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Why A Blended Workforce May Be Key To Lasting Competitive Advantage

This article is more than 2 years old.

by Joseph B. Fuller

In recent years, companies have been anxious about the lack of skilled workers to fill pivotal jobs. But then came COVID-19 and a subsequent recession.

The ensuing business turmoil and record-high unemployment may have temporarily distracted companies from their chronic struggles to find and retain high-skills talent, but the talent scarcity will only increase as COVID-19 triggers an acceleration in the rate of digital transformation across companies. That shortage threatens the growth potential and capacity to innovate for any company that fails to address it.

COVID-19 can be a catalyst for companies to rethink their models for sourcing talent. It has obliged companies to eliminate barriers to implementing remote work broadly, enabling a future in which fewer employees are tied to a physical office. By doing so, companies have opened a further possibility: that their labor forces can be extended beyond permanent employees to include highly skilled gig workers, sourced from digital talent platforms.

We believe the most successful companies will be those that adopt what we call an on-demand workforce model, one that blends talent sourced externally and employed temporarily with full-time workers. Such a model offers the prospect of achieving every manager’s goal of putting the right talent on the right project at the right time.

Innovative companies are already acting. We spoke to firms from Amazon to Unilever that increasingly rely on talent platforms—Toptal, Catalant, Upwork, and more—for securing the talent needed to supplement full-time staff. (Disclosure: I am an adviser to Catalant’s board of directors.)

To understand how businesses view the battle for highly skilled workers and use digital talent platforms to build blended workforces, the Harvard Business School project on Managing the Future of Work partnered with Boston Consulting Group’s Henderson Institute. We surveyed 700 business leaders between December 2019 to January 2020, focusing on those familiar with these new platforms. The report, published November 17, is called Building the On-Demand Workforce.

High priority for competitive advantage

We were surprised at the importance business leaders assigned to talent platforms. Nearly 90 percent of survey respondents familiar with the platforms said they would be somewhat or very important for achieving competitive advantage over the next three years. And executives plan to rely on talent platforms more over time: 52 percent of C-suite leaders surveyed expected to significantly increase their use.

Platforms provide benefits to both workers and companies. Highly skilled workers who offer their expertise via digital freelancing or premium talent marketplaces can exercise control over their work-life balance, deciding for themselves what jobs to take and how much time to dedicate to work each week.

Meanwhile, companies gain access to high-skills talent they may otherwise struggle to hire full-time—as and when they need it. They can ramp-up projects quickly, capitalizing on new opportunities while retaining labor flexibility.

In fact, about 40 percent of respondents cited improved speed-to-market, improved quality of innovation, and improved overall productivity as benefits of using talent platforms. Sixty percent went so far to say it was somewhat or highly possible they will maintain a much smaller core workforce in the future as a result of the capabilities unlocked by new methods of engaging talent.

Although our research shows that businesses are increasingly recognizing the potential of these platforms, we believe organizations need to take a more systematic approach to integrating full-time and on-demand workers.

Blended approach works best

This requires adopting a blended approach. Getting full value from highly skilled gig workers requires more than simply hiring them. Few companies have developed cultures that accommodate transient, outside talent; few managers are adept at overseeing teams that consist of workers with different backgrounds, levels of commitment to the organization, and access to company resources. Companies will have to revisit an array of policies and procedures to make identifying, recruiting, onboarding, and offboarding gig talent efficient.

They will also need to audit their performance-evaluation systems and metrics to minimize real or perceived disincentives for using highly skilled gig workers. Managers must learn to break down projects into discrete components, define skills needed for their completion, and envision critical points of connection between work being done by full-time employees and their gig counterparts.

In short, companies will need to move beyond tweaking their current approaches to managing work and adopt fundamental changes to the way they think about and manage their workforces.

To be successful in this endeavor, companies need to identify a senior executive to champion such a transformation. Businesses that have made the shift to a blended workforce have done so with the explicit endorsement and support from the C-suite. This executive should have both the authority and the credibility to break with old practices and embrace affordable, innovative solutions to their company’s skills deficits.

It may require enduring disruption, but incorporating highly skilled gig workers will allow companies to avoid being casualties in the next war for talent.

Joseph Fuller, a professor of management practice, co-leads Harvard Business School's Managing the Future of Work initiative.

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