Here is an excerpt from an article by Elizabeth J. Altman, David Kiron, Robin Jones, Susan Cantrel, and Steven Hatfield for the MIT Sloan Management Review. To read the complete article, check out others, and obtain subscription information, please click here.
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New research suggests that taking a holistic approach to strategically managing all contributors in the workforce ecosystem can enable enterprise success.
As organizations increasingly rely on contributors beyond their own employees, the once simple question of who (or what) is doing the work now has far-reaching implications for management practices, leadership approaches, and what it means to be a socially responsible business.
Our research shows, for example, that corporate diversity, equity, and inclusion practices (and goals) are typically internally focused and do not encompass external contributors. And yet more than 90% of respondents to our global executive survey agree that their workforce includes external contributors. Many organizations rely on external contributors to perform at least 30% of the work, yet accessing and engaging with talent is often siloed, fragmented, and uncoordinated across internal and external contributors. We have seen organization after organization realize, belatedly, that their dependence on external workers was creating inefficiencies and missed strategic opportunities.
Taking a workforce ecosystems perspective — which we detail below — helps leaders think more broadly and holistically about their workforce. This approach recognizes that the composition and boundaries of the workforce have changed; long- and short-term contractors, gig workers, partners, and technologies can all be part of a workforce. Workforce ecosystems embrace the idea that contributions to performance outcomes, irrespective of employment status, determine whether a person, partner, or technology is part of an organization’s overall workforce.
New functional relationships and leadership approaches are often necessary to effectively orchestrate workforce ecosystems. It is common for procurement, IT, marketing, a business unit, or another group to contract with external contributors while HR ensures that employees have the appropriate skills and recognition opportunities. In effective workforce ecosystems, these groups are more likely to be working together to supply both internal and external workers; develop diverse, inclusive, and equitable cultures; measure worker productivity; and create accessible learning and development opportunities.
New functional relationships and leadership approaches are often necessary to effectively orchestrate workforce ecosystems.
Virtually all of the leaders we have interviewed agree that leading teams that include external contributors who may have more autonomy and flexibility than employees is both a challenge and an opportunity. A traditional, hierarchical command-and-control leadership approach is far less (or not at all) effective in networked, boundary-spanning structures like workforce ecosystems. At the same time, many leaders now view their corporate purpose and social responsibilities as being inclusive of external contributors — a far more expansive view than they had in the past, when they relied less on these workers.
Companies’ relative lack of control over external contributors does not make them exempt from engaging responsibly with such workers, especially given that contingent workers are five times more likely than employees to be let go during a downturn.1 A growing number of workers are in precarious work arrangements that are low paid, insecure, unprotected, and insufficient to support a household. The increasing prevalence of workforce ecosystems has the potential to increase or decrease the economic and social security of many workers. Getting workforce ecosystems right — for all workforce contributors — is both a business imperative and a social responsibility.
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