired Fieldglass, which makes a cloud-based VMS that is also integrated with SuccessFactors.

Rob Brimm, president of SAP Fieldglass, doesn't like the term vendor management system because it really doesn't describe what Fieldglass' system does, but it is technically the industry category, he said.

"We're really a talent supply chain system that is providing the right talent to get the work done," said Brimm, who added the company was started some 17 years ago in response to the then increasing use of contingent workers.

Harvard remakes contingent hiring system

Harvard is using Fieldglass to remake its contingent hiring system. The university spends more than $100 million annually on contingent labor. Yoh Services, a staffing firm, will operate as the managed service provider.

Harvard's new "competitive sourcing" system, according to documentation posted by the university, will "achieve higher levels of supplier and worker quality by maintaining talent profiles and engagement feedback," as well as "gain visibility to detailed data, now 'trapped' in vendor systems, about roles, rates, assignments, workers, suppliers and spending." It's due to go live soon.

Yoh is responsible for ensuring that the supplier is providing the right quality candidate to Harvard, but it is using Fieldglass' technology to reach out and manage the process.

The capabilities that Fieldglass has added in its product include a digital supplier network, which gives it the ability to connect, through APIs or microservices, with alternative talent providers in the freelance and contract market. These cloud-based systems offer recruitment management services and use algorithms to identify potential job candidates.

"We want to continue to extend out and have an intelligent enterprise that allows companies to plug into" an ecosystem of providers, Brimm said.

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