As the gig economy grows, many HR professionals are being left out of the loop as hiring managers make their own arrangements to meet immediate and sporadic staffing needs.
"Often, a manager brings someone in and pays them, and it doesn’t even show up in HR’s system," says Jens Audenaert, vice president and general manager of business incubator ADP Ventures in New York City. Such situations highlight the need for an end-to-end HR process that includes contingent workers along with full-time employees, he says.
For that to happen, HR must inject itself into the processes surrounding the acquisition and management of independent contractors, many of whom may be hired through online marketplaces for freelancers such as Upwork or Fiverr.
In smaller firms, this might mean educating managers about why it’s important for HR to keep track of how many hours a contractor works over the course of a year, for example, or about tools to accelerate the onboarding process.
Gig or Freelance?
"Gig economy" has emerged as the preferred term for the current environment where organizations contract with workers for short-term engagements via new technologies. Although the use of independent contractors is not new, it has increased in recent years, and there is now a brighter spotlight on how contingent workers are acquired, engaged and managed, with technology playing an integral role.
At smaller companies, the processes underlying these functions can be somewhat informal.
"In terms of hiring freelancers, I get looped in on the administrative end by more-experienced managers," says Brian Murray, director of talent and culture at social media agency Likeable Media. "On the other hand, managers with less experience will ask me to take the lead when they need to find someone."
Talent acquisition strategies are more complicated in larger organizations, where contingent workers are usually contracted through a formal procurement process, an approach that presents some challenges from HR’s perspective.
"Procurement’s not designed to negotiate with talent, but with entities," says Stephane Kasriel, CEO of global freelancing platform Upwork in Mountain View, Calif. "HR needs more influence in the discussion."
The shift in the composition of the workforce was a big reason behind software giant SAP’s 2014 acquisition of Fieldglass, a provider of technology for procurement and contingent workforce management, says Mike Ettling, president of HR software provider SAP SuccessFactors in San Francisco.
"HR wants to manage the total workforce," he explains. "Now we can bring that data into the SuccessFactors platform so users can see a complete org chart that shows, for example, who’s salaried and who’s contingent, or so recruiters can include contingent workers in their searches."
From Reactive to Proactive
HR has willing partners in its technology vendors as it seeks to exert greater influence over managing its organization’s contingent workforce.
"As organizations take on more contingent workers, they’ll need to meld them into their overall approach to performance," says Brent Skinner, principal analyst at Nucleus Research in Boston.
"Vendors are absolutely paying attention and tackling products as they’re able to." He notes that companies such as SAP, Oracle and FinancialForce are "looking at how they can integrate their financial areas to accommodate this."
Through cloud-to-cloud partnerships, some tech companies—including Ultimate Software with its human capital management tools and NetSuite with its financial, enterprise resource planning and commerce software—have already developed integrations between their respective systems in anticipation of inevitable changes in the makeup of the labor force, Skinner says.
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Such tools could help employers respond to several relevant HR issues, including "How do you track gig workers? Communicate with them? Assess them? Connect with them?" says Penny Queller, senior vice president in the Americas for London-based talent acquisition and management company Alexander Mann Solutions.
Driving the Conversation
Ultimately, it’s up to HR to lead its organization in integrating contingent workers. The very dynamics of the gig economy provide plenty of reasons why HR departments should take the initiative in this area.
"Years ago, not many experts were contingent," says Christopher J. Dwyer, research director of Boston-based analyst firm Ardent Partners. "That’s not so true anymore. When you start bringing in more nonemployees of higher quality, you can’t rely on procurement to handle them in terms of engagement and the like."
Many employers are advocating for smarter systems to manage different classifications of workers, says Ben Willis, vice president of products for Redwood Shores, Calif.-based Saba, a talent management solutions provider. For instance, he has heard proposals to explore the concept of a lifetime worker ID within an organization or industry, where information on an individual would be collected in one place so companies could track job-related training and see whether a worker is salaried or contingent.
To meet the demands of workforce changes ahead, HR professionals and organizations will need "a complete human capital management ecosystem" around gig workers, Audenaert says, that includes information on budgets, time tracking and ratings for each worker.
Leveraging such technologies will be a top priority as employers strive to stay at the forefront of an evolving world of work.
Mark Feffer is a freelance business writer based in Philadelphia.
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