Rethinking the on-demand workforce
In this era of chronic skills shortages, rapid automation and digital transformation, companies are confronting a growing talent problem: How can they find people with the right skills to do the right work at just the right time? The half-life of skills is shrinking, and many jobs now come and go in a matter of years. Not only that, but demographic changes are underway: Boomers are aging out of the workforce, and millennials and Generation Z are taking over, bringing with them very different opinions about who should do what work.
To help companies address these challenges, talent platforms — such as Catalant, InnoCentive and Upwork — offer ondemand access to highly skilled workers who have four-year college degrees or advanced degrees. To better understand them, we undertook a survey of nearly 700 U.S. businesses that rely on the platforms. We were impressed by the variety of engagements that companies are making with the platforms. But despite this, few firms have developed a cohesive organizationwide approach to their use. Instead, operational leaders have been reaching out to them on an ad hoc basis.
To compete, companies must do better. They’ll have to figure out how to engage strategically with the “on-demand workforce.” In an environment of ongoing uncertainty, employers will be even more attracted to the freelance route for a variety of reasons: It makes hiring easier for hard-to-fill jobs, offers access to a wider set of skills, reduces head count and allows more flexibility during times of change.
In this article we’ll show how some pioneers are taking advantage of new talent platforms, and we’ll explain how you and your management team can do the same.
THE MATURING GIG ECOSYSTEM
As the gig economy has grown, three kinds of platforms have emerged:
— MARKETPLACES FOR PREMIUM TALENT: These platforms, which include Toptal and Catalant, allow companies to source high-end niche experts — data scientists, project managers and even interim CEOS. Experts might be hired for strategic initiatives or embedded in teams, and the projects they’re assigned to can range in length from a few hours to more than a year.
— MARKETPLACES FOR FREELANCE WORKERS: These platforms, which include Upwork and 99designs, match individuals with companies for discrete task-oriented projects — designing a logo, say, or translating a legal document. For example, when Amazon. com wanted to explore creating custom social media content for its new TV shows, it tested the waters with Tongal.
— PLATFORMS FOR CROWDSOURCING INNOVATION: These platforms, which include Innocentive and Kaggle, allow companies to post problems among large communities of technically sophisticated users. The challenges run the gamut from simple coding projects to complex engineering dilemmas. The pharmaceutical company Astrazeneca, for example, has turned to Innocentive’s “solvers” to develop molecules used in genetic research and testing.
EARLY LESSONS
In studying how talent platforms are being used, we’ve identified three areas where companies have consistently found platforms most useful:
— LABOR-FORCE FLEXIBILITY: When the head of technology at the PGA, Kevin Scott, found himself frustrated by the need to constantly improve the organization’s digital capabilities and offerings despite a lack of in-house digital talent, he partnered with Upwork to engage software engineers to generate and develop promising ideas.
— TIME TO MARKET: Many managers have turned to talent platforms to fast-track processes. When Matt Collier, a senior director at Prudential PLC, was on a tight deadline to overhaul the training given to insurance agents in Singapore, he turned to Toptal to find designers and other talent that helped him create course materials quickly.
— BUSINESS MODEL INNOVATION: Digital talent platforms can also help companies reinvent the way they deliver value. In 2015, when Enel made the strategic choice to embrace the United Nations’ 2030 sustainable development goals and build new businesses around them, it engaged the services of several crowdsourcing platforms.
ENGINEERING THE TAL
ENT TRANSFORMATION
To engage with the on-demand workforce at a strategic level, companies will need to focus on five main challenges:
— RESHAPING THE CULTURE: When a company decides to turn core functions over to freelance workers, permanent employees often feel threatened. Often, the strongest opposition comes from employees who have the least exposure to high-skills talent platforms. The members of Enel’s leadership team saw this when they decided to seek external help. With some careful attention to cultural change, the company managed to overcome that resistance. Instead of allowing employees to fear the unknown, Enel focused on educating them about how they could benefit from an on-demand workforce.
— RETHINKING THE EMPLOYEE VALUE PROPOSITION: Companies need to get employees to see how they personally can benefit from talent platforms. That’s what one private equity firm did when it collaborated with Upwork. According to Hayden Brown, Upwork’s CEO, the message the firm sent its employees was “This is a way to help you. There are a lot of things that you may be doing in your day-to-day work that you can offload so that you can do even higher-order work or free yourself up to do more strategic thinking.”
— REORGANIZING WORK INTO COMPONENTS: One of the biggest predictors of whether a company will get the most out of a talent-platform partnership is how well it can break work down into defined components that can be easily handed over to outsiders. In traditional workplaces, managers can afford to be vague when making assignments. They know that everybody on the team will be interacting so frequently that they’ll be able to clarify goals over time. But when companies use talent platforms, they have to provide more upfront definition.
— REASSESSING CAPABILITIES: To engage strategically with talent platforms, companies need to develop a portfolio approach to skills. The first step is to understand which capabilities they have in-house. Once the company has mapped internal capabilities, it can strike the right balance when dividing work up internally and externally.
— REWIRING ORGANIZATIONAL POLICIES AND PROCESSES: This can be surprisingly difficult, as Collier discovered when he tried to bring in Toptal to help Prudential revamp thousands of training slides. A new mindset and a different way of working were necessary. “To adapt our initial contract for freelancers,” Collier told us, “we had to navigate a number of necessary processes, including due diligence, intellectual property, technology risk, antibribery, even anti-money-laundering.”
Talent transformations are often easier than they might seem. That’s because many companies have people on staff who already have experience with talent platforms — the managers who have used them on an ad hoc basis. These people can provide valuable guidance.
Ultimately, however, companies will have to appoint leaders who understand their companies’ strategic positioning, who recognize the potential of the on-demand workforce, and who can inspire a cultural shift in their organizations that will make a genuine transformation possible.
Josephfullerisapr ofessorof managementpracticeandacochairoftheprojectonmanagingthefutureofworkatharvardbusinessschool.heisalso thefacultyco-ch airofhbs ’s executiveeducationprogram onleadinganagilewor kforce transformation.manjariramanisaprogramdirectorand seniorresearcherforharvard Businessschool’sprojecton U.s.competitivenessandthe Projectonmanagingthefuture ofwork.allisonbaileyisamanagingdirectorandseniorpartneratbostonconsultinggroup andthegloballeaderofbcg’ s Peopleandorganizationpractice.nithyavaduganathanisa managingdirectorandpartner atthebostonconsultinggroup andabcgfellowonthefuture ofwork.