Almost 40% of Americans now have part-time or contingent jobs, according to MBO Partners, a company specializing in the independent-employment market. Deloitte research found that almost two-thirds of young people are doing “side hustles.” And, according to ADP sources, the number of W-2s filed since 2000 has gone down by almost 4%, while the number of 1099s filed has gone up by 34%.
Such data, along with my own research, clearly show that workforces have changed, with companies increasingly relying on a variety of employees–such as part-time and temporary workers, contractors and freelancers.
I call this new independent workforce the “pixelated” workforce. Rather than viewing workforces as homogeneous (largely full-time, with one-size-fits-all approaches to management), we need to view employees as individuals (like pixels) who choose their own way of working based on skills, location, age and lifestyle.
Pixelated workforces are now impacting every segment of business. Many companies outsource the handling of sales inquiries or customer service to third parties. Pharmaceutical firms often outsource R&D and drug testing. Marketing organizations are probably the biggest users of pixelated workforces. For the most part, this transition has been a good thing. People who are experts at a craft can now ignore the politics of “climbing the corporate ladder” and just do the work they love.
The latest study by MBO Partners really drives this home. According to its research, independent workers generated $1.3 trillion of revenue in the U.S. last year, and 48% of U.S. adults are working or have worked independently during their careers. More than 80% of independent workers are doing so voluntarily, and 76% are highly satisfied with their choice of work arrangement.
Interestingly, job satisfaction among independents is now higher than that of full-time workers, and more than half of respondents thought working independently was less risky than full-time employment. The biggest issue faced by independent workers is the cost of healthcare.
Employers Have Not Caught Up
However, most employers have not caught on to this new workforce trend. As we found in research conducted in partnership with HR People & Strategies earlier this year, only 16% of organizations have a workforce strategy to address the pixelated workforce. Those that do are almost four times as likely to describe themselves as market leaders or leaders in innovation and growth.
Harnessing the value of the pixelated workforce and managing it strategically are key competencies not yet in place in most companies. Following are some of the top-level findings and recommendations that came out of our study:
- Too many companies still delegate the “contingent” workforce to the purchasing department, where expertise in talent sourcing, management and measurement of talent, and ongoing development is weak.
- Examine various HR policies, from hiring to training to diversity and inclusion, and think about how these should be applied to the pixelated workforce.
- Invest in contingent-workforce systems that help you better manage all. Most traditional HCM systems don’t manage contingent work very well, so companies tend to buy vendor-management systems to do this. A new breed of tools (such as Workmarket from ADP, Gloat and others) is starting to make this easier.
- Educate your hiring managers with guidelines on when to hire externally, when to source internally and when to use alternative workers. HR leaders have the opportunity to establish standards that help managers with such hiring in more strategic ways.
- Put together a plan to embrace and engage your pixelated workforce, and make them part of your employment brand. Take care of them and they will take care of you.
I’ll be talking more about this workforce trend and the HR technology that supports it in my keynote presentation at the upcoming HR Technology Conference in Las Vegas.