April, 2017

A Growing Imbalance by

Prepared by: Aylish Jarvie, PR Manager at PeoplePerHour

New trends are redrawing the skills map for global businesses; the supply of talent is shifting at a time when demand is increasingly leading to serious concerns from business leaders in their ability to attract and maintain the necessary talent. In this report we look at these trends in more detail and analyse why this shift is happening and what businesses can do to address it.

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Demand for talent is on the rise while supply in the traditional sense is shrinking

A GROWING IMBALANCE

Across the globe as well as across all business sectors there is an increasing shortage of talent.

40% of global employers report talent shortages, up from 30% in 2009

The world could have a supply gap of as many as 40 million college-educated workers and developing economies may face a shortfall of 45 million workers with

secondary-school educations and vocational training.

In advanced economies, up to 95 million workers could lack the skills needed for employment (McKinsey).

40%95 MILLION WORKERS

BY 2020

The speed at which technology is transforming the face of the employment landscape leads to a constantly evolving range of demanded skills. In turn this process shortens the life-cycle of the skillsets of existing employees, which means that businesses more and more have to source the needed skills externally.

The complexity and the velocity of change increases the trend away from the long term full time employee shifting towards a more adaptable self-employed market as businesses need more flexibility in their talent pools.

In such a fast-paced employment landscape, the ability to anticipate and prepare for future skills requirements is increasingly critical for businesses. A growing imbalance between talent supply and demand is creating a widening skills deficit.

http://ilabour.oii.ox.ac.uk/online-labour-index

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The growing imbalance in skills has given rise to a whole new way of working. The freelance economy is becoming a well-understood phenomenon - more than 30% of the American workforce is now freelance, and there are over 1.5 million freelancing Britons. This talent pool is set to impact every area of business life. By 2020, 25% of organizations expect to use 30% or more freelance workers, and the proportion using less than 10% will fall from 35% in 2016 to 22% in 2020 (EY, 2016). Those that freelance, contribute up to $715bn to the economy while in the UK the flexibility afforded by the freelance economy is worth an estimated £21bn to the national economy.

The growing imbalance has turbo-charged a whole new way of working: the Freelance Economy

GIGSTERS TO THE RESCUE

The exponential transformation in technology, leading to the disruption of almost every industry the world over has already been dubbed the Fourth Industrial Revolution by the World Economic Forum because it has challenged the status quo of the traditional business models and has ignited the radical change in the workforce upon which these business models rely.

Widely accepted as more than a passing fad the increased use of the freelance workforce represents an opportunity to disrupt traditional sourcing and management processes, and is, without a doubt, here to stay. The role of Strategic Workforce Planning has become more critical than ever with businesses needing to pipeline both internal and external talent on demand to fulfil their changing talent requirements.

Martha Crow of Lionbridge Technologies refers that the next wave hitting our talent pool will be increased demand for what she calls “Talent-as-a-Service “or (TaaS), drawing on the analysis of Irving Wladawsky-Berger, an innovation specialist from the the Wall Street Journal, who states that further evolution and virtualisation of the the workforce is inevitable. TaaS is thus a real option to be explored to keep pace, especially for businesses.

More than 30% of the American workforce is now freelance There are over 1.5 million

freelancing Britons

30%

1.5M By 2020, 25% of organizations expect to use 30% or more freelance workers.

25%

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Increasingly company leaders are looking at HR as a key source of competitive strategy and there is no doubt that the HR function has been thrust to the forefront of the business agenda, moving from a pure personnel function to a more strategic role. C-Suite executives are beginning to fully appreciate the extent and importance of the HR function within their organisation not only to understand the existing talent pool internally, but to provide solutions and to drive change for future talent including internal gigging, which will be an internal medium horizon target towards a more flexible workforce.

Increasingly company leaders are looking at HR as a key source of inspired and visionary people strategy

IN HR WE TRUST

Millennials are demanding more flexibility, businesses are driven to source talent from increasingly global pools, and the rise in freelance and contingent workforce are all radically changing the face of the HR function. How should the role evolve from just personnel management into a comprehensive talent strategy that in turn supports corporate strategy?

To provide world-class human capital management services, organizations have sought to transform themselves to focus on strategic human capital management delivery. Some early adopters are leading the way but the HR sector is still largely dominated by laggards, both in terms of culture and technology.As SaaS and cloud computing disrupted the way we work, and drove the remote working revolution, so technology can help frame the talent landscape and prepare it for the en-masse transformation that is ahead.

As the freelance economy grows, new challenges are emerging for all organizations. Firstly are corporations making the most of this new way of working and ever increasing talent pool? Conversely are freelance workers as motivated as permanent employees? How well are they workers performing? And are they as well-managed? Can we get the scale, reach we need? Can organisations turn parts of their existing workforce into internal on-demand talent pools?

The increasing use of the freelance workforce raises complex HR labour law issues and may expose companies to financial, criminal and reputations risk. The EY Contingent Workforce report highlights that most businesses have yet to implement policies and processes to ensure compliance with contingent workforce regulations. What is more, streamlining hiring processes for the freelance workforce is a top priority for organizations in relation to managing these workers.

Yet in the face of the above growing challenges HR is a function that’s remained largely unchanged.

THE TIMES THEY ARE A-CHANGING

37% of businesses that use freelancers admit to having fragmented HR systems for managing their freelance

workforce and 30% use multiple management systems.

A full 70% of CEOs expect the Chief HR Officer to be a key player in business strategy.(Ipos Mori in their survey Leadership Connections: HR and the C-suite Driving Innovation).

Furthermore, C-suite executives say that top priorities over the next year are: leadership development, talent attraction and succession planning, talent retention and performance management. Business transformation and cultural change score lower (Linkedin Talent Trends).

There are issues surrounding the interaction between freelance workers and permanent workers – how do they interact effectively. Research shows that freelancers want to be considered part of the team.

But performance is not the only issue here. There are also serious concerns over intellectual property, data security and cybersecurity. It’s becoming clear that many businesses are staggering into the freelance economy under-prepared and ill-informed putting their business at considerable risk.

From talent attraction, talent development and retention to off-boarding processes businesses will now demand new technological advances to meet the needs of the evolving HR department. The key is to find a unified and streamlined system, allowing for greater efficiency, transparency and flexibility.

Flexible Talent Management will help HR departments to effectively create and manage talent networks, to be able to quickly react to the changing needs of the company.

Inevitably new and more targeted technology is emerging to tackle these challenges. PeoplePerHour’s new enterprise offering is designed to help HR departments manage this flexible workforce by creating a centralised way to manage, and collaborate with contingent workforce across the whole of the organisation. Designed as a system to aggregate all existing networks of talent in one place and provide the tools needed to not only collaborate, but also to manage them effectively (from budgeting to invoicing and billing). Gone are the days of where personal contacts, agencies, recommendations and those recruited from their own freelance platforms are kept on separate systems, or worse in someone’s head!

The Flexible Talent Management solution will act as a neural brain centre for all engagement within organisations with this increasingly significant part of the workforce, dynamically adapting to the world around.

Flexible Talent Management (FTM)

Flexible talent management (FTM) -is an approach to manage existing

talent pools and satisfy future talent needs within organisations. It tries to promote and improve the use of on-demand workforce by

establishing a unified process. An important aspect of the FTM

approach is the systems of FTM that aggregate all human capital

resources onto a single platform to distribute work.

37% of businesses that use freelancers admit to having

fragmented HR systems for managing their freelance workforce and 30% use

multiple management systems.

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Without businesses evolving to find ways to balance out the talent deficit the chasm will inevitably grow. Talent demands have already changed dramatically over the past few years. But in the future, the use of freelance and contingent workers is set to go mainstream.

Leaders are learning that a shrinking talent pool and a need to recruit on an increasing global scale has thrust talent attraction and retention to the forefront of the executives’ minds. Challenging economic conditions and the rise of cloud technologies has driven the freelance economy to a tipping point where it’s use is soon to be the accepted norm.

HR departments need to be on top of these changes and adapt to fast paced environment with technological backbone being a vital part of the puzzle to create Flexible Talent Management processes.

This will ensure that businesses are not only operating efficiently but are better insulated against the regulatory, legal/compliance and operational risks associated with such dramatic changes in the workforce landscape. FTM is a solution that allows companies, once again to regain control over their security and productivity, and is built to scale easily.

The future is clear – talent imbalances and a widespread shortage of talent driven by rapidly evolving skills requirements are fuelling the need for increased Strategic Workforce Planning of an increasingly mixed talent pool of internal and external talent. Legacy HR systems are woefully inadequate to manage this diverse talent pool. As companies discover that flexible working and the utilisation of the freelance talent pool is crucial to filling their increasingly diverse skills requirements so the HR function has to evolve to manage this. Technology and the cloud have been embraced by businesses in nearly all other areas and now is the turn of HR. Increasingly there will be a need for Flexible Talent Manage-ment to create a collaborative virtual office where HR can ensure all talent needs are met and managed efficiently.

As HR departments react to changing skills demands and embrace the more flexible workforce and freelance talent pool so they must also embrace the technology that will enable them to recruit and manage this talent.

MIND THE GAP

“The world at work: Jobs, pay, and skills for 3.5 billion people”By Richard Dobbs, Anu Madgavkar, Dominic Barton, Eric Labaye, James Manyika, Charles Roxburgh, Susan Lund, Siddarth Madhav http://www.mckinsey.com/global-themes/employment-and-growth/the-world-at-work

EY Global Contingent Workforce Study 2016 - https://gigeconomy.ey.com/

The Future of Jobs Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution 2016, World Economic Forum http://www3.weforum.org/docs/WEF_Future_of_Jobs.pdf

Leadership Connections 2016, HR and the C-suite driving innovation, 2016, IPSOS Mori, https://www.ipsos-mori.com/researchpublications/publications/1799/Leadership-Connections-2016-HR-and-the-Csuite-driving-innovation.aspx

Global Recruiting Trends 2017, 2016, Linkedin, https://business.linkedin.com/talent-solutions/cx/2016/10/global-recruiting-trends-2017

Sources

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HR departments must embrace technology to help them overcome the talent deficit

For Press enquiries please contact: Aylish Jarvie, PR Manageraylish@peopleperhour.com

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research.peopleperhour.com

PeoplePerHour is the largest digital marketplace for freelance talent in the UK, with over 410,000 highly-specialised Freelancers and over one million users globally.

As the leading marketplace for freelance talent, PeoplePerHour hold a powerful insight into the self-employed segment

of the labour market and have created and collaborated on numerous research projects on SMEs, freelancing and the gig economy, which can be found at via the Research page on their website.