The External Workforce: It’s More Than a Gig

Employers and their HR departments are shifting their talent management strategy to be more agile and scalable by investing more heavily in contract workers, freelancers, independent consultants–aka, gig workers.

What employers and HR fail to realize, however, is that workers engage in these arrangements for many of the same reasons as the employer: they like the flexibility and freedom to go their separate ways after the job is done.

This is just one key takeaway from a new research study examining the external workforce, undertaken by the Society for Human Resources Management (SHRM) and SAP SuccessFactors, released at the recent SHRM Conference in Las Vegas.

“We’ve broadened the umbrella to include not just gig workers, but freelancers, contractors, independent consultants,” said Alexander Alanso, SHRM’s chief knowledge officer. “We estimate that there are somewhere between 16 million and 57 million workers who fit this model. How do we engage this workforce and what are the myths that exist out there?”

Well, for starters, stop looking down on their career choice as inferior. “Managers in particular believe that ultimately individuals that are a part of the external workforce are on the hunt for a bigger job or can’t find a job,” Alanso said. In reality, external workers are often seeking more control over their career and schedule.

“External worker” is also not a life sentence. According to the research, 40% of external workers say “this is just what I’m doing right now.” They may go on to become internal workers if the right opportunity comes along, and in fact, nine in 10 HR pros say they’re likely to convert external workers to permanent employees. On the flip side, internal workers may opt to set out on their own at any time.

“It’s much more of a fluid workforce of people vacillating between external and internal employment,” said Autumn Krauss, principal scientist, Human Capital Management Research at SAP SuccessFactors. “We need to be building better talent management practices to facilitate those transitions.”

The external workforce is expected to continue growing, and HR professionals who aren’t already incorporating these roles into their policies, procedures and even company culture have a lot of catching up to do. According to the study, 40% of HR professionals say that their external workers are managed by a combination of departments, and 20% said they’re not even at the table.

“As this workforce continues to grow, HR needs to be an advocate for all people inside the business,” Krauss said. “We’ve got a very diverse sample of people wanting different things and having different experiences. We need to identify the different types of external workers and their different motives.”

In addition, this growing segment is driving a need for more formalized practices and procedures. “Onboarding is a critical first step,” Krauss said. “They don’t need to be the same as for internal employees. Companies need to figure out what is the fit for purpose experience.”

In the end, companies would do well to invest in their external workforce as they would their internal workers as the line between the two becomes increasingly blurred. “When we asked them what the most important factor in a positive experience: being thanked and getting another contract,” Krauss said. “Sounds a lot like what an internal employee would want.”