Traditional Workforce Models are Constraining Business Growth — But New Models Have Arrived

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As discussed in Part 1 of this series, traditional models of workforce engagement continue to dominate and constrain organizations’ access to the talent they need. To break through this barrier, organizations must embrace and support innovation — doing new things.

Increasingly, the place to turn for talent, growth and innovation exists outside of the four walls of the enterprise, and goes beyond traditional categories of consulting and contingent labor. This is especially true when it comes to tapping into specialized skills and expertise, many of which are required only for a limited time in targeted projects.

But the landscape of new solutions is evolving rapidly. To see how, we provide some examples of different types of innovative human capital sourcing and discuss how procurement can use these tools to drive innovation and long-term growth.

New Human Capital Solutions and Models

A new generation of workforce solutions supports new human capital models and allows businesses to look beyond traditional sources of external talent like staffing agencies and consulting firms. These new solutions are now often referred to as platforms and accompanied by terms like freelancer, on-demand or gig economy, but they are much more than buzzwords. Typically taking advantage of new technology in significant ways — along with the service and intelligence of human capital specialists — these solutions allow companies to source and structure work in innovative ways in a rapidly changing, globalized business environment where securing critical talent can be at the very least challenging.

These solutions are emerging, extremely diverse, often overlapping and evolving. Some may allow a business to directly source a worker in another country who will complete work remotely. Some may be able to contract with a business to provide project outcomes, a specific deliverable or an ongoing service. In short, the new solutions are very difficult to categorize. But there are some commonalities, including how they:

  • Provide access to sources of skills and expertise that would not be possible through traditional sourcing channels.
  • Aggregate and maintain digital collections of talent, skills and expertise — typically knowledge work, from standard and routine to unique and complex
  • Provide work outputs in the form of an output-directed project (even most freelancers work under some sort of SOW, implicit or explicit)
  • Frequently allow business users to buy directly; in the majority of cases, they function more or less as source-to-pay solutions

Still, noting some of the commonalities only goes so far to get a clearer picture of what these new solutions are and what they can mean for an organization. Therefore, a small number of examples of types of solutions are presented below.

Adoption of these different solutions or platforms is driven by different business needs; benefits to using them include:

  • Sourcing and consuming skills and expertise previously out of reach, especially for firms that have neither the will nor the means to engage large professional services firms on a project basis
  • Getting just what is needed in terms of specific outcomes and more limited timeframes (e.g., engagements that last an hour or less)
  • Doing so faster and sometimes at lower direct and indirect cost

Engines of Human Capital Innovation

These technology-based workforce solutions are themselves innovative. But if procurement steps up and appropriately harnesses and guides the adoption of these solutions within the broader business, they can also serve as enterprise-wide engines of human capital innovation — that is, a means of moving beyond traditional models of workforce engagement by establishing new, alternative models for sourcing, organizing and consuming skills and expertise.

External (or “open”) innovation is not a new concept for procurement, which has begun to add “supplier innovation” to its own KPIs. While supplier innovation has tended to mean tapping into the innovative contributions of existing suppliers, it is not a large step to consider new kinds of suppliers as sources of valuable innovation.

Becoming aware of these new innovative solutions (i.e., suppliers) and knowledgeable about what they can actually do for the business is just the first step for procurement in the process Empowering, guiding and enabling your organization to take advantage of these innovations is the next, more complex stage. It requires a roadmap that goes beyond current procurement navigation systems, which today focus largely on cost and risk management. It also requires large-scale education and change management efforts to promote and guide adoption.

Yet if procurement is to play a key role in human capital innovation — and shed its former reputation as a barrier or a drag — it must engage with these solutions and engage with the organization in new ways.

In the final part of this series, we will discuss how procurement can become a supporter, enabler and even a leader of human capital innovation, without compromising its more traditional goals.

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