‘There is so much opportunity to leverage high-skill, high-value talent,’ MBO’s Bryan Peña says of independent workforce

A Gallup poll estimates that in a few years, about 57 million people, or almost 36% of workers, will be part of the independent workforce. And as companies find that traditional approaches to engaging independent workers are no longer effective in all cases, they must seek out new ways to engage top talent to meet their needs, both now and in the future.

Direct sourcing of talent is emerging as a viable option for many companies, but to effectively adopt the strategy, companies need to understand the industry as a whole, what independent workers are seeking and how to effectively integrate a new technology into their existing practices. Part one of this series (“Direct Sourcing of Labor, Total Talent Management Strategy Help Companies Improve Independent Contractor Success”), offers specific information about how companies can successfully utilize direct sourcing.

To learn more, we sat down with Bryan Peña, Chief of Market Strategy at MBO Partners, for a conversation. An industry expert with more than 20 years in the trenches, he shared insights about the state of independent contract labor, how technology is changing the field and what companies can do to excel in the rapidly evolving market.

Spend Matters: Let’s begin with your perspective on the overall state of contract labor. How are people looking for work and how are firms engaging them?

Bryan Peña: We are in an interesting place with regard to the evolution of the workforce. You keep hearing this sort of hand-wringing about the future of work, and while much of the popular narrative — the lawsuits, the bad actors, disenfranchisement of segments — is not always positive, the great thing is that it's finally being paid attention to.

There is a rapidly developing universal understanding that organizations need workforce flexibility to be competitive on a global scale. That’s being enabled by rapid advances in technology and other significant market forces like demographics.

People are more willing to accept working in nontraditional ways to generate a living. There is so much opportunity to leverage high-skill and high-value talent. What I see happening is that organizations are recognizing the need for alternative work models, and individuals are becoming more comfortable exploring them.

Spend Matters: How have you seen the non-employee labor industry change over the years?

Bryan Peña: Very early on, there were traditional staffing firms and a very few MSP and VMS companies. There was a level of chaos, which gave rise to a whole bunch of new solutions.

MSPs helped organize and create order out of that chaos, and VMS technology automated and routinized the invoicing and time-capture process. For the first time, companies have visibility and analytics into what was previously a black hole. All of this brought much-needed transparency and created new jobs to administer and measure the process, creating entirely new strategies and concepts, like total talent management. As those systems and methodologies became more robust and sophisticated, suppliers became more efficient and were forced to re-examine how they serviced their accounts.

The advances in technology enable more creative work models that have never been able to be scaled the way they can now. All of these things, coupled with a very tight job market, are creating an exponential level of opportunity. How you choose to get work done is only limited by your appetite for creative solutions and willingness to take advantage of them.

In the past, managing contingent or independent talent was just part of someone’s job description, but we’re seeing contingent workforce management evolve into a discipline of its own. It’s now commonplace to see titles like “VP of External Talent Management” or “Contingent Workforce Program Lead.” To be frank, this increased professionalism in program oversight is truly the greatest disruptor of the status quo and will only accelerate the inevitable changes in the market.

Spend Matters: In MBO’s 2019 State of Independence report published in June, your data showed that the pool of workers continues to grow but the makeup is changing. Could you tell us more about what you found in the report?

Bryan Peña: In this year’s report, we see the pool of people who want to work independently continue to grow but in specific areas. The total number of independents was statistically flat, while the number of occasional independent workers grew by just over 6%.

We’re seeing growth in a few key areas. We see huge increases in the satisfaction of independents overall. In 2019, some 76% of full-time independents said they were very satisfied with their choices, up about 4% from 2018. The number of what we call reluctant independents — those who would rather have a traditional job — is the lowest it has ever been.

We are also seeing big shifts in how people find work, namely, how independents use technology to grow their own businesses. While word-of-mouth remains the top way for independents to find work, technology-based talent and commerce marketplaces are growing rapidly; nearly one in three independents plan to use an online marketplace to find work in the next 12 months. It should come as no surprise that Millennials use them more than Gen-Xers and Baby Boomers.

Full-time independents who make over $70,000 a year — what MBO considers a highly-skilled talent pool — statistically are more satisfied with their jobs. And the percentage of people in our survey who feel more secure working independently than in a traditional job has tipped to 53%. That is super important — it speaks to some of the demographic shifts and willingness to work outside of traditional employment models.

With the available technologies, independent workers can build their businesses and work completely remotely, be completely virtual. This is especially true for younger workers because they grew up with technologies that enable individuals to reach out across vast expanses and have relationships. We’re seeing that translate into a different worldview, a willingness to work differently and a much deeper facility with technology— it is really a global revolution, and one that will impact the traditional workforce as well.

Spend Matters: Technology is changing the way people find work, but what about the specific challenges that companies face when they're trying to adopt a technology or update existing technology?

Bryan Peña: At a high level, companies have to determine what they want. At MBO, we believe companies will move away from all-in-one solutions and look for specific technologies that provide as many points of access to talent as possible.

A great example of that is direct sourcing. Everyone’s talking about it now, but it’s been around in some form or another for decades.

Technology is also becoming ubiquitous, and the discipline of managing a talent pool is becoming an organizational competency. So what we see is a lot of technologies that have been around for a while taking off because there’s more of an organizational demand for them as jobs become harder and harder to fill. And now that some of the basic problems are solved, you can point to more advanced ones. So many technologies are evolving to solve very discreet, unique problems — it's an exciting time.

Spend Matters: Once companies decide to engage with technology, how do they need to plan and strategize?

Bryan Peña: They should first consider the types of workers they need to engage, then take a good look at how those people want to work. Today’s independent workers have many choices, so companies need to focus on becoming a client of choice, a preferred place for independents to work. That means offering meaningful work, clearly defining project expectations, showing them their work is valued, and paying on time — it’s just good business.

They should also consider talent acquisition planning. If they’re hiring for roles that have high turnover, for example, they will need to cast a wide net through multiple channels or work with a supplier to cast that net for them. In this situation, controlling costs and cycle times might be key factors managed by their technology.

Spend Matters: During this process, are there ever any barriers to workforce innovation?

Bryan Peña: The biggest barrier is probably what we talked about earlier — the organizational appetite for change. People in leadership today often hold a worldview rooted in a hierarchal, traditional 40-hour workweek and tend to support more traditional work models and inadvertently hold back the pace of innovation.

Today’s optimized workforce is much more agile, and people are comfortable with technology and new ways of working. Leaders also need to watch out for an execution gap, which is the inability to execute on a good idea. To avoid it, they must understand what it is they’re trying to achieve and be willing to commit significant resources to it.

“Digital nomadism” and demographic shifts can also be barriers if they aren’t addressed. Digital nomadism is the term for people who work and travel at the same time. Our State of Independence report found that 4.1 million independent workers identify as digital nomads, and that will only increase. Demographic shifts, often caused by aging workforces, are already starting to be felt in Europe and Japan. Those shifts eventually could become catastrophic if alternative work streams aren’t a part of an organization’s change plan.

Spend Matters: More specifically, what can MBO offer when companies look for a solutions provider to help them with all of this?

Bryan Peña: We offer different approaches based on need, but one of the things that makes MBO unique is that we always start with the needs of the talent. Over our more than 20 years in business, we’ve found that by providing this service to individuals, we can solve problems for enterprises without losing sight of the candidate experience. We do this by making sure we provide leading-edge solutions to enterprises that allow them to engage individuals in a compliant manner while managing cost and risk.

We have strong and deep experience in professional services and currently provide support to consulting firms like PwC, Booz Allen, KPMG, Deloitte and Accenture; we also support more than 60 of the world’s most iconic brand names. Core to this success is MBO’s organizational understanding of how professional services leverage talent to create revenue, unlike other players in the space who aren't as familiar with that.

Additionally, I believe we're one of the few providers that really does honest-to-goodness compliance. While we have a large and market-competitive payrolling practice, upward of 70% of our population is independent contractors. We help companies understand that there are ways to engage these individuals without reflexively putting them on payroll after a cursory compliance review. That's one of the things that we really want to focus on in 2020 — making sure companies are aware of other ways of working outside of a traditional payroll solution.

Spend Matters: How can enterprises specifically utilize MBO’s technology to set themselves apart, securing that “client of choice” position with potential independent workers?

Bryan Peña: It’s important from the outset for companies to understand that direct sourcing, like what they can access through our MBO Access platform, is not meant to take the place of traditional staffing firms. It takes a while for these solutions to grow and succeed. They have to be willing to let direct sourcing channels and market position iterate.

By utilizing MBO Access, which we believe is the only one of its kind in the marketplace, companies are able to engage independent professionals, manage the entire lifecycle and ensure compliance. And all of this is done in a cost-effective manner.

For companies to successfully engage independent workers, they need to be compliant but still be able to engage workers in ways that are appealing to them. MBO’s technology provides the nuances that set companies apart, establishing them as clients of choice.

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