With skills and labour in such short supply at the moment the external workforce has never been more important to organisations.
Our research[1], conducted in collaboration with Oxford Economics, involving over 2000 executives indicates that on average 42% of total workforce spend is on external workers. This is projected to increase in the future with Martin Thomas, Head of Total Workforce Management at Royal Philips, saying: “I can see a world where the external workforce makes up an even greater proportion of the workforce. That’s a future we anticipate for Philips.” The McKinsey Global Business Executives Survey[2] reveals that approximately 70% of executives anticipate they will hire more on-site temporary workers and freelancers in the next two years, compared with pre-COVID levels.
Finding those external ‘super talents’ that are going to ‘work with you but not for you’ is just half the challenge! How do you develop the ‘love’ between you when you engage them and as they begin to work with your organisation? Once they’ve completed their work with you how do you keep the love between you if you need their super skills again in the future – when everyone else is also looking to attract the same amazing contingent workers and service providers? This is an important point as in our research with Oxford Economics 55% of executives said their company would be unable to conduct business as usual without an external workforce – yet less than 1 in 3 companies have the technology in place to engage and manage the external workforce effectively!
Crucial to effectively engaging the external workforce is driving a focus on diversity and inclusion. While this was traditionally focused on the ‘full time’ workforce leading organisations are now ensuring that there is an integrated approach around diversity and inclusion across both full time and external workers. This important agenda goes beyond race, religion, age, ethnicity, gender and sexual orientation. It also extends to talent diversity. As organisations increasingly look to external workers to drive business performance, these workers drive critical projects and make significant contributions to organisational strategy. Talented external workers switch from one company to another upon completion of projects and it’s crucial, if you’d love them to return in the future, that they have an excellent experience during their time with the organisation. This will enhance the reputation of the organisation when looking to attract new external talents while also supporting the successful recruitment of those external workers it may decide it would like to make full time employees.
This holistic focus on diversity and inclusion across an organisations total workforce will drive improvements in financial performance, productivity and of course innovation and creativity as the best people want to work with you and your teams. It will also create differentiation for you in the marketplace and drive better business outcomes.
In our research with Oxford Economics Lisa Zak, Director of Strategic Sourcing at Medtronic, the world’s largest medical device company, summed it up well: “Many C-level executives don’t have the external workforce on their radar because they are not aware of the extent to which it comprises their total workforce mix and fuels growth and innovation of their business”.
JP Stadelmann, Head of Purchasing for the External Workforce at Swisscom, also remarked: “For us, the value of the external workforce has never been cost. It’s flexibility. It’s strategic.”
Driving this focus on diversity and inclusion starts the moment you commence the recruitment process. Candidate can anonymize candidate profiles to avoid bias. This enables them to identify candidates based purely on skills and expertise—not by their name, gender, race or ethnic background. Having clear communication around the company’s diversity and inclusion policies during the onboarding process will educate external workers about the company’s values and make them feel included from the very beginning of their time with the organisation.
While external workers can be sourced directly from an organisations own talent pool they are also sourced and engaged through 3rd party organisations. It’s essential that these partners are reviewed to ensure they share the same values around diversity and inclusion as that of the hiring organisation. If there is lack of alignment then the partners may find they lose business to those that have an inclusive ethos at the heart of their business.
External workers must be provided with the access, technology and assets necessary to do their jobs. If there are any differences between how things are organised for full time employees versus external workers then these should be explained to ensure the external worker feels supported rather than excluded simply because they are an external worker. The organisation should have in place the necessary technology itself to allocate assets, access and technology to the external workers and of course recover those elements once the external worker has completed their time working with the organisation. Our research with Oxford Economics indicated that very few organisations had the capability to do this.
Creating a diverse and inclusive environment is everyone’s responsibility and requires on-going effort, consistency and focus. Leaders must encourage an inclusive culture and lead by example. Where external workers are seen as ‘separate’ to full time employees this leads to unnecessary and damaging silos, damaging an organisations culture and diversity and inclusion efforts. Every individual connected to an organisation matters and diversity and inclusion should matter to every individual within an organisation.
At SAP we are committed to being one of the most diverse and inclusive software companies in the world. We provide world class technologies that drive forward diversity and inclusion initiatives, support organisations to find and retain the best talents in the world and enable those resources to successfully deliver outcomes to their employers as efficiently as possible – what’s not to love about that !
[1] SAP & Oxford Economics – External Workforce – Agility isn’t always on the payroll
[2] The postpandemic workforce: Responses to a McKinsey global survey of 800 executives | McKinsey
