When most people think of a “job,” they think of a full-time, traditional, W-2 relationship in which the worker is an employee of the company paying him or her and works only for that employer, with close supervision of his or her work and performance.
Of course, this is a vast oversimplification. Employment relationships can take many forms these days, including freelancing, part-time gigs, and contract employment.
Flexibility in High Demand
These options give valuable flexibility to both employer and worker. For example, a parent of small children may need some additional income but be unable to work full time, or an employer may have a need to staff up during peak season but doesn’t need to bring on several new permanent workers.
At the same time, however, managing multiple forms of employment can be complicated for employers and managers—at least that’s one of the conclusions of a new report from Deloitte and MIT Sloan Management Review titled “Orchestrating Workforce Ecosystems: Work Across and Beyond Organizational Boundaries,” which surveyed more than 4,000 leaders across 29 industries and 129 countries.
One of the key findings of this report is that nearly three-quarters (74%) “of those surveyed indicated that effective management of external workers is critical to their organization’s success; however, only 30% said their organization is sufficiently prepared to manage a workforce that increasingly relies on these workers.”
New Management Challenges
The capabilities, level of oversight, and even schedules of different types of labor can be vastly different. Even compensation can pose challenges.
Consider, for example, asking a team made up of salaried W-2 workers, hourly W-2 workers, freelancers, and contractors to put in some extra hours. That might translate to no additional labor costs in the case of the salaried workers. For hourly labor and contractors, more time often means more money. And, for the freelancers, the financial impact depends on whether the freelancers are paid for their time per project.
Furthermore, the level of supervision that is appropriate or even legally allowed for different categories of workers can vary. If a company tries to control the work of a contractor too closely, for example, a court might determine that the contractor is more accurately classified as a traditional employee.
At a minimum, companies need to educate managers on the varied needs and requirements of the staff under their oversight and establish guidelines and policies for each category. Ideally, companies will have strategies in place to effectively integrate and coordinate the activities of these diverse groups so that their pros and cons complement one another instead of creating interference and inefficiency.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.