The ADP Research Institute recently conducted a large study of client data from 2010 to 2019, which found that about one in six workers were gig workers. Since Covid-19 hit, the concept of a hybrid workforce — traditional employees combined with gig or contingent workers (the “extended workforce”) — is even more relevant. And as the use of independent contractors grows, companies will seek ways to ensure internal compliance. With freelancer management systems such as WorkMarket – a platform acquired by ADP in 2018 — programs can set parameters for the extended workforce while enabling their companies to scale their workforces through the Covid-19 crisis and beyond. WorkMarket’s Jens Audenaert, division vice president and general manager, discusses how a freelancer management system, or FMS, can help program managers be intentional about their contingent workforce planning.
What do you see as the future of the gig economy given the changes that have occurred from Covid-19?
As the economy rebounds — and it will rebound — contingent work is going to be more top of mind than before. Over the last couple of months, companies have gotten used to work being done remotely, and independent contractors are accustomed to working virtually and remotely. Quite a few companies, after having been forced to take some draconic decisions on their existing employee base, will be thinking about how to scale back up without hiring an army of W-2 employees. And that is in favor of the contingent workforce continuing to grow.
What is WorkMarket’s strategy to help enterprises manage contingent workers from a compliance standpoint?
A key advantage of having a freelancer management system is compliance — companies that use an FMS are able to define processes around how to engage with their extended workforce. They can set guardrails around engagements to force compliance, such as stipulating that contractors must have signed an NDA within the last year. Or if they are doing work on site, they need to have a certain type of insurance. Or they may need to hold relevant professional credentials. A system like WorkMarket can make sure people within the organization can only engage with independent contractors who meet those requirements, and the moment workers no longer satisfy those criteria — the insurance or credential has expired, for example — they will no longer be allowed to engage with your company until the criteria are met again.
Those are examples of setting up policies. Let’s talk about what happens if you need to prove you are following those policies. When they first came on board with WorkMarket, and prior to having an FMS, many of our clients managed these processes manually. So, they had no audit trails, no way to ensure that their employees were engaging with independent contractors the way that their HR or procurement leaders wanted. So, just having a system in place via an FMS goes a very long way to helping an organization not just be compliant, but also follow consistent processes throughout.
Rogue spend and lack of visibility can be a pain point for enterprises on multiple fronts, and it is one from a finance perspective. WorkMarket provides an audit trail, documenting everything that’s happening, with reporting capabilities.
More importantly, it’s being done in compliance with a company’s internal processes, so if there’s ever some kind of government audit, companies can immediately show where everything fits, who’s doing what and what kind of guardrails are in place.
Beyond compliance, what should companies that have a large contingent workforce be thinking about in terms of an FMS? What factors make it beneficial to have a solution such as WorkMarket?
It starts with agility. It’s that one thing that companies seek to attain, but their lack of systems and processes become barriers. Some companies are out there seeking to scale, while others are looking simply for a better way to manage their existing program. Leveraging technology to administer a contingent workforce can help you with these components.
It’s also around improving results. We have quite a few clients that have increased their performance on their internal service level agreements, or the SLAs that they have for their clients, while also keeping their costs in check just by being much more creative around who does what job.
And I would also say from an HR perspective, it’s about meeting the talent where they are. Some think of gig workers as high-end coders or IT people. Some of us think of them as freelancers in the media landscape, others think of Uber drivers. There’s a wide range. Quite a few independent contractors on our platform are skilled people that either companies don’t really need to have as full-time workers, or they have the kind of skills that companies can’t attract as a full-time employee. And so, for HR, it’s also about meeting the talent where they are.
The last piece is around automation. Companies with a large extended workforce are in the best position to benefit from automation to manage their manual processes. We’ve taken it a step further by building process automation capabilities to improve the speed of delivery thereby giving users a competitive edge.
So how would you compare systems like yours with vendor management system (VMS) products?
The quick answer would be that a VMS typically handles for their client the temp population, which is payrolled by a staffing agency and oftentimes also sourced by one. A freelancer management system, however, helps clients to organize, manage and pay independent contractors.
From a conceptual perspective, there really isn’t a need for an intermediary on the FMS. Our clients are engaging directly with workers and contracting directly with them through the system, versus going through some kind of intermediary agency. That’s a big differentiator as well, making the process quicker. And in many cases, if you think about the gig economy, or on-demand economy, you want that flexibility and that speed in your engagement cycle.
How should companies approach pairing an FMS with their contingent workforce?
It starts with being very intentional around your strategic workforce planning and who needs to be doing what. In many companies, finance and procurement have responsibility for the contingent workforce. Sometimes HR is the lead, but even when it’s not, I believe HR should be very involved in driving the contingent workforce strategy because, at the end of the day, we’re talking about the talent that is delivering on the work that needs to be done. That’s why we refer it as the extended workforce — we see it as an extension of the traditional W-2 workforce.
Another consideration is to make sure that you define all those policies and guardrails I discussed before to ensure compliance. As companies implement a system like WorkMarket and pair it with their existing contingent workforce, the system will get them to think through those different steps — just like an enterprise resource planning or human capital management platform that helps companies think through their business processes. Companies need to be intentional and thoughtful before they actually implement the technology. And then the platform will allow them to manage that independent contractor layer of your workforce efficiently and compliantly.
Discuss WorkMarket’s current business model. How do you see this playing out amid the Covid-19 pandemic?
WorkMarket manages the entire lifecycle of engaging the extended workforce — from the identifying phase, which happens in the platform; through managing the engagement through various tools; paying and rating the worker; to filing a 1099 form at the end of the year.
And in today’s world, our business model helps our clients take full advantage of that and to maximize the use of the platform, based on their needs. It is a subscription-based software as a service model.
In terms of Covid-19, we obviously stay close to our clients just like any business. We communicate frequently with both clients and the workers and facilitate communication between them as well. Take, for example, CDC guidelines. The technology enables clients to add simple questionnaires prior to on-site work to ensure workers are adhering to these guidelines.
We’re also making sure that we communicate provisions that are available to workers, such as those provided to the independent contractors by the CARES Act.
Finally, we are in a coalition called Volunteer Surge alongside companies like Absorb LMS, Amazon Web Services and Salesforce.com. This coalition is actively recruiting an army of volunteers — for example, contact tracers — that will help fight the Covid-19 pandemic. And obviously, we’re making our technology available for free for that nonprofit coalition.
What are WorkMarket’s future plans?
As we sell the WorkMarket solution through ADP’s sales channels, we’re uncovering new verticals and new use cases to use the platform almost every day. These learnings will enable us to make the platform even more applicable to broader populations, both companies and workers alike. Ultimately, it’s about enabling companies to improve their ability to serve their end customers better.