3 Steps Companies With a Blended Workforce Should Take to Protect Themselves

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Nov 28, 2017

Companies that solely rely on traditional hiring models may soon lose their ability to remain competitive. Traditional models of hiring no longer provide the agility businesses must have to access in-demand skills when and where they’re needed.

One reason is because rapidly evolving technological advancements and global markets are increasing demand for more specialized skills. However, demand for many 21st century skills continues outpacing supply, which makes it more difficult to secure skilled talent.

Securing skilled talent is so difficult that companies were 3x more likely to say hiring was harder in 2016. This can negatively impact a business in many ways as 76% of hiring managers say their success depends on getting access to top talent.

In-Demand Workers Are Freelancing

Adding to the hiring challenge is that more in-demand professionals are choosing a freelancer’s life over employment.

57 million Americans are freelancing in some capacity. When you add the EU-15, the independent workforce accounts for 20%-30% of the working-age population. It’s predicted that those numbers will continue rising. In fact, by 2027, a majority of the US workforce will freelance at least part of the time.

One thing is for certain: companies can’t rely on a traditional workforce alone to get critical work done. Freelancers and other independent contractors (ICs) are the future of work.

Classification Risks Increase

To remain competitive, companies must be able to quickly find and engage diverse outside talent. However, this can swing the door wide open to increased risk.

One risk lies in determining proper worker classification for each project. Engaging workers operating as ICs can be challenging. And it takes a little upfront work to set up contracts correctly. Rather than being a black and white question, worker classification generally involves an array of fact-intensive, multi-factor balancing tests. It’s a task that many companies are not equipped to navigate efficiently and effectively.

But chances are your business partners need work done quickly and are turning to you for solutions, not barriers. So how do you help your business partners get the critical work they need done, while protecting the company from risk?

Create a Compliance Ecosystem

A compliance ecosystem enables you to efficiently meet your company’s diverse flexible talent needs, while ensuring compliance with regulatory requirements. This requires linking HR, procurement, finance, and legal resources into a single, synchronized force.

Here are three steps to create the internal structure needed.

1. Define responsibilities for flexible talent needs

If you haven’t already done so, identify who in your organization handles different types of service provider engagements. IC and staffing-vendor relationships can involve complex legal issues and requirements. Because of this, more companies coordinate among procurement, finance, HR, legal, and other departments. Most larger companies meet demand by creating a dedicated contingent workforce department.

When defining responsibilities, be sure your company can meet all flexible talent needs. This includes, but is not limited to:

  • Identifying solutions for business partners who need outside talent quickly.
  • Ensuring employment law compliance for workers employed by staffing vendors.
  • Safeguarding IP ownership and protection, confidentiality, and data security.

2. Staff up on compliance roles or secure outside expertise

Ensure you have sufficient expertise in relevant compliance areas available to support your contingent workforce department. In particular, be sure your team maintains updated classification compliance expertise and does so for each state and country where your company contracts outside talent.

To support your compliance ecosystem for outside talent, it’s important you have enough legal resources. Lawyers handle everything from tracking global legal developments to ensuring IP ownership. If you’re classifying and contracting ICs on your own, you’ll have to dedicate more in-house counsel time or obtain outside expertise. With their help, you’ll avoid unknowingly exposing the company to costly, legal risk.

3. Create a centralized system with channels to obtain all types of flexible talent

The final step is to create a centralized system of approved talent sources. Remember to include sources to meet all types of outside talent needs. Many companies still use a decentralized approach, where each department secures talent from different sources. A centralized system with approved talent sourcing channels can increase business agility while ensuring compliance.

After centralizing your service relationships, periodically evaluate them. Determine whether more solutions or other adjustments are needed to address changing business demands.

Cover All Types of Talent

An effective compliance ecosystem should have compliance processes for all types of outside talent. This includes individual freelancers, large agencies and staffing-vendor employees.

You can increase efficiency by using talent sourcing channels that offer classification compliance services. By having compliance built into the sourcing channel, you can use less legal resources and ensure accuracy at scale.

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