A vast majority, 87%, of global managers consider employees and other workers who create value for the enterprise—including contractors, service providers, gig workers, marketplace sellers, and even bots—to be part of their workforce, according to the just-released MIT Sloan Management Review (MIT SMR) and Deloitte 2021 Future of the Workforce report, “Workforce Ecosystems: A New Strategic Approach to the Future of Work.”
While the idea of organizations relying on a variety of contributors to get work done isn’t new, the scale at which it is happening is new. This growth has been driven by several significant shifts, including the nature of work, worker preferences, and how technology is used to engage with and manage workforces.
Today, most workforce-related practices, systems, and processes focus on employees, not external workers and other worker categories. Consequently, organizations often lack a cohesive approach to managing a workforce in which external contributors play a large role.
“The search for an integrated approach to strategically manage a diverse group of internal and external contributors has led forward-thinking executives to adopt a workforce ecosystems approach,” said Elizabeth J. Altman, assistant professor of management in the Manning School of Business, UMass Lowell, and MIT Sloan Management Review guest editor and coauthor of the research report. “This new, more holistic view of workforce management provides executives with new perspectives and flips a perennial strategic question. Instead of asking, ‘How can my workforce support my strategy?’ workforce ecosystems enable leaders to ask, ‘What strategies become possible with my workforce ecosystem?’”
A workforce ecosystem is a structure that consists of internal and external workers and organizations that work in conjunction with each other to offer value for their mutual customers.
The global survey includes insight from 5,118 professionals and leaders across 138 countries and 29 industries, plus 27 executive interviews, to understand how they approach strategic workforce management issues.
Key findings include:
• Workforce ecosystem participation is increasing, yet preparation is lagging.
– Fifty-four percent of survey respondents place significant value on gaining ideas and skills from contributors who do not work for their organization.
– Thirty-three percent will rely more on external participants, such as gig workers, in the next 18-24 months.
– Only 28% are sufficiently preparing to manage a workforce that will rely more on external participants.
• Organizations are demanding new skills and increasing the use of online platforms to access talent.
– Ninety-one percent, an overwhelming majority of survey respondents, agree that upcoming changes to their organization’s business strategy require them to improve access to new capabilities, skill sets, and competencies.
– Fifty-two percent expect to use online platforms to access external talent in the next 18 months.
• Risks and challenges of workforce ecosystems exist, calling for caution.
– Strong internally focused organizational cultures, resistance to change, and organizational silo behavior can stifle workforce ecosystems.
– Labor-related legal and regulatory issues worldwide present complex hurdles.
– Quality, brand, and intellectual property questions arise such as, “Who has the right to use created property and under what conditions?”
– Pay inequalities and parity within and beyond organizational boundaries may cause social justice issues.
• Management practices within the workforce ecosystem approach need to change across several areas: workforce planning, talent acquisition, performance management, compensation and rewards, learning and development, career paths, and organization design.
– Workforce planning could transition from taking a narrow view of employee roles to adopting a definition that includes both internal and external human and digital workforces.
– Talent acquisition could change from a decentralized HR function to an integrated, multifunctional process that spans HR, procurement, IT, and other teams.
Performance management may move away from annual reviews to become better aligned with ongoing organizational needs.
– Learning and development efforts should support strategic skills and competencies.
– Organizational structures could change to accommodate all aspects of the workforce by shifting toward more team- and network-based approaches.
“When the workforce changes from being primarily employee-centric to encompassing a diverse community that crosses an organization’s boundaries, core talent processes must evolve,” said Robin Jones, principal, Deloitte Consulting LLP and coauthor of the report. “Most of these processes have been in place for generations and were designed to support a traditional employee life cycle. Moving to a workforce ecosystem approach calls for a shift in practices, including adjustments to underlying philosophies, systems, and processes.”
The adoption of a workforce ecosystem has significant implications for a wide range of management activities, including strategy, leadership and culture, diversity, equity and inclusion, as well as workforce governance. This workforce ecosystem approach has many strategic benefits, such as more efficient and effective collaboration among workers, flexibility in how talent is used, more detailed data on projects, removal of geographic constraints for both organizations and workers, and more easily matching project-based demands with appropriate types of workers.