As technology has enabled the creation of new alternative approaches to performing work, an issue arises for organizations. For instance, crowdsourcing, where individuals voluntarily do defined blocks of work for an agreed-to reward, enables freelancers to connect directly with the organization. With these rises in technology, more organizations are using fewer employees by distributing work to organizations or individuals operating as contractors or consultants. Projections have been made that, by 2020, 40% of work in the U.S. will be performed by people who are not employees. Does the HR function have a role in deciding who does the work? For managing the work done by nonemployees? For developing policies and processes that best fit non-employees?
Employees, consultants, contractors and outside individuals must be organized and function effectively in an integrated manner. Although some of the logistics can be managed using technology, there are “human” issues that must be considered, which is where the HR function is vital. For example, when employees in the research and development function discover that the new software products will be designed by outsiders, consider the impact that it will have on their morale and job satisfaction. Perhaps they will view outsourcing as a threat to their employment. Or, perhaps they will decide to depart, to work for the organization doing the new stuff. HR professionals can anticipate these concerns and, in conjunction with other key parties, work to reduce the perceived threats and ensure work is being divided appropriately between employees and outsiders.
Further, outsiders are usually seen as making much more than existing employees (which is often true, at least on an hourly basis), which inevitably causes conflict. Paying contractors by the hour motivates them to do three things: (a) work as many hours as possible, (b) never get done and (c) avoid training employees lest a competitor be created. This can be addressed by contracts that make rewards contingent on on-time and on-quality completion and on the contractor training the organization’s employees on the new system.
Given the potential difficulties of integrating the work of outsiders with that of employees, each organization should go through the process of identifying the pluses and minuses of alternatives and making a selection based on that analysis. Ideally, this should be done using a partnership between line management and HR, so each can provide their own perspective. One of the key questions is: what, if any, are the benefits of having work done by employees rather than free agents? Loyalty and engagement are two potential benefits that come to mind. Additionally, organizational memory is often one of the most valuable resources when processes are complex and large amounts of firm specific knowledge are needed to produce the desired results. Tacit knowledge leaves with the possessors when they leave. This can lead to underinvestment in ensuring knowledge transfer occurs on a regular basis. Master– apprentice type training is in some cases the only way to transmit tacit knowledge because people often know more than they can render explicit in writing, they need to have others work alongside them to make the transfer happen. So, if an organization relies heavily on organizational memory, then having outsiders trying to do work on a one-shot basis may not be the best decision.
If an organization brands itself as an attractive employer, it will have a better chance of attracting the talent it needs, whether they are employees or outsiders. Each employer must put forth a value proposition that candidates evaluate from their perspective. An employer can tout its culture as an attractive benefit. Cultures that are egalitarian, provide opportunities for learning, and that are based on beliefs and values that are consistent with potential candidates can be a strong attractor for some. “Best places to work for (working mothers, older people, innovators, etc.)” awards can send a message that an employer is a good choice for employment or for doing independent work. Further, it is important for the brand to be legitimate. Promising something that does not materialize can result in turnover and a damaged reputation. Involving the HR function in formulating and marketing the value proposition is usually beneficial.
It is also important that the value proposition is appealing to the type of person the organization needs. Competitive rewards will certainly act as an attractor for many; however, offering work or work that provides a social benefit may be viewed as more attractive to some. Additionally, paying people an hourly rate may be viewed as reasonable for a night watchman but may be rejected by someone who wants to be compensated for the value of their contribution. Consider a top coder who may be able to create an app in a fraction of the time an average coder takes to provide the same result. In this case, the coder would expect the organization to pay for results, rather than the time worked. Some people highly value being able to do the work where they prefer (Jet Blue reservation agents prefer to perform the work at home). Others want to create something new, rather than just code yet another app that is similar to many they have created in the past. A big question for an organization utilizing multiple types of talent is how to decide what is needed and how flexible it can be relative to how, when, where and by who the work is performed. The acid test for a value proposition is: does it attract the type of people the organization wants and needs and repel those who do not fit the desired profile?
Hybrid/on-demand workforces are here to stay. It is likely that they will become more prevalent and that a larger percentage of new work will be done by people who are not employees. Workforce management strategies are needed that result in work being performed by the right people with their role defined appropriately. Employees may still be a preferred option when an organization’s core competencies require that people doing work must acquire firm-specific knowledge and skills and when they must work together in an integrated fashion. But, with the development of artificial intelligence and machine learning technology, each organization must continually assess whether employees must do specific types of work or whether it would be optimal to automate it or to distribute it to outsiders. Maximizing return on investment is a requirement in an increasingly competitive world. If competitors can do something better, faster or cheaper, you are in trouble. The type of workforce an organization uses is the key to remaining competitive and viable. A partnership between HR and the other functions should facilitate better decisions. An operating function will tend to focus on operational rather than people issues when deciding how to get the work done and who should do it. It is the responsibility of the HR function to anticipate the interpersonal issues that may arise by allocating work to outsiders and to work with the operating functions to find the optimal strategy. The two parties need to work together in order to deliver the optimal approach.
Robert J. Greene, PhD, SPHR, GPHR, SHRM-SCP, CCP, CBP, GRP is the CEO of Reward Systems, Inc. and faculty member for DePaul U. in the MSHR and MBA programs. He has published four books and over 100 articles, was a principal designer of the SHPR/PHR, CCP and GRP certification programs and was the first recipient of the Keystone Award for achieving the highest level of excellence in the field. He has contributed to over 20 SHRM National conferences and over 30 state HR conferences, including four Florida State conferences.