A major shift is occurring today in the way that work gets done. New technology and cultural influences are enabling the creation of fluid, global work environments.

Where once workers might take and hold a job for years, workers now have more options, involving where they will work, whether they will travel or pursue remote work opportunities.

With that, we see an increasing number of workers from scientists and engineers, to data analysts, risk management specialists and more who choose to join the ranks of the external workforce, comprised of non-payroll workers and service providers.

As businesses become increasingly reliant on the external workforce, they are being employed on a contractual, seasonal or freelance basis to work across operations from customer service, facilities management and field services, to information technology, finance or digital, to name a few.

Shedding further light on just how pervasive the growth of the external workforce is across industries, nearly half (46 per cent) of 800 executives participating in a recent global survey completed by SAP Fieldglass with Oxford Economics say that without an external workforce they could not conduct business as usual.

The transition is not without challenges: Only one-third (35 per cent) of the surveyed executives say they are highly informed about who is doing non-payroll work for their organisation, and less than half (47 per cent) have such insight into their services providers.

However, there is a group of businesses we call ‘Pacesetters’. They stand out from other businesses in their management of the external workforce.

This 10 per cent of businesses differs from others in their management of the external workforce in three important ways: visibility into it, effective management of their external workforce, and the business impact they realise from their external workers.

As we have found, businesses are reaping a variety of benefits from their external workforce. Furthermore, although Pacesetters are the most advanced, strides can be made across the board in the management of these multi-channel workforces that extend beyond businesses’ traditional employees.

Changing how work gets done

The shift to external labour to get work done is well under way with nearly half (44 per cent) of workforce spend on the external workforce, not the traditional payroll.

The channels through which businesses source this talent are many, as they are engaged to work across companies, providing support services, completing special projects; augmenting existing staff and supplementing teams with specialised skills; or even stepping into corporate staff positions.

All the while, businesses gain flexibility, scaling with demand and reducing overhead in the process. In fact, 79 per cent of Pacesetters say the external workforce is a key enabler of business performance, yet only 52 per cent of the executives surveyed respond likewise.

These external workers, according to 62 per cent of executives, improve corporations’ overall financial performance.

There was a time, not all that long ago, when businesses made decisions about what was or was not core to the business when making decisions about when to contract external workers. That is not necessarily the case today. External workers are now found working at the core of businesses.

Nearly two-thirds (65 per cent) of the survey respondents told us their external workforce is critical to working at full capacity and meeting market demands. This new reality is yet another manifestation of the transformation that is occurring in how work gets done across industry sectors.

Pacesetters chart course for effective external workforce management

Senior management at most companies has much to do to realise the full value of their external workforce. Pacesetters, which are more advanced in their management of them, find it much less challenging to effectively perform a wide range of external workforce management duties than those who are at the beginning of this journey.

Whether they were asked about tracking resource and project quality, managing inconsistencies in talent or project quality, ensuring that underperformers are not re-engaged and that their businesses are compliant with local tax, labour and privacy laws and regulations, as well as unauthorised spend, administrative issues and digital security, Pacesetters demonstrated more rigour in their external workforce management processes.

Pacesetters also are less likely to identify gaps in the technology used to manage their external labour, and more likely to indicate that they and their C-level executives are informed about their contingent workers and services providers.

Additionally, Pacesetters shine when it comes to realising value beyond cost control. Nearly 80 per cent of them report that the external workforce is a key enabler of business performance, followed by 71 per cent of Fast Followers, 35 per cent of Followers and 18 per cent of Beginners – all of which are less advanced in their management of their external workers.

About 60 per cent of Pacesetters and Fast Followers say their external workforce allows them to stay competitive in the digital age, while only 32 per cent of Followers and 18 per cent of Beginners make the same claim.

Take steps to become a Pacesetter

·         Give your leadership visibility into the scope, activities and quality of your external workforce, related challenges and the benefits realised—as well as the potential benefits.

·         Understand how your external workforce can deliver the greatest value to your business, whether they have essential roles in moving products to market faster, providing difficult-to-access skills, facilitating digital transformation, or product or service development.

·         Anticipate future skills requirements—and identify those in short supply. Develop a strategy to acquire, retrain or source skills that are in scarce supply via the multi-channel workforce.

·         Lastly, apply workforce strategies that span external and traditional labour sources and execute those plans to ensure you are sourcing and engaging the right mix of skills when and where they are needed to fulfil organisational objectives and purpose.

Mikael Lindmark is a senior vice president at SAP Fieldglass, a leader in helping companies procure and manage their external workforce.