3 ways to incorporate independent workers into your talent strategy
As more younger workers go independent, companies need to take note.
The old social contract is broken—but what is coming next?
More workers have opted out of traditional jobs and are going independent. Research conducted by Gallup in 2019 showed that 28% of the workforce (44 million Americans) reported being self-employed at some point during a given week. Of those, 17% filed a Schedule C tax form, the highest number since the Internal Revenue Service started reporting that data.
MBO Partners’ 2021 Annual State of Independence Report reveals the trend toward going independent has accelerated over the last two years. The report found that 51 million Americans now identify as independent workers. Moreover, these aren’t your traditional senior-level workers. The data reveals that millennials (34%) and Gen Z (17%) outnumber the combined ranks of baby boomers (26%) and Generation X (23%) in the independent workforce.
Related: Number of independent workers climbs to record level
As more younger workers go independent, companies need to take note.
While the pace of change may have accelerated during the pandemic, the roots of our great work unbundling go back about 40 years. Here’s what happened — and some strategies for companies to adapt their talent strategies and thrive.
Breaking the social contract
The social contract that dominated the American workforce for half a century was grounded on one big thing: workers promised loyalty to a business in return for a guaranteed pension for life when they retired. But pension systems began eroding in the 1980s, fueled by corporate bankruptcies in the steel and airline industries. At the same time, more and more companies switched from defined benefits to defined contribution plans. No longer was loyalty essential. Blue and white-collar workers alike could just port their existing benefits to a new company.
The second great unbundling factor was the internet — which flattened information and made the cost of starting up a business negligible. The only capital investment needed for many workers today is a laptop and a printer. From online education to online networks, most workers can get the skills they need and build friendships and business contacts without leaving their homes. Many of these relationships are as strong or stronger than those forged in a traditional workplace.
And then came the pandemic.
Pandemic isolation brought remote work forward
The pandemic didn’t change everything, but it did accelerate the move toward hybrid work. For the first time, many companies were forced to adapt to a workforce that was 100% remote. At the same time, millions of employees suddenly had a new, albeit-strained, form of work-life balance and got their first taste of what it could be like to work from home.
Something else happened during the pandemic: recruiting went virtual.
The third pandemic consequence: The Great Resignation. People are tired. They’re tired of employers telling them what to do and when. They see that work can be different. They better understand they can not only work from anywhere—but can get hired in Boise to work for a company in Boston. And they don’t have to be full-time employees anymore. They can do it all as an independent contractor.
So how can you adjust your workforce to reflect these shifts? Here are three ways to incorporate independents into your long-term talent strategy.
1. Become the client of choice.
As job mobility increasingly becomes the norm, the balance of power has shifted gradually from companies to workers. That shift has accelerated as the independent workforce looks less like a pool of senior-level consultants and more like the entry and mid-level talent that companies need to thrive. As companies increasingly compete for independents, it’s going to be important to think about how you can position yourself not just as an employer of choice, but as a Client of Choice as well.
Top companies are working as hard to attract independent labor as they are their FTE population. Examples include custom project marketplaces for independent professional labor, as well as codified programs and processes for prompt onboarding and payments. Those companies already adept at direct sourcing (working directly with independents instead of using costly third-party channels) are also scaling and seeing greater use and benefits by working within those key talent pools to nurture relationships — specialized initiatives to stay engaged with talent so that the enterprise remains top of mind when future needs emerge.
2, Redefine your corporate culture.
Corporate culture traditionally guides how managers and staff interact and sets the norms and expectations for the workforce. In ways both overt and more subtle, it sends cues to employees and prospects as to who will and won’t fit in. And it’s molded across team meetings and corporate-wide gatherings — almost exclusively comprising full-time employees.
Companies are going to need to redefine corporate culture. What does success mean when work is no longer tied to job titles and promotions? In the new hybrid model, companies will need to consider how to integrate independent workers at all levels of their organization. Corporate culture will look different, and the more you can welcome outsiders into the company family the more likely your talent strategy will succeed.
3. Adopt supply chain planning.
Where recruiting and hiring were once driven by organizational charts and job titles, today’s talent strategy must instead consider projects and short-term needs. In essence, you need to adopt supply chain planning. This will involve increasingly recruiting not for a job but the right person with the right skills for the project at hand. That person could be someone in-house, or it could be an independent consultant.
In the future, projects will become more fluid in the makeup of the project team, and individuals with those specific skill sets to support the project will move on and off at various intervals. Independent workers are uniquely suited to these project style engagements, allowing organizations to increase agility and mobility without increasing overhead.
Miles Everson is the CEO of MBO Partners, the definitive market leader in enabling the future of work and improving the well-being of professionals and businesses throughout the world.
Read more: