Traditional talent models are under serious pressure. They represent a now-antiquated philosophy for pursuing opportunity: hire a pool of qualified individuals to respond to the needs of the business. Hire more as the business grows. But “hire and retain” just isn’t working anymore, and the struggle is redefining how companies will drive objectives in the future. Complicating things further, many staffing firms have adopted a “throw spaghetti at the wall” approach, rather than providing the specific, high-quality talent companies demand.
Read the complete State of the Remote Workforce 2019.
Toptal State of the Workforce 2019
With the US labor market close to full employment, companies are struggling to find quality talent needed to compete and provide customer value.
Talent are looking for more flexible ways to work: enter the Talent Economy.
Companies are looking more and more to on-demand marketplaces for quality talent because they solve both sides of the equation, but they aren’t perfect solutions. Our survey data reveals several key ways talent providers need to rise to the occasion.
Why quality is a rising concern for organizations seeking to harness on-demand talent.
Why some talent providers may be in trouble as the marketplace sways.
What organizations really want when they look to the on-demand marketplace for talent.
How both talent providers and organizations must work together to create an innovative future for work.
The Talent Make the Rules
Traditional talent models are under serious pressure. They represent a now antiquated philosophy for pursuing opportunity: Hire a pool of qualified individuals to respond to the needs of the business. Hire more as the business grows. But “hire and retain” just isn’t working anymore, and the struggle is redefining how companies will drive objectives in the future. Complicating things further, many staffing firms have adopted a “throw spaghetti at the wall” approach, rather than providing the specific, high-quality talent companies demand.
The Gap Is Widening
The talent/skills gap is easily the most pernicious problem confronting procurement executives today—especially digital skills, the most in-demand skill group currently. It’s predicted that the gap will cause visible disruptions in three-quarters of organizations in 2020 (that’s next year, by the way). And in case you missed the headlines, the unemployment rate is the lowest it’s been in five decades, so it’s not like there’s a horde of IT programmers sitting out there untapped.
This gap is threatening organizations with stagnation and less vitality for competing and providing customer value. How can organizations move forward? Simple: adapt.
Leaving the Offices, Heading to the Clouds
The remote work revolution has been hot for a while now, in case you’re late to the party. Decades of dissatisfaction with long commutes, isolating cubicles, and other aspects of traditional corporate culture have finally tipped the scales of progress. Workers now demand flexibility and the chance to self-define a lifestyle that doesn’t revolve around a commute to and from an office, no matter how many kombucha kegs and skylights that office may have. Employees now seek out companies that are forward-thinking enough to provide remote options, or ditch employment contracts altogether in favor of full-time freelancing.
But roadblocks to working with remote talent (which on-demand talent frequently are) are copious for organizations. Deep, incorrect beliefs about remote work myths as fundamental as whether remote workers can be productive still abound. When asked about adopting remote work practices, many of the companies we surveyed cited concerns about efficiency, productivity, and engagement. The good news is that, given the considerable research around remote worker productivity and benefits to companies, adapting to the new talent economy in this regard is just a matter of mindset.
As more organizations move their IT and workflows to the cloud, it only follows that the workers themselves follow a similar cloud-like trajectory; hence the “human cloud.” And technology is evolving specifically to support remote initiatives: Slack for team collaboration, Zoom for video conferencing, and Google’s collaborative suite are just a few. 5G and VR are poised to bolster the remote work experience even more. More companies are migrating to the cloud than ever—88% in the UK in 2017—and will only accelerate the remote trend.
A New Talent Model
The thing is—as our data demonstrates—traditional employment is in some ways a headache for organizations anyway. They know it’s time to evolve in favor of something better. Workplace happiness statistics have been hand-wringing for a while now, and the time has come to reevaluate the way we think about work.
This translates to the hiring process. Of the organizations we surveyed—roughly three-quarters of which were enterprise organizations with more than 1,000 employees—27% cited adding the right talent to their organization as the most critical challenge they currently face, and 50% categorized it in the organization’s top two or three challenges.
While organizations are concerned about who they work with, the equation is equally about how organizations work with talent. We’re closing out the second decade of the new millennium, yet some organizations and institutions still believe that talented workers need to be physically present to make a difference for a team. There’s no need to argue, the research simply proves them incorrect, and many organizations (this one included) are a thriving testament to the power of distributed, remote teams. Within the next decade, qualified talent will be as likely to come from a neighboring suburb as halfway around the world; if your HQ is even a physical location anymore.
Organizations must embrace and leverage on-demand talent. Why? Expectations from talent are different; it’s their market now. Workers are the new consumers, and many employers are adapting their models to match that demand. Companies that do not transform their approach to talent are missing a critical opportunity to attract and retain top talent, introducing a risk that will only threaten success more as the talent gap widens. In the transportation sector, for example, on-demand working models like Lyft and Uber have been welcomed by workers with open arms. It’s no different for knowledge workers, IT professionals, and an expanding array of professional disciplines. Flexibility is everything, and on-demand models offer that.
The good news is that adapting to these shifts and trends answers two needs with one solution, and organizations themselves stand to reap massive benefits by adopting new methodologies. Utilizing on-demand talent through various staff augmentation models, organizations can quickly leverage top talent as-needed or per-project. It shifts the onus (read as: headache) of hiring and vetting onto the talent provider and saves employers the associated costs of retaining highly-skilled talent.
In some areas, the on-demand talent marketplace has improved. For example, organizations are generally more satisfied with the onboarding process for on-demand talent. But working with on-demand talent models is kind of like the consumerization of IT; consumers didn’t all buy a smartphone on day one. Now a smartphone is almost synonymous with a living, breathing human. Consumer needs informed the way smartphones evolved—there’s a heck of a difference between the iPhones 1 and 11. In the case of on-demand talent, the metaphorical smartphones have only just come out of the box, and there are some serious growing pains that come with adapting to all those rings and dings. As in all periods of adaptation, those who do not adapt risk catastrophe. (See also: Blockbuster, Enron, Pan Am, MySpace . . . )
Sounds simple. Just fill in the talent gap with on-demand talent and enjoy increased agility and soaring profits, right? But it’s not just about companies needing to adapt to the demands of the talent economy. Our data reveals some striking takeaways about the roadblocks and frustrations organizations are encountering when adapting to these new models, how they’re thinking about and measuring success, and how their thinking has evolved from 2017 until now. A new bar is being set for on-demand talent.
Takeaway 1: Mere Talent Is Not Good Enough
Analyzing the survey results, the most critical issue for companies hiring on-demand talent revolves around quality. That means they must adapt to new models that offer the opportunity to connect with that quality. As more businesses realize this, the pressure pivots to talent providers. As competition stiffens amongst talent providers, it is no longer enough to simply present talent who have the right qualifications on paper, and markets are moving too fast to support a spaghetti approach. A resume is a piece of marketing collateral, not a promise of quality. The pressure is now on staffing providers to create vetting processes that ensure quality across the board. But the problem hasn’t improved in the past three years and is a growing concern for organizations.
Organizations only increasingly run into problems related to on-demand talent quality. In our 2019 survey, mismatched expertise, depth of expertise, and time-consuming processes topped the pain points. In the past three years, depth and breadth of expertise have been notably and steadily on the rise as potent roadblocks. Also worth mentioning is the sudden spike in respondents who included “lack of availability of suitable talent” in their top three. The talent gap is only becoming more of a problem.
Takeaway 2: Expert Talent Drives Innovation
What is driving the growing demand for quality, apart from the talent gap? When asked to cite what metrics they use to evaluate on-demand talent, organizations echoed the same quality-centered refrain once again: depth of expertise and breadth of expertise. The demand for expertise highlights a shift in the way that companies are using on-demand talent, in the very nature of the work they’re leveraging talent for. On-demand talent isn’t being used to fill holes anymore; they’re paving the freeways.
Another reason companies are demanding more quality and expertise from on-demand talent? The on-demand talent pool is becoming a likelier place to find experts in the first place. Millennials are the largest generation in the workforce as of 2016, and they’re demanding a very different work environment than their predecessors. They want transparency, a thriving work culture, and they want it remotely. Legacy organizations that don’t embrace this stand to lose out.
On-demand is being applied to increasingly complex and integral projects. And as the talent gap gets worse, organizations are turning even more to on-demand talent to fill specialized needs that can’t be solved in-house. Correlative to that trend, we also saw a decline in how many organizations use range of skills and capabilities to evaluate talent.
Our survey results also revealed changes in the way that organizations evaluate the success of their on-demand talent processes. As the use of these models increases and companies rely more heavily on on-demand talent to drive initiatives and enterprise-wide digital transformations, it becomes more important to examine how effective on-demand programs are. When asked what the top three factors were for using on-demand talent effectively, 2019 respondents listed regular, consistent performance evaluation and finding the best talent in the top two spots. Organizations want to know that the talent they hire is making an impact, and they want to ensure that they’re being held to the same standards as a traditional hire.
Takeaway 3: The Barrier to Remote Is Mindset
The dictionary definition of what a company is in the first place may be up for grabs. Is a company still a company if 50% of its staff are in flux? The percentage of organizations comprised of on-demand workers—the variable workforce—is only on the rise. We’ve seen a spike in the 25-75% brackets over the past three years alone.
But to respond to this shift, to really leverage it, requires a significant effort on the part of both talent providers and organizations. For talent providers who want to stay competitive, it means taking the charge in vetting talent and working closely with companies to respond to their inputs and needs. For organizations, it means adapting to on-demand talent and remote workers by proxy. Of the organizations we surveyed, all listed significant barriers to leveraging remote talent, chief among them managerial roadblocks.
The Spaghetti Needs To Stop
As the marketplace responds to an increased demand for quality, throwing spaghetti at the wall and hoping some of it sticks doesn’t cut it anymore.
Companies want the best from on-demand platforms and they want it quickly. In its nascent years, the on-demand marketplace sought to fulfill this need by plunking heaps of candidates in front of clients as quickly as possible. That might work for gig models—you don’t need someone to vet your Uber driver if they’re already on the platform and two blocks away—but it’s a headache for organizations seeking specialized, highly-skilled talent. We found that organizations are increasingly presented with more candidates than they know what to do with.
What’s worse, the most common cause of delay among 2019 candidates was a lack of qualified candidates. More spaghetti, and most of it isn’t sticking.
Organizations want a higher-touch process, and the data reflects their need - consulting firms and independent staffing firms are where companies turn to. Outsourcing firms, local independent contractors, and MSPs (Managed Service Providers) have declined or remained at the same level.
Many offshore staffing firms have built their models around providing services at the lowest price. But it’s also worth noting that offshoring in general—once feared to cause millions in US job loss—hasn’t been as cataclysmic as feared. The jobs pulled off-shore have mainly been general, while work that requires higher quality and nuanced understanding has remained.
While low-cost models may be a good model for some needs (simple, repetitive tasks), the lowest price isn’t where organizations are starting when looking for critical needs, like hiring a machine learning expert to help create a proprietary algorithm.
Many on-demand providers design their services with speed and cost in mind, but our data suggests this is the wrong way to go about it. Most companies, overwhelmingly so, demand quality, experienced talent as their top priorities. Concerns about cost and speed come only second.
It only follows that organizations that demand top talent must adapt to the ways top talent want to work. Ping pong tables and free pizza won’t attract or retain them. Flexibility and the opportunity to contribute at a critical level will.
Combined, transformations on both sides of the equation can synergize and create a future that is a win-win for talent, companies, and talent providers. The future of work is now, but an even better future is around the corner, one in which companies thrive because more talent providers have systems in place to provide on-demand talent with deeply meaningful work experiences when they want them, wherever they want them.