HR Tech lessons #4: The contingent labor exposure

Brian Sommer Profile picture for user brianssommer November 9, 2015
Contingent labor is an increasingly important part of the workforce. Do we have a clue what this means?

workforce contingent job
More and more workers belong to a self-employed, contingent workforce today and companies are more willing than ever to utilize them.  Some firms, like Uber, are almost entirely composed of independent, contingent personnel, although as we know from a variety of lawsuits, their legal categorization is open to interpretation in the US. An emerging case in the UK throws further question on Uber driver status.

Within HCM solutions, support for contingent workforce data has generally been an afterthought. The typical responses have been to:

  • Ignore contingent workers altogether (or promise to produce functionality for same sometime in the future)
  • Make contingent workforce functionality a separate application (for more license fees - of course)
  • Make contingent workers appear in the HCM solution in skeletal HR records
  • Ignore contingent workers and make the customer use a solution from a staff augmentation firm

In other words, HCM vendors weren’t terribly interested in changing their core HCM data model and applications to tackle this. Why? It turns out that there are many different kinds/flavors of contingent workers. In the US, some are 1099 people who produce work-for-hire products. Some are seasonal hires. Some are procured en masse via staff augmentation firms. Some provide highly skilled services while others don’t. Some might someday join the firm’s permanent workforce while most won’t. Some have to possess their own tools, service vehicles, etc.  The variety of these workers is almost endless. This much variety creates data model and functionality complexity. And, complexity gets costly for software companies.

At both the Salesforce Dreamforce 2015 and HR Tech 2015, I met with HR vendors that were creating all-new HCM solutions. None of them had contingent workforce support in their new software.  While I understand that this functionality might be absent from an all-new solution, I can’t excuse its omission from their product roadmap or data model. The new economy will demand its inclusion. Moreover, given the heavy services focus of these products, contingent workforce support must be present.

Contingent labor must be a core part of HCM and professional services automation (PSA) solutions and not an afterthought. I’m still running into companies that cannot determine how many people or employee equivalents work for the firm. The HR system only tracks company-hired employees. The financial budgets and actuals reflect worker costs be they from full-time and part-time employees and contractors but only if each department that is using contractors has broken out those costs. Sadly, those financial numbers concern dollars not people’s names. No one has the singular view into what the true workforce looks like.  There is no single point of truth – the breadcrumbs are scattered in multiple systems, emails, invoices, etc.

At the very least, such lack of data makes it impossible to plan a workforce with any degree of certainty beyond vague dollar amounts. Is that acceptable in the 21st century when we are looking more and more for precision and predictability in so many other numbers? I think not.

HR departments have been pre-occupied of late with Affordable Care Act (ACA) compliance concerns. Can’t we get a better handle on the as-a-service workforce? It's time.

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