Could Procurement Ever Be Renting Employees from Other Companies? Andrew Karpie - September 14, 2015 8:06 AM | Categories: Services and Indirect Spend, Services Procurement & Contingent Labor, Services Procurement & Contingent Labor Management, Solution Providers, Technology | Tags: L1, Technology It may seem like a far-fetched scenario, but in this time of the sharing economy, severe talent shortages and heightened uncertainty about worker misclassification, necessity may become the mother of invention. While services procurement and contingent workforce management practitioners have likely never considered this option, there is actually evidence of the basis for this idea. The practice of businesses loaning employees to one another – as documented in this 2015 article from Harvard Business Review “The Case for Lending Out Your Star Performers” – has been occurring in different sectors. And it’s not just sectors like sports: The article provides the case of loaning employees in the oil and gas industry, as well as in the telecom and public sector. We are also aware of another case of loaning that involved Disney and a tech company. But loaning of employees is one thing. One business renting the employees of another business is quite another – something that might be viewed as a contingent workforce procurement strategy, as crazy as it might seem. It’s not entirely crazy, though. There are actually platform-based businesses that intermediate such transactions. Here are a few examples: B2B Cloud-Employee Sharing is a platform that has successfully developed a business in Eastern Europe through which companies have been renting employees from one another. The business started with a focus on SAP consulting firm employees and then expanded to other technology categories. FLOOW2 is a platform intermediary based in the Netherlands that describes what it does as follows: “FLOOW2 is the business-to-business sharing marketplace on which companies and institutions can share equipment, services and the skills and knowledge of personnel.” While initially focused on companies renting equipment and assets to one another, it eventually expanded its scope to the renting of employees. Colergo Peer-to-Peer Staffing is a US-based startup – still in beta – that describes itself as “an employer-to-employer marketplace to buy and sell employee time.” It will be interesting to see how this new platform is adopted and utilized by businesses when fully launched. Job Pool is a US-based startup that has pursued a slightly different model, perhaps not employee rental per se. Job Pool enables part-time workers and employers of part-time workers to fill multiple part-time jobs, allowing workers to increase their use and earnings and employers to fill their open part-time jobs. In an interesting twist, Job Pool was founded and backed by a former NFL player – demonstrating that almost anything can happen. So as crazy as it might seem, employee renting is not a mere fantasy, though it is certainly far from mainstream adoption. The arguments for such a practice has been largely economical – reduce employee downtime, access a new source of talent. But there might be other arguments in a time of heightened worker misclassification risk: In the employee rental scenario, the rented employees remain on the payrolls of the source companies. As such, one might look at employee sharing as one alternative to current staffing arrangements, especially those of engaging independent contractors. Admittedly there are many practical and execution issues that accompany the employee rental model – maybe some legal and ethical issues as well. But if nothing else, considering the scenario of employee rental may be simply a “brain stretching” exercise for labor procurement practitioners. In a time of rapid change in labor engagement models and increasing severity of talent shortages, procurers of contingent talent may be well served by developing an openness of mind to alternative – and perhaps quite innovative – means of sourcing and engaging talent. Related ArticlesNLRB Drops a Worker Classification and Contingent Workforce Bombshell – What You Can Do About Co-Employment RiskThe Leap From Contingent Workforce to Extended Workforce and ServicesClarifying Crowdsourcing: Contingent and Services Procurement Examples, Definition and AnalysisSelf-Sourcing Contingent Workforce: What it is and Why it Matters NowA New Large Company Trend in Contingent Workforce – Using Ordinary PeopleThe Good the Bad and the Procurement Genie: The Magic Coming to the Contingent Workforce Space Voices (6) Simon: 20.09.2015 at 5:35 am Why does it seem far-fetched? You would second your employee to consult on a project – in this case a project working worth a client (the other business). Then you bill the other business for the consultancy service Reply Andrew Karpie: 20.09.2015 at 11:34 pm Simon, Thanks for your comment. My expressed reservations in the article were just rhetorical. I think it is something which will occur more in time. Reply Andrew Karpie: 18.09.2015 at 9:07 am Giuliana, Agree completely with all of your observations, including the fact that employees would have to opt in. Also agree that this would likely work best locally. Where I sit here in the heart of Silicon Valley, I think about tech firms filled with tech workers eager to learn. In any event, if nothing else, a mind-stretching exercise. Reply Giuliana Scott: 17.09.2015 at 1:27 pm Great idea. Would work best in urban areas with close proximity to companies participating. The idea could be used for routine work, companies needing extra temp staffing in the procurement divisions, or as an outsider with a specifically outsider point of view – for new ideas, or auditing of procedures & relationships in the existing organization. This only works if staff is onboard with the opportunities. Best remember – people are NOT cogs in a machine, and only certain staff would be willing to trade the work situation they interviewed for with unknown locations, travel times and business environments… Reply Matt Krane: 15.09.2015 at 12:21 pm Perhaps it is worth considering the idea that outsourced staff, in this case to a Procurement Provider, or staff augmentation of an existing team to such a provider for a set term, may very well be the same as loaning staff/employees. Often times in these types of PBPO engagements, individuals from the outside company are intended to be assimilated with the in-house team, representing one Procurement Organization to the rest of the business, although it is actually comprised of two or more companies’ personnel. I would argue that having a contract with a PBPO firm for xyz years (in this scenario) may represent another common example of loaning employees, as these folks remain employed by the service provider, but primarily, if not entirely serve their client as a basis for their role. These individuals are depicted as being part of the Procurement team, their ideas and work contribute to the client’s business, and they are present at that client for only a set duration (pending contract extensions and terminations). Under this perspective, BPO itself positions many contributors as loaned employees, although likely not in the most pure sense intended in this article. We may already be doing this more often than first realized, and perhaps it is not necessarily a bad thing, either. Food for thought! Reply Andrew Karpie: 18.09.2015 at 8:58 am Matt, Thank you for your observations/insights. You make a good point about BPO effectively lending employees in the context of an umbrella agreement. As you suggest, it’s important not to get trapped in our standard ways of thinking about how we engage talent. Reply Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of follow-up comments by email. Notify me of new posts by email.