The Flexible Workforce is an Indispensable Enterprise Capability
What is a flexible workforce?
Simply put, a flexible workforce is one that changes to suit the prevailing needs of the business by enlisting a talent pool of freelancers and contractors to supplement — when needed — a company’s full-time team.
Building a flexible workforce gives management the ability to be agile and tap into the skills and resources it needs to accomplish a goal at the right time, overcoming common barriers like organizational silos, geographical distribution, and skills gaps. A flexible workforce succeeds with access to multiple talent pools and the ability to redeploy resources quickly to adapt to changing conditions.
Research from Harvard Business School and BCG highlights one fundamental change in how business leaders think about their operating models. Rather than pressing ahead with the same rigid internal hierarchies, many organizations are adopting a flexible workforce of internal teams plus external consultants and freelancers to meet demand when necessary.
The momentum toward a flexible workforce is staggering. 60% of leaders surveyed by HBS and BCG said they expect their full-time workforce in the future to be “much smaller” than their current one. The same percentage said they would increasingly prefer to “rent,” “borrow,” or “share” talent with other companies.
Why are more companies adopting a flexible workforce?
A global pandemic, a leap forward in connectivity, and the rise of digital natives have dramatically altered the way organizations think about work in a very short period of time.
Many are rethinking their office spaces, moving more teams to remote work. Many are launching new businesses in areas of opportunity. Many are re-evaluating their operating models, capitalizing on their opportunity to drive change through their organizations.
Why are organizations like Shell, Anheuser-Busch InBev, Pfizer, and Unilever building out their flexible work models? Interestingly, “saving money” isn’t a major driver. The researchers from Harvard Business School and BCG found three distinct benefits:
- Increased speed-to-market as organizations were better able to find the right people at the right time to launch new products or move into new geographies.
- Innovation through new business models as organizations could test new products and ideas more efficiently without committing internal resources to them.
- Increased labor force flexibility as organizations can try new ideas without committing to increased fixed costs in the form of full-time employees.
The success of these models has led to the rise of on-demand talent platforms, which business leaders use to quickly source and deploy external talent to strategic initiatives. Research shows these platforms help leaders accelerate speed-to-market, improve innovation, and increase productivity, however most companies have yet to develop the organizational capability to work with on-demand talent at scale.
The Challenges of Building a Flexible Workforce
While many organizations are moving to a flexible workforce as a natural progression away from the limitations of the full-time employment model, very few have the capability to manage a flexible workforce at scale.
Some business units may rely more heavily on consultants, contractors, and freelancers than others, but very few companies have taken a holistic approach.
This lack of capability is detrimental for several reasons. First, it leads to tension between business units and central functions. Human Resources leaders, in particular, have struggled to integrate flexible talent because their core responsibilities — mainly hiring and retaining talent — require different skills and experience. Meanwhile, business unit leaders deploying on-demand talent struggle to navigate the regulatory and financial complexities of working with non-full-time employees.
Secondly, without a centralized framework for managing a flexible workforce, redundant efforts are practically guaranteed. As more teams and units engage without outside talent, they lose some of the natural communications networks that would alert leadership to overlapping projects and initiatives. For example, it’s not difficult to imagine a product unit and a marketing unit inside the same organization hiring outside researchers with similar goals.
Finally, there is the cultural challenge of integrating flexible teams and full-time employees. Without a governing framework, front-line managers have to deal with uncertainty about when work happens, who completes the work, and how the impact of the work affects their team’s goals and objectives.