Coronavirus affects the world of work (Part 2): Facing the next phase of the crisis

Part 2 of this Spend Matters PRO series will focus on where things stand with the coronavirus crisis about a month since many countries and most U.S. states issued stay-at-home orders. It also has been about a month since the publication of Part 1 of this series. Now, governments are considering plans for “re-opening” the economy that they will likely start executing in mid- to late May. Part 2 of this series will discuss approaching the transition/mitigation phase of the crisis. And it will consider how the challenges and priorities may be shifting for enterprise planners and human capital managers in procurement and HR.

This PRO coronavirus series is being posted outside our subscription paywall to inform more readers about handling contingent workforce/services issues during the coronavirus crisis.

In the middle of March, we published Part 1, in which we suggested that organizations, reacting to what eventually became a shutdown of major swaths of the U.S. economy, might begin thinking about the crisis in terms of four stages. We also suggested they begin thinking about relatively new, alternative digital solutions for sourcing and managing contingent workforce/services, given a new business environment that is both highly uncertain and subject to new constraints. (For more details, read Part 1.)

We made these suggestions to reinforce that:

  • This crisis is not a one-time emergency to be stanched, but an unfolding of conditions over months, if not years.
  • There is an opportunity — or a compelling force — to re-examine previous assumptions, strategies, approaches.
  • There are alternative, digital means of sourcing and managing CW/S that can complement established technology and sourcing channels

We are continuing to recommend solutions for sourcing and managing CW/S in the “CORONAVIRUS RESPONSE” PRO series (here and here). At the same time, this series (“Coronavirus affects the world of work”) will continue to discuss problems and solutions, issues and opportunities over the different stages of the crisis.

We believe it is helpful to break down the coronavirus disruption into four crisis/post-crisis stages in order to discuss how different solutions can be usefully applied (or planned for):

  • Reactive/acute
  • Transition/mitigation
  • Recovery/upswing
  • Long-run/business-as-usual

Let’s jump into Part 2, and look at the transition/mitigation phase of the coronavirus crisis.

What comes next?

The question of what comes next is apropos now, when in a matter of weeks, governments are likely to begin restarting their jurisdictions’ economic activity.

As we look at the four stages we defined for the COVID-19 crisis (actually, three in-crisis plus one post-crisis), we are shortly going to be moving from the first stage to the second.

StageExplanation
Reactive/ acuteAt this stage, worker safety and business continuity are clearly the top priorities. A small sample of relevant problems includes: keeping supply chains, distribution centers and last-mile delivery networks staffed and operating; managing help desk/customer service center volume peaks; filling critical gaps when employees or temp staffing workers aren’t available, etc. At this stage, companies may be able to make limited (though perhaps critical) use of some alternative technology-enabled solutions, but realistically it may be that the greatest value is captured by noting opportunities that can be seized upon in the later stages.
Transition/ mitigationAt this stage, all of the above will still apply (even as freedom of movement becomes less restricted). Starting to step up operations again after an unprecedented slowdown will be a top priority. A great deal of support work will be required for a limited period of time to manage information, review policy/procedures, plan for returning employees, etc. There will be peak demand for a range of services providers (from legal to cleaning/maintenance; IT security to trucking), creating supply gaps and necessitating alternative approaches to sourcing services.
Recovery/ upswingAt least in some segments of the economy (most likely not durable goods) demand for goods and services will begin to increase more rapidly, depending on the broad state of the economy. In those specific segments that start to grow many of the above issues will again apply. Staff augmentation requirements in one segment may be significant and specific (e.g., a backlog of on-site tech services work orders). This stage is also where the need for analytical and forecasting capabilities will increase (even as there is already a shortage of data analyst types).
Long-run/ business as usual (BAU)When the crisis has become a thing of the past, it will not be a thing of the past. Smart businesses will not simply move on and return to business-as-usual. They will incorporate what they learned into new and better ways of doing things. That may be making sure that they have expanded their workforce/services sourcing channels beyond the conventional ones, or they have established enterprise integration with external work/services platforms. It may also be incorporating more data and analytics into their workforce management processes to enhance agility, enable quick decisions and support scenario-building.

Businesses across different industries have been weathering the acute/reactive phase of the crisis, with outcomes ranging from relatively little negative impact (e.g., grocery stores, online media, etc.) to near catastrophic impact (e.g., restaurants, airlines, etc.). Now we are reaching the point when businesses will be transitioning from the acute/reactive phase to the transition/mitigation phase. That is when they will begin trying to repair damage by using customer outreach, supplier outreach and many more possible remediations, as well as starting to ramp up business operations in accordance with market and other conditions.

We can now expect that relaxation movement and business restrictions will start happening and economic activity will start increasing in May. But we don’t yet know exactly what that will mean for different businesses — we’ll know more as plans are announced. At this moment, we are bathing in uncertainty.

Something enterprise planners and human capital managers in HR and procurement can be sure of is that conditions will vary across different business segments and different geographies. This is not only the case because COVID-19 infection status will be different in different places, but because municipal, county, state governments are very involved in exercising governance in response to the crisis.

Another challenge that will be faced is, a perhaps unprecedented, rate of change (in goods and service markets, labor markets, supply chains, regulations, government funding/lending for businesses and workers, etc.). Many businesses may not be prepared to deal with the extent and diversity of changes that will occur from week to week in the coming months. In a certain sense, the transition phase of the crisis may be nearly as reactive as the earlier crisis stage.

Then there is the longer-term macroeconomic outlook. The Conference Board developed three possible U.S. domestic economy recovery scenarios (all of which could turn out to be overly optimistic):

(Click image to enlarge)

In the Conference Board’s best-case scenario (May reboot), the economy will return to Q3 2019 output levels by the end of 2020. In its worst-case scenario (Fall recovery), output will only reach 97% of Q3 2019 levels at the end of this year. Of course, these scenarios assume that everything goes well (e.g., no big COVID-19 flare-ups that could force a return to an earlier level of restrictions on movement and interactions). Not to mention that plenty of other forecasters have projected the end of 2021 for a full recovery (that may be a more realistic, risk-adjusted outlook).

Uncertain as it is, businesses will not only be responding to current and foreseeable conditions in their respective markets, but also forming expectations about the performance of the national and global economy in the coming months and years. And these expectations will loop back to influence decisions in the present (e.g., rent or buy?, temp or perm?, think short or long term?, etc.) made under extreme uncertainty.

The bottom line is each business will have to plot its own course for the weeks and months ahead.

Making the transition/mitigation phase work

If the need in the reactive/acute stage of the crisis was to “batten down the hatches'' and “start bailing,” the priorities in the transition/mitigation phase will be to pry open the shutters, repair critical damage, assess the market and other conditions, while beginning to re-start or increase operations according to market conditions. In the transition/mitigation phase, there will be a gradual shift from operating under mandated operating restrictions or closures to getting a business restarted and/or on a recovery path under new workplace social requirements.

In the next 2-3 months, many businesses will be trying to calibrate their need for labor, skills and expertise and decide how to fulfill immediate and short-term business requirements under significant uncertainty (and perhaps under pressures to bring furloughed or laid-off workers back on board). And businesses will not simply be turning on the light switch and re-entering the world as it had been in January. There will be new rules/constraints — for example, ensuring social distancing in office locations or processing healthy-to-work certifications. Workers who are immune may be deployed to frontline activities; workers who haven't been infected may perform work within social distancing guidelines or simply work remotely.

What businesses may not anticipate in the transition/mitigation phase ...

We believe there will be many activities that are effectively one-time projects. This could include activities that require individuals with certain technical skills (e.g., knowledge of COBOL coding) or other specialized knowledge/expertise like legal issues. It could mean establishing relationships with new service providers. Now is the time to start getting ready for a surge.

That may mean polling managers across the organization in the coming weeks for short-term requirements and determining the need for external resources and services. Being able to forecast what will likely be needed could avoid delays and frustrations just several weeks down the road.

It will also provide an opportunity to analyze and plan sourcing — posing questions like: Can our current suppliers deliver what is needed? Do they have the capabilities, agility and capacity in the midst of demand spikes? Or do we need new sources or even sourcing channels? The sooner these questions can be answered, the sooner requirements can be met (requirements that may be on the critical path to business ramp-up).

With respect to a surge in one-time projects, there are three questions that procurement/HR executives need to ask and answer:

 QuestionsSuggestions
Does the procurement or HR organization have the processes, resources and expertise to effectively handle this surge? What can be done in a manner of weeks to prepare? Many organizations may not be well prepared to handle a surge in short, one-time projects. Taking an assessment of processes, resources and expertise is the first step in preparation.

On the one hand, most organizations will have well-established processes to source and manage workers from staffing agencies, but this sourcing channel may or may not be what is needed for the transition/mitigation phase. There may also be processes around the sourcing of services from external providers, but with the same caveat.

 

Many organizations will not be equipped with processes, resources and expertise to source and manage independent workers and small, niche service providers (in different geographies). The “make or rent” decision process will be an important one to review because it will be important to determine if it will make sense to use/bring back a qualified employee or source externally.

Does the organization have relationships with suppliers and workers needed to execute one-time projects? What can be done to ensure this?

 

Organizations may have established relationships with suppliers of various kinds. But the question is: Can these suppliers meet the needs that will arise? Staffing suppliers may or may not have temp workers actually needed (e.g., they are not aligned to the right worker population). Staffing suppliers are also expensive, and their time-to-fill rates may not be adequate. Existing service providers may be geared to pre-crisis business-as-usual operations, but may not be aligned to crisis needs.

 

Some organizations may have established relationships with independent workers and small-scale service providers, but to a much lesser extent. Here, too, the question arises: Are these workers and providers the ones needed at this time? All of the above supply-side groups in their current state may or may not be what is needed. Discussing work-arounds with these suppliers (including MSPs) may provide some answers. But it may be necessary to engage different suppliers on an agile basis.

Can technology and digital solutions help enable the above? What can be considered?While many organizations have not seriously considered (let alone begun to use) new technology and digital solutions, this may be the time to start. But, first of all, existing technology solutions (foremost, VMS) will likely offer support. Temporary worker and SOW sourcing may be useful (though velocity may be an issue), and external workforce tracking modules could be very helpful. Some VMS solutions, like Beeline and Fieldglass, can support direct sourcing with a fast, effective way to establish a network of independent workers and small-scale service providers and processes for managing them. One benefit of VMS to keep in mind is the enablement of temp-to-hire, which may be very useful as we continue to emerge out of the crisis. There is also the potential added benefit of tracking all suppliers/providers and external workers in one system.

 

But an organization’s VMS solution may not be able to solve all the problems (for example, it does not have all the capabilities needed, including pre-integrated solution partners). Other third-party, specialist, best-of-breed solutions may be able to do so, though process enterprise system integration may not be as tight on day one. That said, these digital solutions are built on the latest cloud technology as SaaS and can be turned on quickly. In addition to direct sourcing technology solutions, there are providers that offer worker/provider networks (some offering pre-vetting or a vetting process). Digital solutions, which span several categories, can provide a range of benefits, including being designed to support short, project work; enabling fast engagement of workers/providers; supporting engagement management/tracking; rich analytics; etc.

It can be noted that in the transition/mitigation stage of the crisis, a number of factors become more important than usual — predominantly velocity/agility and direct sourcing.

Technology and Digital Solutions for Contingent Workforce and Services Technology

As Spend Matters is very focused on technology and digital solutions, here’s a list of some of them.

  • VMS solutions can be useful in the ways described above. At this stage of the crisis, it’s “love the one your with” for the most part. Beeline and Fieldglass are solution providers that have the best shot of being a one-stop-shop for both conventional and innovative sourcing and management capabilities. Other VMS providers, covered in our SolutionMap vendor rankings, may have some or all of the capabilities. These include: Elevated Resources, VectorVMS, VNDLY (a next-gen VMS that could theoretically do anything), Simplify Workforce (very comprehensive, yet simple mid-market solution), Workforce Logiq (with full MSP services).
  • Direct sourcing solutions are not necessarily heavy-duty sourcing solutions as the name implies, but all provide the capability to manage independent workers/service providers in talent pools/private networks that support fast self-sourcing as well as ongoing relationships with the workers/providers. Among the largely technology solutions enabling organizations are Shortlist, Talon, WorkMarket and (offering strong sourcing capabilities) TalentNet. Some of these also operate platforms for workers/services and can be looked at as alternative digital suppliers or external networks; these include Globality (consulting, marketing and other services providers — global), Field Nation (specialist in field tech contractors — U.S.), RigUp (specialist in energy industry contractors — U.S.), Upwork (multiple categories of online knowledge-work freelancers — global), Wonolo (multiple categories of mobile, local contractors), et al.
  • External digital platform suppliers may become important sources of different kinds of project workers and service providers in the weeks and months ahead. Most, but not all, of these are “spot market” platforms workers/providers (some provide an organized service, not simply spot-buy access to single project workers/services). We covered this platform category in our parallel technology solution-focused CORONAVIRUS RESPONSE series (here and here), which we strongly recommend checking out. Spend Matters will also be digging broader and deeper into this area in the coming months.
  • Data management and analytics solutions must be considered carefully as a remedy in the first two stages of the crisis, due to the rate of change and unpredictability of market conditions. Rate benchmarking could be very helpful to determine costs of contractors in local labor markets. But most providers focused on rate benchmarking typically pull data once a month (and in some cases from secondary sources), and data one month back may not be accurate for the current labor market. Also the methods and full range capabilities and services vary from provider to provider. A provider like Engage Talent, a Workforce Logiq company, offers various real-time talent acquisition analytics. Other key providers of contingent workforce data management and analytics include: (1) Brightfield (which also provides a unique analytics solution for SOW/Services and contract/SOW management that could come in handy during the early stages of the crisis), PeopleTicker (which offers a quick-to-use, by-the-drink, volume-based subscription benchmarking solution with various handy tools) and HCM Strategies. If you are using any other providers, you might want to check out the frequency of data updates, whether there is an “easy and quick access” offering, and what other capabilities/services are available. These types of solution providers will likely become more valuable as the recovery from the crisis proceeds).

Conclusion

The transition/mitigation stage of the crisis will be a very fluid and uncertain period for procurement and HR human capital managers, where the factors of velocity and agility will rise to the top and more direct sourcing will likely be required.

HR in many companies may be overwhelmed with what must be done to manage the permanent employee workforce and changes in corporate policies and external regulations. So a heavy, unshared burden is going to fall on procurement and its role in contingent workforce and services.

It bears mentioning that of all procurement spend categories, contingent workforce and services is not only complex and under managed, but is (1) most connected with the contagion (i.e. only people, not goods and materials, practically speaking, can be infected) as well as (2) impacted by what will probably be a much more extensive and changing set of laws and regulations.

In general, resources in procurement are frequently not sufficient, and that may be even more so in contingent workforce and services. Some procurement organizations may be able to shift some resources from other procurement categories to this one, though most organizations will not be able to do that (looking for resources elsewhere in the enterprise — finance? —could be something to consider). Be that as it may, ultimately, contingent workforce/services procurement executives will need to step up their use of technology and new digital sourcing/management solutions. This may take the form of getting more out of your existing technology and/or turning to and making use of new, alternative digital solutions — or more likely doing both.

We’ll be back with Part 3 of this series in several weeks as we inch into the actual transition/remediation phase that we are now facing.

If you need help in navigating this solution landscape and finding a solution appropriate to your needs, you can look to us. Sheena Smith would be the first person to connect with at ssmith@spendmatters.com.

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