To manage the challenges of a major recession, companies often rely on the flexibility and skills of an external workforce — contingent workers, freelancers, consultants, temporary staff, and independent contractors. Indeed, 32% of organizations have bolstered their full-time labor force with contingent workers. And not just to save money. They’ve also gained other advantages conferred by workers who tend to be resourceful, proficient, and adaptable.
But what happens with these individuals once they’re part of your overall workforce? Moreover, how will your business hold onto them, especially once the pandemic subsides? How can you weave the unique capabilities of a mixed workforce into the permanent fabric of your operations?
By cultivating a culture that recognizes the critical contributions of all your workers, including external ones.
For starters, this means valuing external workers commensurately with internal employees. Translation: it means equitably rewarding payroll and non-payroll workers alike.
It’s important to pay heed to the evolving cultural factors that increasingly determine how traditional and non-traditional workers commingle, collaborate, and create value together. Years ago, it was widely accepted that external workers would command lower pay for contributing less strategic value than their full-time counterparts. But the rise of the flexible workforce has long since blurred this preconception beyond recognition. Today, external workers are often just as valued as traditional employees.
An Oxford Economics revealed that nearly half of executives (48%) said their company would not be able to conduct business as usual without an external workforce. These workers are critical to organizations’ success today because they increase speed to market, they improve the customer experience, and they help innovate and compete in a digital world by bringing in expertise on topics like machine learning, robotics, and blockchain.
What’s more, 42% of total workforce spend goes to the external workforce. As technology continues to advance, the competition for external workers with cutting-edge skills will increase and the organizations that make attractive pay table stakes will be leading the way.
Offering the Right Benefits
The skills gap has narrowed considerably in recent years between internal and external workers. But the gap in benefits has not.
As a result, some employers have already begun to broaden the circumstances under which external workers become eligible for benefits akin to those offered to their full-time counterparts (within the constraints set by applicable labor laws.)
Similarly, companies must look beyond pay to attract top external talent. That could mean offering paid time off, access to childcare and mental-health services, and protection from discrimination and harassment similar to that afforded by the Employment Non-Discrimination Act.
The U.S. government’s coronavirus relief package has put a spotlight on unemployment and paid leave benefits for external workers. Under the Pandemic Unemployment Assistance (PUA) program, for the first time, independent workers qualify for unemployment insurance (including the now-expired additional $600 a week provided by the federal government).
Also for the first time, self-employed individuals who are unable to work due to their own illness or due to caring for a sick family member are able to claim paid leave as a tax credit against their 2020 federal income tax bill.
These programs offer much needed aid to people who are critical to getting work done but are traditionally ineligible for unemployment and paid leave. Although these benefits are set to expire at the end of the year, the pandemic is pushing forward the national conversation around the evolution of the workforce. It’s also sparking dialogue about categorization of employee versus non-employee, living wages for all people, and fair benefits for members of this key workforce segment who normally fall through the cracks.
Firms also need to consider including external workers in team-building and digital networking activities, involving them in training programs, expanding their opportunities for flexible work hours, and keeping them fully informed through internal communications. Likewise, it’s important to extend performance feedback systems to gauge all workers comparably.
Many companies are leading the way in truly seeing external workers as an extension of the workforce with talent strategies that encompass everyone. Rather than being seen as competition from the outside, external workers collaborate with employees, openly share new ideas, and challenge everyone to do their best work. In a workplace that values and includes everyone, external workers will be seen as raising the bar by bringing in new skills. They’ll also be valued for improving the corporate culture itself by bringing in new people with different backgrounds and experiences.
Ultimately, diversity and inclusion efforts fall short of their fullest expression when organizations neglect to extend the principles of fairness to all classifications of workers.