As digitization, coupled with the global pandemic, propels contingent hiring online and with more individuals relying on employer reviewer sites to evaluate businesses, delivering a positive[...]
As digitization, coupled with the global pandemic, propels contingent hiring online and with more individuals relying on employer reviewer sites to evaluate businesses, delivering a positive[...]
March 10, 2021
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Reinvesting in a company and its talent goes beyond compensation. A global study performed by Oxford Economics and SAP proved that the highest performing organizations are those that leverage talent to fuel profits and business growth. The report revealed the key characteristics of these leading edge companies, and many of the approaches cited are the best practices already championed by staffing industry professionals. So let’s look at how these contingent workforce leaders can help companies reinvest in their own success through exceptional talent.
Defining the word “investment” in today’s business culture is beginning to feel like a weird exercise in creative semantics -- akin to Bill Clinton’s infamous quip that “it depends upon what the meaning of the word ‘is’ is.” When America’s largest corporate concerns talk about investing in their futures, they seem to be discussing the inflation of their stock prices -- rather exclusively. In 2015, for example, the amount of capital companies spent on buying back their own stock to bolster share prices hit a record high. According to figures posted in the Standard & Poor’s 500 index at the time, these organizations dumped $10.4 billion into stock buybacks, which is the highest expenditure since data monitoring began in 1995.
Flash forward to April 2017, and the situation takes a turn for the strange. On April 27, American Airlines decided to make an investment in its passengers. The company did so by investing it its workforce. American announced healthy pay increases for its pilots and cabin crew, two years before their union contracts were set to expire.
“In response,” wrote Michael Hiltzik of the Los Angeles Times, “Wall Street absolutely slaughtered American’s stock. The airline’s shares lost more than 8% in value over the ensuing two trading sessions, a loss of about $1.9 billion in market value in 48 hours.”
“From 2014 through 2016, American Airlines authorized $9 billion in share buybacks, money that went directly into shareholders’ pockets,” Hiltzik added. “The company also paid out 40 cents per share in shareholder dividends in both years. By contrast, the pay raises will cost American $1 billion over three years. Pilots will get 8% and flight attendants 5% through the end of the current contract.”
Customer service and toxic business cultures have been an exploding powderkeg of problems for major airlines lately, with a lot of media attention following the smoke. Peter Drucker famously said that “there is only one valid definition of business purpose: to create a customer.” The pilots and flight attendants are the public-facing persona of the company for every traveler who boards a plane. American made an exemplary move to define its business purpose by creating a world-class customer experience. And yet investors oddly appeared to punish American for its wise investment in its talent.
The problem is that stock buybacks do nothing to strengthen company productivity or improve performance. To refer to these actions as “investments” requires a very narrow view of the term. Little, if any, of that revenue actually goes to what most of us would consider reinvesting in a company. Consider one of the nation’s largest retailers. If the organization devoted the same cash to reinvesting in its talent instead of repurchasing its own stock, it could give every worker an additional $25,000 per year in wages. That’s not to say all the money should go to pay hikes. As we learned from the Gravity Payments debacle, in which the CEO gave all employees a $70,000 minimum salary, uniform pay isn’t necessarily equitable or welcome.
Organizations that demonstrate the greatest levels of performance are those that make workforce issues a top priority. Strategies for improving talent, their working conditions, overall health and wellbeing, and the prevailing business culture start at the highest echelons of management and infuse every other aspect of the company. In high-growth, high-performing businesses, researchers found that workforce decisions became the focal points for strategic business drivers, and they were made at executive or board levels. Underperformers, on the other hand, brushed aside workforce initiatives as an afterthought in context of near-term business plans. Like buying back stock.
With a traditional workforce, hiring managers and HR leaders often find themselves time-strapped, stretched thin across competing priorities, and forced to respond to urgent issues as they arise. This leaves little room for them to focus on strategizing near-term and long-term plans. An contingent workforce program, meanwhile, has an inherent advantage. While hiring managers, procurement professionals and HR folks may identify the need for outsourced workforce management, the decision to engage comes from company leadership. So by its very nature, this kind of program already captures the attention of executive decision makers. More importantly, staffing professionals bring a wealth of wisdom, experience, resources and tools for consultatively developing ongoing workforce strategies.
This eases the burden of planning for the board or C-level officers. Contingent workforce program managers collaborate closely with these executives to execute recruiting strategies, needs assessments, forecasting, implementation plans, issue resolution initiatives, training and development efforts, on- and off-boarding, succession planning, supplier management and rationalization, cost containment protocols, progressive strategies for the evolution of the program, and more.
According to the findings in the Oxford Economics and SAP study, high-performing companies invest in training, mentoring and developing their talent -- they’re 16 percent more likely to offer a formal mentoring program than underperforming businesses.
Millennials want access to mentoring, formal training and on-the-job learning. They seek satisfaction and personal fulfillment over money. They want a job that improves their experiences, personally and professionally. Their flexibility and willingness to learn inspire positive attitudes that boost morale, while presenting a clean canvas on which to project the skills that hiring managers are hoping to develop in their workforces.
Contingent workforce program managers are participants in the conversation, not directors or lecturers. They not only demonstrate their commitment and support, they position themselves to gain fresh perspectives that could lead to new innovations, more efficient methods, continuous improvements and more. They also discover the unique attributes, skills and characteristics of their people, which can inform more strategic placement decisions for current and future assignments.
MSPs and staffing suppliers have the time and dedicated focus to listen to workers and provide feedback about their performance, areas for continuous improvement, and offer mentoring from qualified internal coaches with related skills and experiences. This is a practice that translates especially well to onboarding. Bringing in peers with experience at the client organization helps create a safe and supportive coaching outlet where new workers can ask all their questions upfront, without worrying about the reception.
Millennials, now one of the most closely watched and influential generations of talent entering the professional ranks, are also the most racially and ethnically diverse group in today’s workforce. A large majority of Millennials, 71 percent, appreciate the influence other cultures exert on the American way of life. That’s nearly 10 percent more than the outgoing Boomer generation. The varied background of Millennials, coupled with their affinity for diversity, is vital to the success of organizations today. As demographics change, it will be even more imperative and influential in the future.
Today, large companies seeking a more inclusive, multicultural and integrated team of talent rely on staffing professionals for these needs. A 2013 Staffing Industry Analysts survey found that 66 percent of large companies that use staffing services emphasized a focus on diversity firms. “It’s typically the largest companies that are most interested in diversity suppliers,” the research concluded.
For years, businesses have turned to MSPs and contingent workforce leaders as experts in fulfilling diversity initiatives. Many staffing organizations are themselves certified diversity enterprises. And they have demonstrated a tireless dedication to cultivate networks of diverse talent to bring their clients the fresh perspectives, robust cultures and new ideas that spring from heterogeneous workforce populations.
The Oxford Economics and SAP report determined that the best performing companies with the highest profit margins were those that concentrated on attracting the highest quality talent -- not the cheapest available candidates. This is the forte of the best contingent workforce programs. They continually court, assess and assemble the most elite teams of staffing providers to ensure the placement of optimal talent, matched to each client’s objectives, mission and business culture. Their staffing curators have a prowess for cultivating diverse talent, utilizing emerging online marketplaces, developing employment brands, and connecting talent to ideally matched business environments.
Experienced staffing curators know their audience -- their clients and their potential talent. Their online and offline sources are as diverse as the talent pools they develop, built from a combination of job boards, social media, online marketplaces, career fairs, associations, professional directories, colleges, special interest groups and more.
Research shows that 60 percent of top companies are motivated by merit over tenure. If you consider some of the most recognized and lauded businesses in the world, such as Google and Apple, you’ll notice that the average tenure is about a year. Nonetheless, the exceptional quality of their workers is undeniable. With the rise in contingent work, driven by the success of the gig economy, project- and assignment-based work is rapidly becoming a new standard. Longevity holds less sway with companies seeking innovation and growth -- they need the best workers, not just those willing to stay.
Contingent workforce leaders greatly increase the chances of finding superior talent because they have influence in the program and the ears of hiring managers who want the best people -- not necessarily the lowest rate. Successful MSPs, for example, expose their supplier partners to all aspects of the client program: the pain-points, challenges, risks, threats, strengths, weaknesses and opportunities. This enables greater visibility into needed job categories and skill sets, costs, compliance and specific customer requirements. It also dramatically improves the odds of identifying the highest performers for the organization’s goals.One of the biggest windfalls of a robust contingent workforce program comes from access to advanced analytics and business intelligence offered by the VMS systems they use. Through these platforms, research demonstrates that all mission-critical KPIs improve:
It’s well established that companies such as Costco, Nordstrom, Zappos, Lego, and others outperform their rivals, even when their competitors pay higher wages. And it’s because they’re making real investments in the workforce -- providing talent with new experiences, skills, development opportunities and incentives that enhance their quality of life and productivity. Paul Zak, a neuroscience researcher, found that employees who have trust in their organization and see a higher purpose to their work experience more joy. Happy employees are more productive, more innovative and contribute more to a healthy bottom line.
It’s difficult in this fast-paced, fluctuating business environment for stakeholders to prioritize workforce issues while upholding their own commitments to the organization. For contingent workforce program leaders, however, ensuring a productive and nurtured group of exemplary talent is their core mission. Now, more than ever, investing in an outsourced workforce management program is an investment in the future of your company that will pay dividends.
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