May 19, 2020Read More
As we discussed in April, close on the heels of VMSA Live 2017, MSPs are entering a new phase of transformation – one that mirrors and complements the evolution of the modern workforce. The original power of contingent workforce management grew from a highly transactional approach that focused on centralization, consolidation and process optimization. Today, the transactional nature of MSPs is giving way to strategic and consultative dynamics. It’s not just the mechanisms of business that have changed. Talent – yes, even contingent talent – have broken free from their cocoons and emerged as a different species of butterfly. Right now, freelancing has taken its place as the new norm. These experts are not contract workers or W2 employees of staffing firms. They are independent entrepreneurs, which begs a few questions: how do you find them, how do you engage them and how do you manage the partnerships? I believe this is precisely where MSP 3.0 will shine brightly.
In her recent article for TalentCulture, Shelly Kramer explores the new world of work, where freelancing talent aren’t just seeking flexibility – they’re developing into micropreneurs: “A new study by Freelancers Union and Upwork backs this up, finding that more people are freelancing by choice. Today, a little more than one in three workers in the United States are setting their own hours and being their own bosses.”
As the report notes, nearly 54 million Americans are now working as freelancers, and 60 percent of those professionals switched by choice. That represents an increase of seven percent from the previous year.
“Nearly a quarter of those surveyed said they specifically left an employer in order to start working freelance,” Kramer explains. “And while there’s certainly risk involved in dropping out of the traditional workforce to go solo, most of these new freelancers said that within the first year they were making more money than the more ‘full time’ salaries they left behind.”
Digital mobility, virtual communications, online platforms and other technologies have made it easier for talent to brand themselves and pursue freelance opportunities. They also express a profound sense of optimism for branching out on their own. A noteworthy 82 percent of the survey’s respondents said they felt confident that “the best days are ahead for freelancing,” despite inherent risks and the lack of stability that more traditional full-time and contract positions offer.
However, freelancing is a different type of contingent labor. These professionals haven’t just ditched the constraints of full-time employment. The switch to freelancing also liberates them from being any entity’s employee, including staffing providers who serve as the employers of record for the contingent workers they place at client engagements.
Naturally, every freelancer’s reasons for embracing independence vary. Yet the core motivation appears to reflect the same drivers we see with entrepreneurs. Freelancers have special skills or offerings that they feel will appeal to client organizations. Their skills extend beyond clerical or administrative tasks. These individuals are Ph.Ds, data scientists, physicists, engineers, specialists, former executives and even Google programmers. The momentum of the sharing economy has empowered their progress. It’s an evolutionary model that almost seems inevitable: traditional employee to contract talent to permalancer to freelancer.
As every business pushes itself to innovate and gain a competitive edge, freelancers will be hot properties to secure. And then there comes a slew of issues to address.
The good news is that MSPs can handle all of this easily, because freelancers are essentially vendors. Clients with experience using MSPs probably think of vendors as staffing suppliers who provide the right talent based on a job opening. In this case, the freelancer is both supplier and talent. And as a supplier, MSPs can implement the same compliant processes to help their clients partner with these entrepreneurial individuals.
As Jon Younger and Rishon Blumberg pointed out in Harvard Business Review, managing freelancers -- or agile talent -- poses a bit of a problem: “Most organizations aren’t good at project management, and fewer still have a well-defined and structured protocol for engaging and managing agile talent other than contractually. Once the freelancer is selected and contracted (no easy task, but that’s a discussion for another article), management is left to the individual project or functional manager. Some are excellent. Others are new to managing or stronger technically than as a supervisor. Rarely do we find organizations that direct, support, and oversee the work of agile talent, and the projects they support, on a consistent and disciplined basis.”
The authors offered a variety of creative approaches for supporting the agile workforce. Yet when I read their suggestions, I kept thinking, “This is what MSPs do.” Let’s look at the ways an MSP can help clients effectively and effortlessly oversee a freelance talent population.
Younger and Blumberg’s first suggestion is for organizations to assign roving project managers: “Their principal responsibility is to support product managers and technical teams in optimizing the planning, onboarding, utilization, and management of freelancers.” MSPs perform these same duties all the time. As the single point-of-contact between hiring managers and talent, they easily foster collaboration, performance monitoring, coaching and guidance, demand planning, and on- and off-boarding. They also mitigate risks associated with co-employment and misclassification.
Beyond that, MSPs ensure that agile talent have well-defined roles, ongoing communications, strategic feedback, clear project tasks and centralized interactions. This removes the managerial burdens from busy department managers.
As an alternative to the “roving project manager,” Younger and Blumberg propose the creation of an external talent manager role. This position would reside in HR or procurement and serve a similar function -- bolstering the “depth and effectiveness of the agile talent network.” Once again, this is a core focus of MSPs. A primary outcome of a robust managed services program is the construction of a solid supplier and talent network. More importantly, top MSPs have incorporated independent contractors into their offerings. That means they’re ideally positioned to handle the procurement and administration of a freelance talent pool. Here’s why.
Independent service providers receive the same dedicated representation as staffing partners through an MSP’s supplier management group. Independent service providers have access to communications and all materials needed to perform their services. Experienced MSPs have already instituted protocols to design and oversee this kind of engagement.
For this recommendation, Younger and Blumberg invoke the field operations of petroleum and mining companies. These organizations have historically created “chief” type positions to oversee the technical staff. On projects of this nature, you’re likely to find chief geologists or chief engineers -- roles more uncommon in professional office settings. Rather than creating new levels of leadership within an enterprise, an MSP provides similar people at your service. A managed services solution has a lot of professionals supporting it: program managers, supplier relationship managers, HR specialists, sourcing experts, compliance and risk officers, finance support, account executives and more.
The chief’s main concern in this example would be to “keep tabs” on new technologies, developments and external talent sources. These components are built into an MSP program inherently. They are evident in the introduction of VMS and related technologies, continuous improvement planning, business reviews, innovation labs, educational seminars on industry and market trends, metrics monitoring and performance reporting.
A significant benefit of an MSP is the client’s access to talent analytics and workforce data. Most MSPs have already immersed themselves in learning the new freelancer and online work platforms. Many of their leading VMS providers have even integrated the functionality into their systems. More importantly, MSPs have been consolidating blended workforces for years while optimizing performance.
In terms of domain expertise, mentoring and understanding the needs of each freelance group, MSPs have that covered, as well. Their project management teams are usually tasked with specific talent categories to ensure familiarity and knowledge with the roles. MSPs also bring the benefit of lessons learned. They have worked with a variety of organizations, workers and industries. They are constantly developing new insights, skills, standards, best practices and innovations. Because of their wide-ranging and eclectic experience, they are the best choice to manage freelance teams across the enterprise. And of course, utilizing an MSP will dramatically cut the costs of creating additional internal positions or hiring new managers.
There is no single or simple solution to the challenges of the gig economy. Yet we know that many rewards await those who get it right. And we can. While client hiring managers endeavor to adjust to the workforce changes that come with this new paradigm, MSPs feel right at home. If you’re considering freelancers and already have an MSP program in place, there should be no question about how to manage them and achieve superior outcomes.