Not Your Parents’ Workforce: The Rise of Contingent Labor in Supply Chain
By Fatime Doczi
As baby boomers retire en masse, organizations continue to tailor their workforce management strategies to younger generations. This brings an increased emphasis on work-life balance and agile, flexible work options that appeal to millennial and Gen Z employees who want to enjoy work on their own terms. The typical 9-to-5 desk job has given way to the gig economy, which promotes a far less structured workday — and a far more complicated talent supply chain.
To understand its broad reach and recent growth, consider the following statistics:
- This year alone, there are roughly 77 million freelancers in Europe, India and the United States.
- More than 40 percent of workers in the United States are employed in alternate work arrangements, such as contingent or part-time work. This percentage has increased 36 percent in the last five years alone and includes workers of all ages and skill levels.
- The average percentage of contingent labor within organizations has increased from 15 to 29 percent in the last year, and 41 percent of employees say they will only work for a company that offers agile employment options.
As contingent labor options become more popular and include more specialized fields, HR and procurement professionals trying to find the right talent at the right time are running into some complex roadblocks. Today, only 16 percent of employees say their companies have well-defined strategies for managing contractors, freelancers and gig workers. The complexity starts with evolving internal ownership of the talent supply chain.
The disconnect between HR and procurement is alarming. As the contingent workforce gains steam, HR has a vested interest in attaining more control over managing and engaging part-time, freelance and gig workers. On the other end, procurement and supply chain leaders remain laser focused on cost containment, supplier performance and risk. Adding to the complexity: outside of the HR and procurement misalignment, most organizations manage their full-time and contingent workers quite differently. Recruiting, hiring, onboarding and retention processes for the two groups can vary greatly, and company policies for contingent workers may be completely different from those for full-time employees.
Closing the labor gap in supply chain
The need for contingent workers rings especially true in supply chain, an industry plagued with a deep-seated perception problem. Many job candidates are deterred from positions in supply chain because of perceived lack of opportunity for career growth and professional status. Incredibly, almost 70 percent of organizations say their search for talent is hampered by this false perception. This creates a significant problem for hiring managers. And, according a study by DHL, organizations are not doing enough to close the hiring gap. In fact, only 36.9 percent of supply chain leaders surveyed say they have adapted their culture to support changing demographics, workforce needs and preferences. For a discipline with a talent crisis, this simply isn’t smart business.
To stay competitive in the war for talent, organizations and their supply chain teams need to bridge the divide between HR and procurement and embrace contingent workforce opportunities. Both departments can drive more value by working closely together. Developing a set of well-defined, transparent policies that span across the total workforce is the first step. The next step is acknowledging that strong workforce management strategies don’t stop at talent acquisition. While companies are filling the labor gap with gig workers, they must have additional processes and technologies in place to speed time-to-fill and increase efficiency.
With younger generations entering the workforce, the number of contingent workers will continue to climb. Contingent labor is still in its infancy, but as the labor landscape continues to evolve, companies need to adapt if they want to remain appealing to potential employees and competitive in market.
Fatime Doczi is chief human resources officer for Workforce Logiq.