How Companies are Using Labor Clouds to Transform Their Workforce

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Mounting pressure to work smarter, faster and more productively is pushing companies to embrace a more flexible way to work: labor clouds.

Businesses of all stripes — from a Fortune 50 retailer to a global media giant — are using labor clouds to work smarter, deploying a hybrid workforce of employees, vendors and freelancers into projects when and where they're needed. Using pre-set controls for skills, compliance and costs, labor clouds are helping businesses adapt to a changing world of work, enabling a nimble and skilled workforce better able to compete in a turbulent and fast-paced global economy.

As a reminder, a labor cloud is as a curated network of talent. Essentially, it’s a tool that organizes a group of people in one system that can facilitate worker engagement, payment, reporting, dispatching and more. For a more detailed primer on labor clouds, check out our earlier article on the topic.

Curious how labor clouds can benefit your organization? To help you get started, here’s a guide to how companies are using them today, including criteria for when you should consider using them and recommended best practices for your own success.

When are Labor Clouds a Fit? 

A labor cloud can be deployed at most companies regardless of size. In terms of best fit, however, there may be scenarios that are more conducive to this flexible labor model than others.

Labor clouds are particularly suited to scenarios where businesses:

  • Need to improve service quality and response times for their field delivery operation
  • Need to ramp up for a project roll-out in a fairly short period of time
  • Want to expand their geographic footprint to other regions where they may not currently have a presence
  • Require highly specialized talent to complete a project, including those that involve professional certifications
  • Have thousands of freelancers, contractors and employees and are looking for better ways to organize and engage their human capital

While these challenges arise in many business scenarios, they will remind procurement professionals in particular of a perennial problem: the need to reduce operational costs while maintaining service quality.

Most organizations are already straining to maximize the cost and productivity of their workforce, to say nothing of the struggle to find the new talent they need to continually grow. To continue delivering on these increasingly ambitious goals, procurement must now explore new, more creative options for talent sourcing, engagement and management. That means integration of the external workforce will become an enterprise necessity — a capability that labor clouds support better, faster and cheaper than ever before.

Fortune 50 Retailer Modernizes its Field Service Model With Labor Clouds 

As with many service executives in the retail industry, this director of IT field services received a mandate to lower his operational costs by some $5 million over the course of the year. In addition, management was pressuring him to maintain the business’ slim margins while also improving and maintaining service quality levels. This eventually led the company to look toward labor clouds to help it cut its operating costs while modernizing its service delivery model.

To start, the company created a labor cloud of IT field technicians who: (1) passed a background check and drug test, (2) matched a predetermined skills assessment and (3) had a 75% or higher reputation rating. This enabled store managers to sort through a selection of thousands of technicians to find exactly the one they needed at the time they needed.

Ultimately, the company was able to not only lower their service delivery costs but also improve first-time resolution and lower oversight and governance needed from higher-level management. Field-level employees were able to focus on completing service requests quickly and effectively, while management gained the capability to monitor the program in real time, intervening only as needed.

Media Giant Uses Labor Clouds to Organize Thousands of Freelance Creatives 

An influential news organization needed a scalable solution that could create a single source of the truth between its full-time editorial workforce and thousands of freelance writers and photographers.

The company launched a series of labor clouds to organize its more than 17,000 freelancers based on location, skillset and desk. In addition to being able to manage the entire lifecycle of that work — from assignment delegation to project delivery and payment — the company was also able to integrate its labor clouds into its enterprise systems of record (e.g., PeopleSoft, Workday) to improve back office financial tracking and simplify company-wide reporting.

The results so far have been promising. Editors reported significant improvements in projects processes, allowing them to get more work done in less time while also gaining access to better data for decision-making. The company also identified significant cost savings, as the labor cloud allowed it to abandon a legacy on-premise solution and reassign IT staff supporting the old system to more valuable projects.

Best Practices and Recommendations 

In both of the examples above, two companies used labor clouds to access the people they needed to keep their businesses competitive while lowering operational costs and improving their customer experience. Still, the road to those achievements was far from easy.

The retailer, for example, faced challenges getting buy-in to its blended workforce strategy from executives. Upper management had long prized its tradition of retaining employees for long tenures at the company, and embracing a more flexible, modern workforce required reassurance that the strategy wouldn’t completely replace the old model.

But the most significant challenge was educating managers on how to use labor clouds. At first, employees saw them as an all-or-nothing solution, one that would take over the entire workforce. The opposite, however, was true: labor clouds could be applied to situations as companies need them. As store managers learned to selectively use them when they needed a technician, employees grew to love the new system, thanks to both the high professional quality of the contractors engaged and the simple fact that it made their jobs easier.

To help your stakeholders get from skepticism to advocacy, be sure to consider how they will be affected by the new system and how you’ll manage the implementation. In a recent webinar with WorkMarket (an ADP company), a provider that offers labor clouds as part of its solution, Spend Matters Research Director for Services and Labor Procurement Andrew Karpie recommended the following best practices:

  • Involve key stakeholders early on. It’s important to involve key stakeholders, particularly those in finance, legal and HR, to help secure successful adoption.
  • Work closely with these stakeholders. Making them part of the implementation process, can help to mitigate risks and drive better outcomes.
  • Create space for experimentation. Start with a pilot or experimentation program inside your organization. This enables companies to test, learn and ideate in a safe environment.
  • Allocate sufficient resources for experimentation. A lack of funding can be a barrier to implementation. Starting off with a small test budget allows program managers to test the platform and explore its potential for generating greater business value.
  • Add a program management layer. Instead of relegating platform adoption to a departmental manager, appoint a dedicated program manager to serve as an internal advocate and take the day-to-day lead in the adoption process.

Once you’ve aligned with stakeholders and prepared to manage your program, you’ll be ready to face the fast-paced, disruptive digital economy with an innovative approach to workforce management.

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