It’s no secret that the composition of the traditional workplace has changed.
Not so long ago, almost the entire workforce were permanent, full-time employees. ‘Work’ used to mean 40-hour weeks, nine to five, Monday to Friday, in the office. Businesses did hire contractors, freelancers and temps – but only reluctantly, to plug an urgent gap.
Today, ‘work’ is a much broader term. The workforce is firmly ‘non-traditional’; a melting pot of permanent employees alongside contractors, freelancers and gig workers.
But there’s a big problem:
Most businesses haven’t yet adapted their recruitment and HR policies to cope.
That matters because it means you’re not harnessing your non-traditional workforce effectively or cost-efficiently. Specialist non-traditional employees can add heaps of value – but only if you handle them the right way.
That’s even more true at the moment, as April’s planned IR35 extension throws these issues into sharp relief. Navigating the non-traditional workforce with confidence (and compliance) has never been more important.
So let’s get stuck in.
By the numbers: here’s the story.
There are 4.8 million self-employed people working in the UK, IPSE report. And the highly skilled freelancer sector has grown by 46% since 2008.
Meanwhile, PwC say 46% of HR professionals expect at least 20% of their workforce to be contractors or temporary workers by 2022. And 20% of people believe traditional employment won’t exist at all in the future. (Bold claim, that.)
The point is, there are endless statistics out there that testify to the same thing:
The workforce has changed, and permanent employees aren’t the only – perhaps even the dominant – type of worker anymore.
That’s a monumental change for businesses, recruiters and HR professionals to navigate. And we’re not doing a great job so far.
Deloitte find, for example, that only 17% of UK businesses have policies and strategies in place for the use of non-traditional workers. Only 66% of HR teams onboard non-traditional workers, and only 49% offer training to these employees. A third don’t assess or manage these workers’ performance.
Which, when you consider Qdos’ 2018 finding that 40% of contractors earn £500 or more per day, is ridiculous.
Overall, only 8% of respondents to the Deloitte Human Capital Trends Survey 2019 believe they’re well-prepared, with established processes to manage and develop the alternative workforce.
Deloitte sum up:
“Companies have to move beyond ‘managing’ contractors and freelancers to ‘optimizing’ and ‘leveraging’ the alternative workforce deliberately and well. Not many do.”
That, then, is the challenge.
- Get this right and the non-traditional workforce powers agility.
Non-traditional workers typically bring specialist skills that move the needle for the business (or stop the business grinding to a halt). Skills that might be near-impossible to source elsewhere. Non-traditional workers also offer flexibility, avoiding the risk of over-committing on salary costs and allowing you to divert working capital fast.
- But get this wrong and the non-traditional workforce hinders performance.
Non-traditional workers are typically expensive. Even more so if you fall foul of employment law when you hire them. They have a poor reputation and damage morale amongst permanent workers who feel they work harder, longer, for less. They can erode your culture. And they can be difficult to manage or hold accountable.
Businesses need to rewrite their approach, to maximise the benefits of the non-traditional workforce while avoiding the risks and costs.
A note on definitions…
Confusion around terms is a major obstacle. How can you start leveraging non-traditional workers more effectively when you can’t have a meaningful conversation about who’s who and what’s what?
You hear about contractors. Freelancers. Gig workers. Crowd workers. Outsourced teams. Contingency workers. And often those terms are used interchangeably, even when they’re not interchangeable.
An Uber driver and your freelance developer aren’t the same thing, for example. The receptionist you hire as sickness cover isn’t the same thing as the vastly expensive strategy consultancy team who work on-site for six months.
HMRC concede, for instance, “there is no single, agreed definition of the gig economy”. On the one hand, there’s this:
“The gig economy involves the exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment by task basis”.
But then that puts emphasis on digital platforms that mightn’t be right. What about the freelance writer you hire because someone in your network recommended them? No digital platform in sight.
And what about the freelance designer you work with on a recurring basis for a day each month? That’s not short-term or task-based, but they’re still not an employee.
This vagueness is a real problem because it’s not just words. How we classify workers isn’t just an issue of how we talk about them. It’s about how we treat them.
This stuff is especially relevant given the impending IR35 extension, which will increase tax liability for contractors who are ‘deemed employees’ for tax and legal purposes. There’ll be increased scrutiny over how you work with contractors, revolving around whether they’re self-employed or employed by you.
If you’re not 100% sure what IR35 means for you, register for this free event on the 23 rd January, specifically for Sheffield’s tech sector.
So, as you read through the three following ideas, don’t lump all non-traditional workers under the same umbrella. Harnessing the non-traditional workforce effectively takes sensitivity and empathy. One size fits no one.
Here’re three actions you can take right now to navigate the non-traditional workforce more effectively.
1. Review and classify your current workforce
The first step towards action is understanding. Review your current workforce to understand how you currently use non-traditional workers, and where you can become more efficient. This is also a crucial first step towards ensuring you’re not caught out by IR35.
For instance, if your workforce includes contractors who’ll fall inside the scope of the IR35 extension, you’re probably not using contractors effectively. You’re likely paying over the odds for business-as-usual. Instead, you could assign contractors onto specialist tasks that can’t be done by someone permanent, or offer permanent contracts.
Also look at your workforce planning processes. Often an overhaul could reveal weaknesses in your planning – like recurrent seasonal trends you’re not planning properly for – which could be fuelling an overreliance on non-traditional workers. Changes like this can mean huge cost savings, and free budget to spend elsewhere.
2. Use specialist tools to recruit and manage non-traditional workers
Traditionally, businesses sourced and managed non-traditional talent through third-party recruitment agencies. It was expensive but you needed comparatively few non-traditional workers so the value proposition held.
The same doesn’t make sense when you hire non-traditional workers at scale. You need to find, hire, conduct due diligence, monitor performance, monitor hours and schedule payment (often including complex rate changes and overtime rates) at scale. Perhaps for hundreds of people.
Modern workforce management tools are designed to help you manage a non-traditional workforce in a more agile, more efficient and more affordable way.
These tools, as Deloitte say, “enable new connections among those managing various workforce segments and types, thereby finally enabling a total workforce view”. A worthy investment.
3. Focus on integrating traditional and non-traditional workers
A high-functioning workforce is built on respect and inclusivity. Those principles must remain central when your workforce includes non-traditional elements.
It’s crucial, for instance, that non-traditional workers are integrated into the workforce and not treated as outsiders. If you exclude non-traditional workers from your fundamental HR processes – like onboarding, training, performance management – you create a divide between them and your traditional permanent employees.
Whether that’s a temp covering for a week’s sickness or a freelancer who works with you regularly, treating them like outsiders isn’t the best way to maximise their commitment, loyalty and productivity.
The flipside can also be true.
If permanent employees feel you value non-traditional workers more highly than them, it’s a possible breeding ground for resentment.
You probably pay non-traditional employees more than permanent workers, for example. Help permanent workers understand the bigger picture – that looking beyond purely financial reward, non-traditional workers sacrifice a lot too. It’s not about being valued more, it’s about being valued differently.
Work hard to make sure non-traditional workers don’t feel like the sexier, snazzier cousins to your permanent workforce. Like, if you always hire non-traditional workers onto all the cool new projects and embrace their push-the-boundaries ideas while permanent workers are stuck on business as usual, you risk causing tension.
For a non-traditional workforce that works harmoniously, balance and integration are crucial.
Don’t just cope. Thrive.
Nobody can afford to bury their head in the sand about the changed workforce.
Non-traditional workers are becoming integral to business growth, bringing capabilities companies struggle to find traditionally, combined with the flexibility that underpins true business agility.
Learning not just to cope but to maximise the value of this non-traditional workforce will become the major predictor of business success.
Prepare for IR35 with confidence [Free event]
If this article’s got you
panicking wondering about your own IR35 obligations, we’ve got just the event for you…
The wonderful tecy.digital are hosting a free IR35 awareness event from 16.30 to 18.30 on January 23rd, targeted at Sheffield’s tech sector. Scott Davis, tecy.digital’s Co-Founder and Director, says:
“Having witnessed the chaos IR35 caused in the public sector first-hand my advice to all tech contractors and companies is to get ahead of the curve. That’s why we are running this event, to help you engage with experts, take advice and review working arrangements as soon as possible in order to secure your contracts, contractors and talent”
The event will feature an informal panel discussion and Q&A session with tax specialists from BHP LLP and Keebles LLP, designed to help freelancers, contractors and the businesses that hire them navigate the IR35 extension with total confidence.
“The planned roll out of off payroll legislation in the private sector is still set for April 2020. If this affects you or your business you need to review your own legal and contractual arrangements to minimise future tax risks” Catherine Wilson, Partner – Specialist Employment Law, Keebles LLP
“A great opportunity to find out exactly what the new IR35 rules could mean for you as a contractor, freelancer or business and why it’s important to HMRC and UK PLC” Chris Humphreys, Partner – Tax, BHP
Plus free beer, soft drinks, pizza and snacks. (We all know what you really care about…!)
Tribepad design and build recruitment management software that’ll transform how you hire, manage and retain your people. However non-traditional your workforce is, or becomes.