The endeavor to achieve total talent optimization starts with job taxonomy alignment. Job definitions, or taxonomy, are fundamental to workforce planning as a whole. Jobs need to be defined, described and categorized. Taxonomy can be difficult to align when comparing contingent and statement-of-work talent roles with those of FTEs, especially as skill needs evolve. But when taxonomy is well-managed, and agreed-upon bill and pay rates are right-sized to that taxonomy, leaders can make the right decisions when it comes to developing the talent they need or buying it. The quality of talent rises, as does compliance with labor laws. And cost savings can be significant as well — typically in the seven figures within the first year of a taxonomy optimization.
But without aligning job descriptions, companies are hindered in making informed decisions on bill and pay rates for contingent workers. And considering the contingent workforce is expected to continue its growth, the need for establishing a common language for job roles is high.
What else lies on the road to total talent optimization?
No slowdown. Global enterprises increased their use of temporary and contingent talent to help them meet their competitive challenges in a resource-constrained, post-Great Recession environment. Unlike previous economic recovery cycles, however, the use of contingent talent did not revert back to historical norms once the economy had recovered. According to SIA research, global enterprises have embraced ongoing use of contingent labor to solve for variable or unpredictable workload (79%), difficulty finding quality people (39%) and rapid growth of organizations (72%).
As it turns out, the first two reasons show no sign of abating, and companies hope the third will not either. For these and other reasons, the use of contingent labor has continued and will continue to grow. By 2017, roughly 37% of the total G2000 workforce was contingent labor, or 200 million workers worldwide. By 2027, these numbers are expected to grow to 50% and 350 million.
Achieving the 5Rs. In light of this, savvy leaders are seeking to launch global, enterprisewide efforts to optimize the full spectrum of employees and nonemployees with a blended focus on maximizing agility and efficiency while managing cost. More simply, they want to achieve a “5R” total talent management vision in which they have the right people in the right roles with the right skills at the right time at the right cost.
Fundamental barriers. However, before these organizations truly can fly with a holistic strategic workforce planning model designed for this new world of work, they need to address fundamental barriers. For instance, despite their ambitions, most organizations cannot answer questions such as:
- What is our current workforce mix?
- What sourcing channels do we use? What are our current- and future-state crucial role needs?
- What is our workforce-mix strategy and sourcing-channel strategy based on workforce-mix assessment?
- What is our current supplier utilization?
- What are the buying behaviors of our managers?
And of course, before organizations can truly answer any of these questions, they need to first be able to align, manage, and ultimately optimize their taxonomy.