In today’s competitive, rapidly changing economy, there are new challenges that human resource managers must prepare for. One of these is the impact of the rise in the contingent workforce on human resource management and future workplaces.
Contract employees
A contingent worker is one who can easily be released by a firm. Most are contract employees, temporary employees or freelance talent. Practising a contingent workforce strategy can increase the firm’s flexibility by providing it with the following leverage.
~ Ease of firing employees, as the HR department has the liberty to let them go when their services are no longer needed.
~ It will avoid lay-offs, which are accompanied by cumbersome legal processes.
~ Minimal need for a training and development curriculum.
~ Saving on labour cost, as their services are used during peak hours, days, or seasons.
~ Cost optimisation, as there is no pay grade or scale and they are not eligible for special benefits or statutory allowances.
Businesses are gradually leveraging technology and on-demand talent, thereby optimising labour costs. But the rise in contingent workforce can be credited to new HR concepts, such as gig economy and the volatile, uncertain, complex and ambiguous (VUCA) environment.
The gig economy
Gig economy, an aspect of VUCA, can be defined as a sector of the job market where people work as freelancers and independent contractors, and are hired when their skills are required.
Statistics from the World Economic Forum show that within the next 10 years, 50 per cent of the workforce is likely to be in the gig economy. In a work environment of continuous disruption, conventional human resource models — such as hiring, training and developing for business and talent management — will see a gradual decline in their usage. Companies such as Airbnb, Handy and Uber are typical examples of firms that practise the dynamics of this new economy.
Since we are no longer constrained by notions of geography, factors such as an open economy, globalisation, increasing use of mobile technology, dynamic economic conditions, rise in self-employment and increased workplace flexibility, facilitate the changes required in the new economy. To succeed in it would require a fundamental change in the talent management process and the key to this change would be an increase in human resource agility.
This means that the process should be able to:
- ~ Anticipate the fluctuations in demand for talent.
- ~ Generate confidence in a performance management system.
- ~ Initiate action to address the issue of employee recruitment and engagement.
- ~ Liberate thinking to enhance the cultural fit between the organisation and gig workers.
- ~ Evaluate results on the basis of how successfully the HR policies have dealt with external talent and internal employees.
Manager to-do
The HR manager needs to develop an “agile model” that prepares for a wider range of processes (like those mentioned above) that can handle any unpredictable events. In this model, there will be fewer permanent resources and more on-demand internal or external resources, which will be tasked with specific business problems.
The roles of HR would also change to designing programmes based on business demand (pull) versus based on the corporate roll-out (push). The competencies required by HR professionals too would need to be altered. In addition to understanding business context, business experts should be able to deliver people solutions. They will need to exhibit a strong analytics acumen and change-management capabilities.
To stay ahead of the environment requirements, the HR manager needs to clearly understand the organisation’s workforce practices and policies and statutory restrictions, and proactively identify and retain the best talent, while incorporating the future demand for leadership.
With so many challenges ahead, HR professionals have their work cut out for them.