The Value of a Flexible workforce

The Value of a Flexible Workforce
John Harland
MRCSA – Director ERG Recruitment
A concept about which much has been written, Flexible Workforce has been around for a long time and in this context broadly refers to that group of workers described as casual workers, temporaries, contingent workers and contractors.
 
In the 2010 Hays Salary Guide across Australasia   1,800 employers were surveyed with
  • 14% saying they use temporary/contract staff on a regular on-going basis. 
  • 51%  saying they use temporary/contract staff for special projects /workloads
  • Only 35% said they use temporary/contract staff either in only exceptional circumstances or never.
From this I think it is reasonable to conclude that a large majority of companies see the use of Flexible workforce as a legitimate workforce strategy. The global recession which continues to impact economies and businesses worldwide has perhaps brought the benefits of flexible workforce into the forefront of workforce management despite a movement which suggests that it is a strategy designed to casualise the workforce and negatively impact on worker payments and conditions. Despite this criticism, in Britain, the US and Europe, it seems that small businesses are increasingly recognising the benefits of the practice. Early this year the former British Chamber of Commerce Chief Executive David Frost claimed that employers are no longer turning to flexible workers as a temporary fix. He explained that "The UK's flexible labour market has long been acknowledged as a significant competitive advantage and a driver of investment and growth in this country. But with 2.6 million unemployed and the UK hovering close to a double-dip recession, it is more important than ever that we think critically about flexibility. Employers are adopting a more flexible approach not only as a temporary retention strategy, but as a permanent and sustainable solution to more competitiveness.”
 
Unfortunately the challenge for the Recruitment and Labour Hire industry in Australasia and worldwide will be to explain and gain the understanding of government(s) of the benefits of the flexible workforce market. Evidence so far would suggest that this is going to be a long difficult process. Administrative burdens and restrictions introduced by Governments such as the Agency Workers Regulations (AWR) in the UK and the “Fair Work” and other legislation in Australia and New Zealand designed primarily to protect “vulnerable workers” is applied on a universal basis which may not be appropriate for all sectors of workers.
 
Stuart Davis, chairman of the Freelancer and Contractor Services Association (FCSA) UK, in an article for Shout99 writes
 
“In the last 30 years much has changed and whether by choice or by circumstance, more people are choosing to enter the flexible workforce. As a group, they are flexible, adaptable and quick to seize opportunities, making them increasingly vital to the UK economy. In 2012, I believe they will be more important than ever as an essential force on the road to economic recovery.
 
To harness the power of the flexible workforce however, the Government must ask itself whether this powerful group is getting the support and recognition it needs to lead us out of the current economic mess. It could be argued that the increase in self employed workers (sic contractors) should be commensurate with a better understanding of the flexible workforce market. However, the evidence of recent years suggests that amongst many decision makers that is sadly not the case.”
 
Davis goes on to say “Currently, there are too many restrictions facing freelancers such as over-elaborate levels of red tape and a lack of understanding of the diversity of the workforce from across the political spectrum.
 
One obvious example is the Agency Workers Regulations (AWR) which, when it became law in October 2011, forced agencies and service providers to adapt their work practices. At FCSA, we would be the first to argue that vulnerable workers need the protection provided by AWR. However, the characteristic mistake of Government (both at a UK and EU level) of assuming that one size fits all has meant that a well-meaning piece of legislation has caused a huge headache to many in the professional flexible workforce. 2012 will be a defining year when we will be able to judge the true impact of the regulations.
 
It may yet be proved that Davis’s comments were unfounded as the Recruitment and Employment Confederation(REC)  has commented that businesses continue to make use of the flexible workforce despite the introduction of agency workers' regulations (AWR) and the regulations have not significantly impacted on the demand for contract or temporary staff. In addition, despite British companies being unwilling to take on permanent staff, sectors such as IT and engineering have seen a growth in short term contracts and this professional contractors sector has increased in number and also pay rates.
 
In a statement issued on 3 February 2012, Jeffrey A. Joerres, Manpower Group Chairman and CEO said "Employers must master flexible work models which enable them to tap the right skilled talent, even remotely located, in a moment's notice. The pressure to drive productivity while volatile market conditions vacillate is intensifying. Companies that cannot quickly tap the right talent to execute their business strategy inevitably lose their competitive edge."
 
 Manpower Group's 2011 Talent Shortage Survey found that 52 percent of U.S. companies are struggling to fill key jobs, the highest percentage in the six-year history of the survey. Manpower Group advises companies to think long-term because the talent mismatch will inevitably worsen as demand for products and services increase.  Manpower called for organizations to adjust their workforce strategy to incorporate a more flexible, agile approach if they hope to successfully navigate the Human Age in a new insight paper published at the World Economic Forum Annual Meeting, Davos.
 
Manpower went on to say “Companies in the Human Age are lean organizations with tight margins. As growth continues in emerging markets and softens in much of the developed world, businesses are demanding new and increasingly specific skills and capabilities from their workers to take advantage of every opportunity and do more with less. Demand is the key driver of hiring activity in the Human Age. Companies are looking to hire "just-in-time" with fast time-to-value, depending on the economic climate and their ability to predict fluctuating demand. According to a recent McKinsey study, nearly 60 percent of companies surveyed see temporary / contract workers as the largest growing percentage of their workforce.”
 
"Clients are telling us they need to be more flexible and agile to react to this environment. Manpower is seeing the global contingent workforce grow as a result," said Joerres. "Companies are evolving their approach to manage their talent as carefully and strategically as they would any other scarce resource, flexing their workforce in response to demand and changes in their markets."
 
I can see no reason why the American, British and European experience and trends will not be replicated in Australia and New Zealand during the continuation of the recessionary environment or during recovery, when it occurs. Undoubtedly businesses will be cautionary when making investment in growth and staffing levels and manpower requirements will be a critical component in these decisions. However, as an Industry we must continue to lobby governments and increase their understanding of the flexible workforce. If we are to ensure that a regulatory environment does not become so overbearing as to destroy its evolvement then the Recruitment and Workforce Management industry must take an active role in educating and working with businesses to ensure that the workers who could be regarded as “vulnerable” are not exploited and we can then offer a genuine solution to workforce management which improves productivity, creates jobs and adds value to the recovery.
 
The recession has focussed businesses on the challenges of retaining talent and remaining competitive. Key workforce trends such as
  • The retirement and impending retirement of Baby Boomers
  • The retention of women in the workforce – in the US research has shown a large proportion (over 60%) of women graduates opt out of full time work within 6 to 8 years of graduating but look to return on a part-time basis. This is likely to be a similar trend worldwide.
  • Retention of the voluntary workforce – those people(mainly highly skilled) who leave due to poor work/life balance
  • Access to a broad labour pool
  • The impact of globalisation on the workforce.
Those companies that address and find solutions to these challenges will attract talent that competitors can’t access thereby creating a competitive advantage.
 
So what are the benefits of flexible workforce?
 
 I have extracted what I see as the key benefits from the plethora of articles available on the subject.
 
For the employer
  • Potential cost savings from adopting a strategic approach
  • Maximisation of the workforce to accommodate volume fluctuations, maintaining leaner head counts whilst accessing the right skills when needed such as project work, annual leave etc.
  • A wider pool of talent, potentially locking this off from competitors
  • Being seen as a progressive employer thereby attracting the best talent
  • Reduced attrition of women
  • Retention of the ”voluntary workforce”, keeping skilled and motivated employees
  • Lower absenteeism
  • Increasing skills and creativity of managers
  • Improving customer service and retention through closer alignment with customer needs
  • Cost avoidance of replacing employees
  • Reduction of the cost of HR.  Research conducted by Right Management (Australasia) found that 88 % of SME respondents thought employee law and legislation is far too complex and 63% thought pay and benefits legislation caused them difficulties. 72% felt they spent too much time on HR issues.
For the employee
  • Better work/life balance
  • Opportunity to reposition their career when needed
  • Increased tenure and loyalty
  • The opportunity to learn new skills
  • The potential to earn more
  • Facilitates mobility
  • Being able to remain in the workforce longer(ageism not a factor)
  • Increased sense of control
For the economy
  • Removal of excess supply and demand thereby improving productivity and competitiveness
  • Improved labour mobility leading to less unemployment
  • Stronger employment creation during economic recovery or upturn
  • A more flexible response to external economic shock because wages and employment are more flexible
Disadvantages
  • Potential for the creation of a skills gap as a result of the  lack of training for workers on  short term contracts
  • The long term effect of workers ability to regain employment if they lose their jobs and have not received further training
  • Can lead to a feeling of insecurity for the workers
  • A reduction in employee bargaining power in many jobs, particularly the less skilled roles.
  • Risk of ‘slash and burn” during periods of economic slowdown as companies seek to cut their workforce aggressively during tough times.
  • Social implications such as work cultures and the effects on family life.
The theme running through many of the new approaches to management in a globalised economy today is the development of a more flexible workforce. Overseas evidence would suggest that the flexible workforce is here to stay and will transcend any legislative endeavours to control or restrict its growth. In his article “Flexible Workforce The 21st Century Solution - By Mo Aiken’,  Aiken says “ The flexible workforce allows businesses to pay for exactly what they get, while they eliminate all the confusion, non-productiveness, liability, legalities and extraordinary efforts that having employees entails from the 20th century laws, culture, society and technology had created.”
“These four forces have converged generating the emergence of a new paradigm. The paradigm entails the availability of the properly trained and skilled workforce for exactly the job to be done, and only being paid for exactly that work.
This paradigm must succeed to remain competitive and sufficiently flexible and competitive in the truly world market.”...
“The new paradigm points to labour specialisation, and only paying for “what you get”.
 
In loose terms these are consultants. In more exact terms consistent with the paradigm it is “flexible labour”. You hire them to perform in their “sweet spot” and only this area“
 

Contact Us

Ground floor
26 Bell Ave
Mt Wellington
PO Box 11671
Ellerslie
Auckland
Phone:    +64 9 258 5130
Fax:         +64 9 276 2731
StaffSure Certified WEB    RCSA Corporate Member Logo small