While the term “flexibility in the workplace” might inspire thoughts of a transformed work environment that allows for alternative work schedules, working from home, or swapping formal cubicles for more conversational workspaces, it turns out it means a lot more than that. These days, it also means adopting a new business model that incorporates flexibility in how human (and other) resources are sourced and applied. In my previous post, I mentioned that the concept of the extended workforce is transforming the way businesses are getting things done. Now I’d like to share more details about what this extended workforce is.

What is the extended workforce?

Essentially, the extended workforce is a global network comprised of independent contractors, outsourcing partners, vendors, strategic partners and other non-traditional workers―all of which exist outside the confines of a firm’s formal employee base. The extended workforce also applies to leveraging capabilities like robotics and automation to perform tasks that don’t have to be done by people, thereby freeing employees up to do the tasks that truly require a human touch. By combining both the traditional and the extended workforce, companies stand to gain critical competitive advantages―including more agile operations and access to the best talent.

Outsourced work is a core element of the extended workforce concept, and often that work is outsourced to contingent workers (including independent contractors and freelancers). However, the face of the contingent worker has changed considerably. While yesterday’s contingent workers were typically administrative or manufacturing-based, brought in to accomplish a specific task or annual peak periods, today’s contingent workers are often highly skilled specialists and knowledge workers who are tapped for a few hours, weeks, or months to contribute their skills, expertise, and strategic thinking to projects that span from engineering to healthcare to finance, and beyond. Firms are even contracting with temporary CEOs, CFOs, and COOs―leveraging their expertise to solve critical problems.

The extended workforce concept applies to more than just human resources. Thanks to technology and the Internet, firms can temporarily contract for short term office space so that contingent workers can feel like “part of the team.” Social networking further facilitates camaraderie between regular and temporary employees. Companies can also leverage digital capabilities to apply talent management practices―such as performance reviews and learning opportunities―to contingent workers. All of these efforts help create a more cohesive workforce environment. And, of course, technology plays a role in automating the work environment through digitisation and robotics, streamlining processes and allowing machinery to perform specific talks in place of humans.

What’s driving the rise of the extended workforce?

The extended workforce has emerged as an ideal solution for managing the complex, turbulent, and ever-changing business conditions most business find themselves wresting with today. Of course, with the extended workforce, resource utilisation can rise and fall according to business needs―absent of the costly overhead of full time employees. However, in today’s highly technical and competitive business environment, organisations are recognising they can take advantage of expertise that exists outside their own core competencies by tapping the extended workforce, garnering the benefits of this expertise without the significant investment of developing it in-house.

Advances in digital technology are driving the extended workforce in two ways. First, digitisation has spawned a significant skills gap. With global access to a growing base of experienced and available workers, the extended workforce offers employers easy opportunities to fill those gaps. Digitisation has also made utilising an extended workforce easier than ever. Cloud talent sourcing, similar in concept to cloud computing, offers a new model through which firms can take advantage of online contractor exchanges―which provide access to on-demand, affordable, skilled workers from around the world, paid for on a transactional basis.

But don’t think it’s only business needs that are driving this change. Individuals are driving it as well. The labor pool is shifting. Many workers are choosing a freelance workstyle over permanent employment. Whether it’s the need for more flexibility, the opportunity to work on varied projects, the desire to build skills or share expertise, or the superior financial benefits that can come from contingent work, Millennials, Generation Xers, and Baby Boomers alike are joining this workforce in increasing numbers. As we move into the future, Millennials will exponentially hold the lion’s share of the jobs. They are already the largest group in the workforce. The extended workforce concept works extremely well for these digital natives, who are looking to learn, grow, and contribute to society in a variety of ways.

Where we’re headed

It’s been predicted that by 2020, as much as 43% of the US workforce will be freelance. Organisations that take advantage of this trend will become more agile, leaping ahead of their competitors. In my next posts, I’ll share more on how leveraging the extended workforce can improve your business, and the special role HR professionals will play in driving this transition.

To learn more about the extended workforce, please see:

The Rise of the Extended Workforce

Technology Vision 2016_People First: The Primacy of People in a Digital Age: Trend 2: Liquid Workforce

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