The Fragmenting Workforce – flexible friend or foe?

Belinda Johnson - Worklab

2

Starting Place – Charles Handy’s Shamrock

Professional Core

ProfessionalsCore

Self-employedProfessionals

Contingent Workforce

3

Some other interpretations of the Shamrock..

4

Fragmenting Workforce - The Extended Enterprise

collaborations

outsourced front-line & support

services

consultants

micro-entrepreneurs & on-line /crowd

workers

apprentices / trainees

temps / contractors/’sub-contractors (CIS),

Interims, etc.full-time, part-time & fixed-

term employees

Degree of user organisation patronage

Degree of statepatronage

outcomes-based tasks

Roles

The Fragmenting Workforce

42% of the UK workforce already works outside the concept of full-time,

‘permanent’ employment

Source: ONS – Labour Market Statistics - Sept 2013

Full-TimeAgency Temps Freelancers SOW Outsourced Offshored

-60%

-40%

-20%

0%

20%

40%

60%

80%

32%

43%

24%

58%

46%49%

-25%-21%

-40%

-10% -10% -10%

Source: Staffing Industry Analysts European Contingent Buyers Survey 2013

Proportion of companies using more or less

European hiring intentions next 2 years?

7

Part-time working

Currently running at 27% of UK workforce – plateauing after recent rises.

Most significant movement is the increase in the number who are working part-time because they cannot find full-time work: 10% in 2008 – now 18.4%.

Source: ONS – Labour Market statistics Sept 2013

8

Apprenticeship starts and framework achievements by level

Source: Skills Funding Council - Further Education & Skills: Learner Participation, Outcomesand Level of Highest Qualification Held(June 2013 – updated Sept 2013)

9

Interest in working on a contingent basis is rising 1.6 million ‘temps’ in the UK – 6.5% of working population

4.2m self-employed, of which c.1.7m are ‘self-employed’ freelancers

The rise of ‘I-pros’ (study commissioned by PCG)

The rise in (European) I-pro numbers between 2000 and 2011 was +82%

Between 2008 and 2011 there was growth of 12.5% which was driven by four countries; Germany, France, Poland and the UK

In same time period, UK achieved double the European growth level – UK I-pros = 19% European total

10

Interest in working on a contingent basis is rising

PAYE: front-line operations

PAYE: operational support

Day rate: Under £500 per day

Day rate: over £500 per day

Average of all the categories

0% 20% 40% 60% 80% 100%

I choose to work on a temp/contract/interim basis

Additionally: • 46% of employed workers considered a freelance role when last

looking for work• 48% will consider it when looking next time

Source: Randstad World of Work Report 2011/12

11

Interest in working on a contingent basis is rising

“The world of work has changed…The intelligent individual is in control of

his or her own market, while the rest still require patronage.”

Andreas GhoshPersonnel and Development Director for London Borough of

Lewisham (and Policy Lead for Workforce Strategy at the Public Sector People Managers’ Association)

Source: Randstad’s Navigator Report 2012

Recruitment industry’s known share of activity

Agency

300k

Direct into Hirer (or Other)

1,250k

All Temporary 1,550k

Temporary (ONS: Q1 2013)

Self Employed (ONS: Q3 2012)

All I-pros 1,734k?

Sole Ltd 168

k

Agency 47k

Run Bus/ Prof

Practice 234k

Partner Bus/Prof Practice

398k

Sub contractor 408k

Freelance 479k

The recruitment industry’s unknown market shareSome uncertainty around where certain worker types, in sizeable numbers, are classified within ONS data.

Construction Industry Scheme (CIS)

797k Self-employed – March 2013.

Number of CIS workers – ONS uncertain: “Depends on how they classify themselves and/or how they are classified by those that engage them.”

Umbrella workers

ONS is currently looking into this area to determine:

How large the pool of employed temporary workers is. Where they are currently being classified. Whether any potential misclassification is cause for concern (based on

the size of the pool).

The recruitment industry’s potential market share

Immediately identifiable supply through recruitment agencies/businesses equates

to less than 2% of the UK workforce…but we know it is considerably more.

And what could it be?

RIB Turnover Growth & UK Job Vacancy Growth

Source: RIB (www.rib-index.com), ONS

Who else is involved in sourcing & managing the fragmented workforce ?

Recruitment Intermediaries (MSPs/RPOs) Talent pooling

The ‘Service Provider’ community. Employed temporary workers

Intermediaries driving alternative resourcing models. Agency sourced but directly engaged temps

Online work platforms Crowd working

Around a quarter of employers Flexible hours working

Where from and where to for managed programmes?

Managed Services (MSPs/RPOs)

Regional GlobalVaried Skill categories All categories

Fundamental technology Advanced VMS

Selected industries All industries

Outsourced Workforce Solutions

IC & SOW – deliverables management

Inclusion within RPO / RPO

Alternative contingent labour resourcing

modelsComplete enterprise-

wide workforce visibility

Major Milestones

Creation of first contingent labour programme

1990s

Technology Expansion

2004 Globalisation

Vendor Neutral

2008

Today

Extended Scope Flexible sourcing models

Source: SIA presentation – Ciett Global Workforce Conference 2012

Current and next steps focus

Source: Staffing Industry Analysts European Contingent Buyers Survey 2013

Which of the following are in place in your organisation?

Another pressing need - the application process is broken..

19

40% had an existing relationship with the

company prior to applying, either as a

customer, advocate or with family/friends

already at the company

20% admit to being an actual customers of

the organisation

they applied to

74% say they would share a

positive with their inner circle - 61%

would share a negative one

27% say they would share a positive CE on

social channels – 16% would share a negative one Source: UK CandEs 2012 –

www.thecandes.org.

one third of those surveyed admitted

to receiving no response at all to an

application

Talent pooling begins to treats candidates in a similar fashion to customers

Time is being invested in drawing candidates into talent pools & puddles, and in nurturing them for potential future opportunities.

Growth of talent pools being fuelled by internal referral mechanisms.

Theory: as a candidate, once within the talent pools of your target organisations, you should never have to apply (or be put forward) for a job again.

21

The Service Provider community Companies who provide payroll, accountancy and

administrative support and advice for the professional freelance workforce.

A number of have also embraced the potential of providing employed temporary workers – know as Umbrella workers: Concept accelerated with the implementation of the Agency

Worker Regulations (AWR) in 2011. Estimated number of ‘umbrella’ workers – c.150,000 -200,000.

An industry/opportunity to watch – precedent set in the US for it to morph into a professional service of high esteem: US has an established and highly regarded Payrolling and

Independent Contractor Evaluation / Compliance industry. UK has a dedicated trade association determined to set a

benchmark to enable the industry to evolve in a similar fashion. A service that, increasingly, both workers and hirers

appear to need.

Intermediaries promoting alternative resourcing models Barclays – PAYE temps sourced by agencies but directly

engaged since 2009.

PWC’s STAFFflow scheme:

Running for around 18 months

Used by around 30 NHS Trusts

Removes the requirement to pay the 20% VAT that would have been payable on the salaries of temporary agency staff by allowing trusts to employ them directly.

STAFFlow margin achieved out of saving (Source: Recruiter Magazine)

23

On-line working

“We’ve passed into a new economic era, presenting businesses and individuals with mounting challenges. Work marketplaces based on social platforms – ‘placeforms’ – fill a new societal need.”

Stowe Boyd

24

The potential for on-line working in the UK has many drivers

Underemployment: “People in work wanting more work increased by 1million since

2008” - ONS Over 3 million people - 1 in 10 workers - want/need more work

One of the key drivers for the introduction for Real Time Information (RTI) is to capture multiple income streams

2000

2002

2004

2006

2008

2010

2012

024

Number of under-employed workers

in Britain (m)

Want more hours in current job (2.33m)Want re-plcement job with more hours (0.46m)Want an addi-tional job (0.27m)

76%

9%

15%

Interest in crowd labour / on-line work is rising

25

Crowd workers Nearly 60% of all crowd workers live in North America and Europe. Almost 50% have a bachelor degree. The number of crowd workers is growing in excess of 100% a year. Crowd members work at least once a month; about half work as

often as once a day. Nearly 77% of all workers have a primary job.

Crowd Providers $1bn industry in 2012 (Staffing Industry Analysts)

Forecast to be $1.6bn in 2013 Projected to be a $5bn industry by 2018

Elance – UK is #2 in volume of task posted and #5 in number of crowd workers

Source: Massolution 2012

26

UK – a top 10 country for both hiring and working

27

oDesk started in technology but is rapidly branching out

28

The top 10 on-line jobs UK businesses hire for Q2 2013 Top Categories (by dollars spent):

1. Web programming 2. Web design 3. SEO (search engine optimization) 4. Mobile apps 5. Desktop applications 6. Graphic design 7. Blog & article writing 8. Ecommerce 9. Web research 10. Data Entry

UK businesses have posted 344K+ jobs

to date

29

What skills are driving growth of online hiring by UK clients? Fastest-Growing Categories (based on 2-yr CAGR of

gross services)

1. Technical support 2. Accounting 3. Email response handling 4. Game development 5. PR - Public relations 6. Advertising 7. Presentations 8. Copywriting 9. Web research 10. Illustration

30

Top skills of UK freelancers

Q2 2013 Top Categories: (by dollars earned)

1. Web programming 2. Website content 3. Blog & article writing 4. Translation 5. Technical support 6. Mobile apps 7. Web design 8. Copywriting 9. Graphic design 10. Software Project

Management

Fastest-Growing Categories: (2yr CGGR of Gross Services)

1. Sales & lead generation 2. Copywriting 3. Software QA 4. Mobile apps 5. SEM - Search engine

marketing 6. Translation 7. Technical writing 8. DBA - Database

administration 9. Business plans &

marketing strategy 10. Website content

31

Rising volumes of flexible hours engagement models

Means of Engagement specified

2011 2012 Increase 2011/201

2

H1 2013 (to end June)

Pro-rata increase 2012/201

3Flexible Working 128,881 190,013 47% 112,628 19%

Flexible Hours 43,892 105,784 141% 72,628 37%

Hours to Suit 10,952 20,491 87% 13,848 35%

Hours as Required

3,804 5,996 58% 3,732 24%

Variable Hours 953 2,361 148% 954 (17%)

Zero Hours contract

942 1,691 80% 1,017 20%

Total number of opportunities offering flexible working patterns

 189,424

 326,336

 72%

 204,807

 26%

Set into context of all the job vacancy types advertised, as captured by the ONS, (Av. 519k during H1 2013), opportunities offering flexible working hours patterns constitute 6.6% of the work currently being offered in the UK.

32

Back to the Starting Place – Charles Handy’s Shamrock Implications for the organisation.

Implications for the individual.

Implications for policy makers:

“This rethinking of organisations will force the rethinking of retirement, unemployment insurance, healthcare, employment taxes and social security, to name but a few. Organisations will step out of the role of providing these benefits to permanent employees and something needs to step into the void.

“..how we might need to adapt in order to not just survive, but thrive.”

33

The implications of further workforce fragmentation for the recruitment industry

The use of intermediaries will rise: To help realise the potential of such fragmentation. To manage compliance.

The range of commercial models will diversify: Introductory fee models for temporary labour –

rather than on-going margin. Payment upon outcomes – shift towards ‘Statement

of Work’, apprenticeships, on-line working, etc.. Compliance has an increasing and, potentially,

standalone value

34

The implications of further workforce fragmentation for the recruitment industry Legacy processes will need to be modified to enable

engagement – throughout the entire lifecycle - with a diversifying range of worker types:

How/where you raise awareness How you address the levels of transparency

demanded by each group How you hold a seamless dialogue across their

chosen range of media The levels of personal contact versus automated

communications that suit the profile of each worker community

How you business accommodates a shift towards payment upon outcomes

35

The implications of further workforce fragmentation for the recruitment industry

The opportunities – beyond transactional temporary, contract, interim and permanent recruitment – are considerable. They could also, potentially, be more lucrative.

36

Contacts

Belinda Johnsonowner - worklab

e: belinda.johnson@work-lab.co.ukT: @worklabinsightsm: 07771 534365

www.work-lab.co.uk