The Flexible Workforce: Agencies Need to Evolve to Survive

I recently had the opportunity to speak at the SIA Executive Forum on the nature of the changing workforce landscape. The flexible workforce is growing rapidly, thanks to a combination of business need and rapidly changing attitudes to work. Recruiters need to adapt to this change or risk being left behind.

A Changing Workforce

Covid-19 has made us all reassess our relationship with work. It has also introduced greater possibilities for working flexibly, with workers demanding a greater balance between work and home life.

A new generation of entrepreneurs are increasingly turning their nose up to the 9-5 in favor of a career that they’re in more control of.

According to Statista, there were 1.45 million temporary workers in the UK in January 2020; this increased to 1.65 million in just 31 months. Worldwide, there are now estimated to be as many as 1.1 billion workers outside of permanent employment.

Flexibility does not just benefit workers. Businesses need to become more agile to respond to an unpredictable global economy. In a cycle of economic shocks, recession and recovery, they need to be able to scale resource up and down as required.

Yet finding talent is becoming increasingly difficult, with ongoing national and global skills shortages across all industries. Korn Ferry forecasts that by 2030 there will be a global talent shortage of 85 million people. That’s more than the population of Germany.

These trends combine to create a phenomenal shift in the world of work. The challenge for recruiters, as always, is to provide the right resource, at the right time, in the right place, while maintaining a healthy profit margin.

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The System Is Broken

But the existing framework for engaging a flexible workforce is no longer fit for purpose.

Governments around the world are struggling to keep up with the pace of change, often implementing systems that cause more problems than they solve. When legislation gets more complex, monitoring and managing it becomes more challenging. Non-compliance is rife within most markets, causing problems for agencies, workers and clients alike.

This also creates challenges for supplying talent between markets with wildly varying worker classification and tax legislation.

Agencies often find themselves responsible for managing theses regulatory, financial and administrative burdens of the supply chain. They’re increasingly investing time and money in maintaining compliance while bridging funding gaps, managing worker wellbeing and payroll, and attempting to find the right partners to support global talent deployment.

To focus on what they do best, agencies look to third parties for services via preferred supplier lists. But an inconsistent quality of suppliers offering different or incomplete services creates a poor, fragmented experience for contractors.

At worst, non-compliant providers take advantage of workers, as we’ve seen in numerous cases in the UK in recent months. Bad practice ranges from salary skimming to full blown tax avoidance schemes that put the worker, agency and client at risk.

This is a major risk for agencies that rely on ongoing relationships to repeatedly secure talent for their clients. A disjointed service compromises the worker’s experience and the quality of advice they receive, leading to a lack of trust and an erosion of the agency’s brand.

In short: The preferred supplier list approach is broken.

Time to Evolve

An obvious solution to this is finding partners who can deliver multiple services to provide both contractors and clients with a joined-up experience, regardless of location.

This could take the form of managed service provision, either as an Agent of Record (AOR) or as an Employer of Record (EOR), depending on the worker’s classification in the territory they are working in.

Just like master vendors for the end client — who take on responsibility for managing other recruiters in the supply chain — a similar business model can be applied between the agency and worker. Ideally this would be a global provider with proven compliance and funding solutions, ensuring that all workers and engaged parties are vetted and protected appropriately.

Flexible workforces are here to stay — vital to business agility in recession and the foundation of growth through recovery. While governments around the world struggle to keep up with the pace of changed, it’s left to the recruitment industry to adapt. This will involve a re-think of current supply chain models and careful consideration of the partners needed to support profitable and compliant growth.

Andrew Fahey

Andrew Fahey
Andrew Fahey is global CCO of People2.0.

Andrew Fahey

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