SHRM Annual Conference: Trends in the External Worker Market

SHRM held its Annual Conference this week in Las Vegas with over 18,000 HR practitioners attending.

SAP had a key role in the sponsoring of the event and findings from the year-long, joint research project between SAP SuccessFactors and SHRM on external workers were shared with attendees. The research produced many fascinating themes and confirmed a few we already suspected.

In addition to the research report, I wanted to share my observations after talking with people at the SHRM conference. There were five main themes: the external market in general, external worker motivators, how organizations approach this topic, the legal landscape, and technology. Here are a couple takeaways on each of the themes.

The External Worker Market

Our research showed that this market includes all kinds of people and roles, from temps to contractors to contingent labor and from dog walkers to Ph.D scientists to retail specialists to laborers. And most types of roles are growing in numbers as demographics change and it becomes more difficult to find talent. Organizations also like to hire more external workers, as it gives them greater flexibility when they need people or not and to move people around more easily.

Conversations at the conference revealed that most human resources (HR) people I talked with don't know what to call this. I had to explain what external workers were. When I would ask 'Do you use external workers?' I would hear 'Not really.' When I would say 'You don't use temps or contractors?' they would reply 'Oh, yes we do.' There is a lack of clarity around who is included in this group of workers. It is not surprising that many smaller companies either do not use external workers or use them in one or two departments while larger organizations are all over it and have more concerns, which we will revisit shortly.

Motivators for External Workers

According to our research, the main motive for external workers to pursue this kind of work is flexibility. They like to influence their hours, schedule, and locations for work. When we compared external workers to HR people at organizations, we found that HR is overestimating how important it is for externals to become regular employees. HR presumed this was a main driver for external workers when it is not. External workers want the flexibility being a regular employee may not provide. Many are covered by healthcare in some way and choose to work in this manner, without healthcare benefits. Also, HR has underestimated the importance of compensation and bonuses. External workers would like to have a bonus at the end of an assignment for their contributions, but rarely see one.

The Approach

Our research showed that external workers, managers, and regular employees in organizations all viewed having external workers in their workforce as a positive experience overall. But, the research suggested the approach to bringing these people in is fragmented and not strategic, with unclear expectations of who owns what in the process. External worker experiences range from loving the organizations they are in, feeling valued and wanted, to not being invited to birthday events or holiday parties, treated like second class citizens. This inconsistency leads into the next theme.

Legal Landscape

Our research indicated that the U.S. legal landscape is a slippery slope and most HR people are not comfortable in hiring external workers due to the legalities associated with doing so. Externals feel the brunt of this. As mentioned above, there is no law that precludes including external workers for a piece of birthday cake or a holiday dinner, yet many in HR are afraid to act. The feedback from people is that we need greater definition around the laws for using external workers and until the laws are clearer, there will continue to be a gap in creating engaging experiences for them and being innovative in this space.

Technology

Lastly, technology can and has helped manage external worker programs, according to our research. Larger organizations hit a point where they cannot use spreadsheets to manage the complexities of these programs whereas smaller organizations are fine using spreadsheets and paper. As the usage of external workers increases, technology will play a larger part in managing how to find and integrate this talent alongside or into the regular employee workforce, legally. This will include onboarding, recruiting, performance management, compensation, learning, payroll, time and attendance, and maybe benefits at some point.

Our research is important in that it shapes the perceptions and realities that drive external worker decisions from many filters. The social and legal aspects of this topic have to be focused on more regularly, with a push for change to make this growing and impactful segment of workers more engaged, productive, and less risky. SAP SuccessFactors will continue to research and share insights on this topic, offer recommendations for the future, and make this experience better for everyone.

Greg Selke is vice president and HR value advisor for SAP SuccessFactors.