The independent contractor-client relationship has made some dramatic shifts in the past several years. In the war for talent, enterprises once pursued becoming an employer of choice in order to attract and retain top talent.
The same companies that once fought a war for FTEs are now fighting to attract and retain the best of the best self-employed workers among a pool of 17 million American workers who each year work full-time as self-employed. This includes the nearly 3 million workers who earn more than $100,000 each year in highly competitive fields like IT, management consulting and more.
This movement is pushing companies to develop new processes, policies, and practices to become a Client of Choice.
If creating highly adoptable and effective programs for contractor engagement were the end of the story, it would be easy. However, organizations are looking to engage independent talent while creating efficient, scalable processes that also mitigate business, co-employment, and misclassification risk.
Enterprises have different thresholds when it comes to acceptable risks; some may be far down the path of implementing independent worker engagement programs, others may be resistant and more conventional in their approach. Across the marketplace, these differences can be represented graphically along a continuum.
This continuum, represented below as a bell curve, showcases the spectrum of independent worker engagement mentalities – ranging from highly restrictive to the most progressive, Client of Choice.
In its simplest form, the traditionalists will find themselves on the left of the continuum, while the innovators on the right-hand side embark on a path to Client of Choice status.
There remain a few remaining organizations that do not want (nor allow the use of) independent contractors. These highly restrictive organizations may operate as such due to the risk landscape, or they may believe that it is simply not worth the investment and compliance efforts. It is worth noting that highly restrictive organizations are as much attitudinally against the use of IC talent as they are restrictive in practice.
However, this doesn’t necessarily mean that these organizations are made completely of full- and part-time workers. When an organization is highly restrictive, they may not always have complete visibility into how hiring managers engage independent talent. With no policies in place, hiring managers engage through back door channels, and, with limited oversight, the very risk these enterprises are are attempting to avoid is exacerbated.
Many enterprises have begun to conduct business as reactive independent contractor engagers; allowing independents to work for their company on an as needed basis only. These enterprises have very little in the way of formal policies and processes to clear the path to independent contractor engagement.
For those in the executive suite of a company looking to be a Client of Choice, settling for an allowed restrictive status is the worst thing possible. It runs the risk of losing the already-engaged independent talent, forcing them to look outside your organization for their next new client.
It is important to note that these reactive organizations have issues not just in policy and procedure, but also in attitude. It is possible for a company to move from this state to become a Client of Choice, but only with behavioral shifts, executive buy in, and an extensive revamp of policies and procedures.
MBO would categorize most enterprises engaging ICs as progressive. These companies allow independent contractors corporately and may even, at an attitudinal level champion the use of independent talent, but they generally have very little in the way of processes and/or policies in place for proactive engagement and management of the independent talent.
As such, it often takes an independent contractor a very long to time get in the door of an enterprise. Procurement, human resources, talent, legal, and contracting teams are now challenged with collectively collaborating to address the question of “what do we do now?” While all teams and functioning bodies of an organization have the best intentions for independent contractor engagement, in the progressive organization, the structure to effectively engage and get the maximum benefit from independent talent is not there.
The goal is to progress toward engaged status. The major difference between progressive and engaged organizations is not just in attitude, but an adjustment in processes. More than being allowed, independent contractors – and the use and leverage of independent service professionals – is encouraged, and the corporate value is clearly defined by all executives and departments.
Further examples of this dedication include the beginning movements in policies and procedures that make sourcing, engaging, paying, retaining and re-engaging independent talent both simple and compliant.
Once policies and procedures are in place, it’s important to sound the horn, so to speak.
A number of organizations, such as PwC, have recently declared that they want to attract independent contractors, and have adopted an understanding that leveraging independence is not only necessary, but also strategically healthy.
From an organizational standpoint, human resources and procurement teams, along with key stakeholders, have gotten together to collectively build out processes and policies to get independent contractors to find their company and stay engaged. There has become a strong demand from the independent talent population for a program that would introduce a job board or way to find work, keeping them engaged and their project pipeline full. MBO Partners has answered this call in their own right, developing MBO Connect™.
Organizations have begun to carve out their own solutions as well, building off of their existing talent processes and career sites, as they shift their focus to letting independents know that “you’re welcome here. We’ve got opportunities and can keep your project pipeline full.”
At MBO Partners, our role as an enterprise program is to help organizations get where they currently sit on the continuum to a better place. Contact us to begin what can be an immediately beneficial conversation.
Independent professionals bring much-needed, highly specialized skills to the workforce. How organizations can adjust their talent management strategy to make use of this valuable talent pool.
Independent contractor compliance varies depending on worker types, length of engagement, and contract size. Why compliance matters and how to determine the best type of program for your business.