Vice President & Chief Analyst
Bersin, Deloitte Consulting LLP
Organizations are relying less on traditional, on–balance sheet employees than ever before. In our latest Human Capital Trends survey, only 42 percent of respondents said their organizations are composed primarily of salaried employees. Instead, companies are utilizing broad ecosystems of talent segments such as freelancers, contractors, consultants, and other contingent workers. Crowdsourcing, customer and developer communities, and new technologies such as artificial intelligence are also emerging to complement human workers and add value to companies.
Given this wider definition of talent, how can leaders create one unified master plan for their workforces to meet their organizations’ future objectives? These are thorny issues with no easy answers. This article explores some early steps that companies can take to improve their management across the entire talent ecosystem.
The Talent Ecosystem
The concept of talent is changing—at our recent IMPACT 2018 conference, more than 80 senior HR leaders could not agree on a workable definition of the term. But one aspect of talent is becoming clear: full-time, salaried workers represent just a fraction of an organization’s talent. This small portion is likely to shrink even more over time. Between 2005 and 2015, nearly all net new employment in the United States came from people in alternative work arrangements such as part-time workers, contractors, gig workers, and freelancers. These contingent workers are often managed directly by business units or a centralized procurement function rather than HR.
According to recent Deloitte research, 39 percent of respondents said that HR is not involved in sourcing decisions for contract workers, and 35 percent said HR is not involved in hiring those workers. Similarly, new business models that rely on crowdsourcing and customer inputs (e.g., ecosystems of app developers associated with major smartphone brands) generally do not involve HR. Technologies such as algorithms, bots, and other types of automation—which increasingly complement human workers and reinvent job and role design—get handled in other departments, depending on the functions they serve.
Given the importance of talent, this kind of segmented approach is becoming at least impractical and possibly detrimental. By focusing most of its time and attention on salaried employees, HR is not fully supporting a majority of the talent-generating value at many organizations. Moreover, by taking a siloed view of talent, companies likely are not capturing the full potential of this varied workforce.
Given that these different workforce segments are usually owned and managed by different stakeholders across the organization, there is often no single-party thinking about the expanded workforce in a comprehensive way. Redundancies and duplicated efforts can impede strategic workforce planning and cause companies to run inefficiently. This lack of clarity can carry significant opportunity costs and obscure the potential for innovations in workforce composition, physical location, and technology to create better outcomes than any separate category could on its own.
Some structural barriers prevent organizations from grouping all categories of talent together. For example, local employment regulations typically incentivize companies to clearly segregate how contractors are managed to avoid the higher bars for benefits and other aspects of full-time employment. But companies can develop more systemic, integrated plans for their workforces by creating venues and processes to connect relevant internal stakeholders. Businesses are realizing that regardless of its source, talent needs to be onboarded and integrated into the company to a much wider extent than before. The right team members should commit to considering the entire workforce mapped against their company’s projected talent needs.
The right team members should commit to considering the entire workforce mapped against the company’s projected talent needs.
Simplifying Job Architectures
Once the necessary stakeholders are engaged, they will need a better vernacular to describe the demand for talent and plan for its future supply. Today, that common language is defined as part of the job architecture, including the many job groupings, position descriptions, and skill and competency frameworks that are commonplace in organizations today. Though this approach to an increasingly complex workforce is well-intended, it is ultimately counterproductive—these architectures are difficult to define and even harder to maintain. Large organizations can have thousands of job descriptions composed of even greater numbers of arcanely defined competencies. Worse, few workers outside of HR can make sense of these descriptions.
Furthermore, as the nature of work changes, companies’ descriptions of work must change as well. Specifically, organizations should simplify and change their focus on job architectures to increase the utility of these positions. Hiring managers must stop using traditional proxies such as lists of required skills, years of experience, and formal credentials. These factors used to allow organizations to trust that workers were sufficiently capable to complete a task, but they have rarely been effective measures of potential and are almost always several steps removed from reality.
Instead, companies should focus on the capabilities, mindsets, and ethics required for specific roles needed now and into the future. Employers should look for experiential factors such as the types of problems an employee has successfully solved or specific mindsets that might show up on a psychometric assessment. Some companies are applying new innovations in cognitive technology, such as artificial intelligence and machine learning, to help uncover the capabilities that are most predictive of performance.
For example, industrial manufacturer Ingersoll Rand grouped jobs for greater efficiency. It had a workforce of 22,000 employees in 62 countries and defined 7,000 unique jobs—one for every three salaried employees. To simplify that structure, the company grouped those jobs into 800 roles—each role was essentially a family of jobs that required similar skills.
Simplifying job structures in this way better reflects the broader definition of talent, allowing organizations to tap into domains that they might have missed using traditional approaches. Simpler job structures also allow business leaders to better understand job groupings and categories to make more accurate requests for the talent they need—and increase engagement among nontraditional workers.
Simplifying job structures better reflects the broader definition of talent.
Reducing Friction and Increasing Mobility
Simplified job architectures can allow an organization to reduce institutional friction and increase internal mobility—generating advantages for both the company and the employee. At the organizational level, this can allow companies to significantly reduce their replacement and recruiting costs and create a more dynamic workplace culture that attracts driven employees. In addition, as work begins to shift to project-based assignments, companies can mix and match talent as needed, which can lead to an abundance of competent workers.
As work begins to shift to project-based assignments, companies can mix and match talent as needed.
At the employee level, increased mobility means employees have a greater range of opportunities to take on new roles and add value within their current roles. This reflects a broader shift from careers to experiences in which employees constantly develop new skills, perspectives, and experiences. In recent Bersin research, 72 percent of survey respondents said that career paths at their companies are not based on the organizational hierarchy. Yet at many organizations, internal mobility is still driven by tenure, title, and internal politics. Reducing internal friction can give employees greater latitude to shape their own careers while better meeting the future talent needs of the organization.
As the workforce changes, organizations need a more comprehensive approach to defining talent and managing their workforce. Salaried employees (the traditional mandate of HR) are only part of the talent equation. For example, chess champion Garry Kasparov highlighted the close relationship between human and machine intelligence—and its vast potential. Describing the results of a chess match in which players used computers, Kasparov noted that a pair of amateurs beat the grandmasters by “coaching” their computers to deeply analyze their opponents’ positions. Companies should follow suit by building an augmented and effective workforce of people and technology working in tandem. HR has a clear opportunity to step up to this challenge.
By developing a more complete picture of an organization’s talent—inside and outside the organization, human and technological—along with simplifying job architectures and reducing internal friction, HR can ensure that organizations have the talent they need in the future of work.
- The definition of talent is expanding to include contingent workers such as freelancers, contractors, agencies, and nontraditional talent segments such as crowdsourcing, customers, and technology.
- Breaking down talent silos can bring some of the stakeholders overseeing these aspects of talent together, allowing companies to plan their future workforce.
- Simplifying job architectures can streamline broader definitions of talent.
- Reducing friction to increase internal mobility allows leaders to better utilize talent, expanding the opportunities for employees and external talent alike.
- Organizations need to develop augmented workforces with human talent and technology working effectively together.