We have been talking about the rise of the gig economy for several years now but perhaps not properly considering its full implications. The labour market is now reshaping itself rapidly, and there are clear signs that many employers are looking at developing an extended workforce that is task-focused rather than focusing on headcount. The impacts for talent acquisition, talent management and employer branding are significant, and the role of technology will be crucial.
My guest this week is Jens Audenaert Division Vice President / General Manager for WorkMarket at ADP. ADP has been doing a considerable amount of research into the nuances of the extended workforce, and Jens has some valuable insights to share
In the interview, we discuss:
• The challenges employers are facing in 2020
• Leveraging and extended flexible workforce
• How employers can future proof themselves
• How do employer branding strategy need to adapt in the face of a changing labour market
• Total Talent Management, Total Talent Acquisition and Total Talent Brand
• The logistics of managing an extended workforce
• The role of technology
• Ways the workforce will evolve in the coming years.
Subscribe to this podcast in Apple Podcasts
Transcript:
Matt Alder [00:00:00]:
Support for this podcast is provided by WorkMarket, an ADP company. Businesses that are looking to gain visibility, automation and security in managing their extended workforce use an end to end platform to efficiently and compliantly identify, onboard, organize, rate and pay their freelancers, independent contractors or contingent workers. Check out workmarket.com to see how you can unlock the power of your extended workforce.
Matt Alder [00:00:54]:
Hi everyone, this is Matt Alder. Welcome to episode 291 of the Recruiting Future podcast. We’ve been talking about the rise of the gig economy for several years now, but perhaps not properly considering its full implications. The labor market is now reshaping itself rapidly and there are clear signs that many employers are looking at developing an extended workforce that’s task focused rather than focusing on headcount. The impacts for talent acquisition, talent management and employer branding are significant and the role of technology will be crucial. My guest this week is Jens Audenaert, Division Vice President and General Manager for Work Market at ADP. ADP has been doing a considerable amount of research into the nuances of the extended workforce and Jens has some valuable insights to share. Hi Jens, and welcome to the podcast.
Jens Audenaert [00:01:58]:
Hey Matt, thanks for having me today. I’m looking forward to our conversation.
Matt Alder [00:02:01]:
An absolute pleasure to have you on the show. Could you just introduce yourself and tell everyone what you do?
Jens Audenaert [00:02:07]:
Sure. I’m a division Vice president at ADP and ADP, or Automatic Data Processing, is the world’s leading provider of human capital management technology and services. And specifically at ADP, my role is I run a division called Work Market, which is a recent acquisition by ADP and it is a SaaS platform that allows companies to pretty much manage the entire lifecycle, if you will, of engaging with their extended workforce. A lot of the ADP services are catered to payroll and HR of traditional, what we in the US call W2 employees. And work market does all of that before the extended workforce. So contractors and freelancers and tell us.
Matt Alder [00:02:52]:
A little bit more about ADP Ventures.
Jens Audenaert [00:02:54]:
Sure. ADP Ventures is ADP what I would call a new business incubator. So I actually had the fortune to launch that group within ADP a couple of years before the Work Market acquisition. And it’s really kind of a lab, if you will, where we kind of look around the corner and we look at opportunities, business opportunities, and really value propositions to the market that traditionally aren’t really being addressed by the human capital management ecosystem. And so this is really where as ADP, we started looking at the gig economy. This large population of contractors out there that are doing a lot of work and all these companies that are engaging them. But there wasn’t really any human capital management technology that kind of facilitated those engagements. So that’s really where the idea around bringing the gig economy into the human capital management ecosystem started out. And we, we kind of built a couple of prototypes around it and then we started looking at potential acquisitions as well. So that’s how the work market acquisition by ADP came about, which we closed in early 2018. We obviously, we still have a lot of really exciting initiatives going on in the ADP Ventures world outside of the gig economy as well.
Matt Alder [00:04:19]:
So 2020, it’s just been an incredibly challenging year for everyone. But obviously in the context of talent, of hr, of talent acquisition, you know, there’s been lots of sort of very, very challenges that employers are facing and having to overcome and indeed still dealing with. From your perspective, what are the main challenges that you’re seeing, which organizations are currently having to face in the talent arena?
Jens Audenaert [00:04:45]:
Well, there’s obviously a ton, right? If you think about it, so much has changed this year. We had this conversation six months ago, we just a vastly different conversation. This pandemic really is the largest external shock to, to the global economy in our lifetime for both of us, I think, and also obviously to the way that people work. So the way that we look at it, I think there are really three kind of key trends that have emerged around how people do work. In these last six months. I think there’s obviously been a either sudden plummeting of demand for a lot of organizations or a sudden surge. There are certain organizations and companies that actually have seen demand spike with everything that’s going on with the coronavirus and the lockdown of economies, the biggest shift probably is really how quickly and how successfully a lot of companies have been able to shift to work from home. Here at ADP, we pretty much almost overnight were able to have 98% of almost 60,000 employees shift to a work from home model, which is pretty impressive. And a lot of other organizations have been able to do that as well. And then I think the third key trend that we’re seeing or observation that I would make is that we just continue to live in very uncertain times. Maybe back in February or March, depending on which geography you’re in, people thought this would be a couple of months. And as we, the economies reopen, we see second waves. And so economy is kind of locked down again and business demand retracts again. And so for company leaders, it’s really hard to predict where they’ll be in a couple of months. Travel restrictions don’t make that easy either. And so that really leads to even more need or a higher need to think differently around how you work with your teams and to be much more flexible. And so specifically to the gig economy, I think this will lead to many more companies really thinking through how can I leverage an extended workforce to be much more flexible. They are typically already working remotely and companies now realize that remote work actually really does work. They typically allow companies to scale up and down based on demand. And that’s something that’s needed because of this uncertainty. And then very importantly, and I think we talked about this today as well, they’re very task based. And so you don’t really have the overhead of a WW2 traditional employee. You really bring in people for a specific job and that’s the job they’ll do when you need them and where you need them. And so as we reopen and as the economy is hopefully going to start growing again, companies will be very cost conscious. And so just being able to be much more task focused rather than headcount focused I think will be important for companies to grow their profitability again.
Matt Alder [00:08:01]:
And just to dig into a couple of things that you said there in a bit more detail, so obviously back in March we were hoping that this was a very temporary thing that would pass quickly. We’re recording this in the, in the middle of August and it’s, it’s, it’s fairly clear that this is around for the long term and companies are really, as you say, going to have to think differently as they move forward. Now I know that lots of employers are currently very much in planning mode for the, for the future, for 2021, 22 and beyond in terms of how they sustain themselves, how they deal with this disruption, but also how they make the most of some of the new trends that we’ seeing. What should organizations be doing to future proof themselves against the current issues, but also things that might be coming down the track that we’ve not even imagined yet.
Jens Audenaert [00:08:53]:
Yeah, it’s a great question. I think a lot of people would love to have a crystal ball right now because there is really so much uncertainty. Right. I think based on just the trends that we’re seeing and the flexibility that companies are going to have to embrace. As I said, I think it’s going to be very important for companies and for HR leaders to really start Thinking about what are the tasks or what are the assignments that need to get done so that we don’t kind of rebuild organization in the same old fashioned way that we’ve done for decades, hundreds of years. I’d like to often kind of compared a task based approach to people with some of the revolutions that we’ve seen elsewhere. Software as a service when Salesforce came out, platform or infrastructure as a service with aws, you know, and in the tech space we’ve seen this evolution where companies don’t really have to build an infrastructure for maximum scale. They can kind of rely on providers out there and scale up and down. And if you think about a company’s most valuable and in many cases most expensive asset, which its people, we really still have a very old fashioned approach thinking in terms of, you know, 40 hours a week headcount. And so it’s going to be very important for companies and HR leaders to really start thinking of the jobs to be done as task based or assignments so they can better map skills and people and resources needed to tasks that need to get done. It’s interesting, but if you ask workers or employees if they use all their skills at work, it’s only about 35% that say that they do, which is a pretty low number and it’s somewhat disappointing. We really don’t do a good job today to really match what’s the job that needs to get done with the skills and the resources that we put against that. So I think that’s going to be one very important trend. And just as we have software as a service and platform as a service, I like to think of your workforce as a service which really comes back down to leveraging an extended workforce. It’s much easier to do if you kind of scale up and down using contractors as well. I think that’s an important trend that companies will have to embrace. And then when it comes to trends that we see out there, demographics obviously are a very important one in terms of what the workforce of the future is going to look like and how we’re going to engage them. And demographics also lead us to believe that companies need to rely more on an extended workforce. We have a large portion of the workforce in the west, at least, that is reaching retirement age and that’s aging. And in general our life expectancy is increasing. But in many of the western societies, sadly enough savings rate and the financial wellness is there for all these people to just start retiring 65 and still live 20 years. And the social welfare and safety nets may not be there either. So I think what we’ll see is a population there that will want to continue to be engaged in the workforce in a different way, in a different modality, and they’ll be contractors rather than full time employees. And then on the flip side, we see the same with the younger generation, Gen Zs, if you will, joining the workforce that are much more likely to prefer to work independently, to own their own schedule, to forge their own path. This whole lifetime employment with one company where you get your gold watch at 65, it doesn’t exist anymore. Right. And so I think for companies to really tap into the right talent, they have to meet that talent where it’s at. And a lot of these people are going to be working independently. So I think both demographics as well, well as breaking down jobs into more task based and be much more rigorous around who you assign to which jobs. Both of those trends really lead me to believe that the future of work is going to be much more contractor based than it is today.
Matt Alder [00:13:34]:
And I think one of the interesting implications for that is around employer brand, because we often talk about employer brand and talent brand on this particular podcast, but it’s always, nearly always in reference to full time permanent workforces and not necessarily the extended workforce you’re talking about. What’s your view on talent brand and how do people need to think differently when they’re thinking of how that applies to the extended workforce as a driver to bring the right talent into their organization at the right time?
Jens Audenaert [00:14:07]:
Yeah, that’s a great question. We spoke a little bit about technology already, which is obviously a requirement, but, but for companies to really be able to tap into all those different source labor, they really have to do what I would like to call total talent management and total talent acquisition. And with that real a total talent brand, if you will. And you mentioned talent brand, but you also said employer brand. It feels like employer brand is a notion that a lot of companies really embrace. They know that they have to be an employer of choice to draw in the right employees and the best employees for the extended workforce, for the contractors, for the freelancers. More often than not, it’s not even an afterthought. No one is really thinking about how the employer or the company is being perceived as a client of choice or not for the contract. And the reality is that as organizations rely more and more on these contractors, you have to make sure that you attract the right contractors, the best contractors, and that those that are good actually want to work for you and want to come back and work for you. More often I think it’s a wake up call for a lot of companies. Sometimes when they look at the share of the total, if you will, within the organization and they look at the share of contractors and then they look at all of the HR processes and everything that’s being done around engagement, diversity and inclusion, all of these really good processes that we think our employees. And nothing is being done for this really large share of people that are almost equally important to the organization. And so I think it’s going to be very important for companies to be much more holistic around how they think about talent management, talent brand, talent acquisition, and really do that across the spectrum of the different types of workers and HR leaders and talent acquisition leaders are really going to have to take more of an active role in that because the reality is that today in many organizations, contracts really still are dollar numbers that are managed by procurement or by finance and not necessarily by the HR department. It’s critical for HR leaders to kind of change their mind shift and really start thinking about all the people that are needed to kind of deliver on the mission of the organization and not just a fraction of people that might just be on that certain type of employment contract.
Matt Alder [00:16:49]:
I couldn’t agree with you more. And it’s something that all employers need to be thinking about and thinking about right now. Just give us some examples of ways that you’re seeing companies using extended workforces.
Jens Audenaert [00:17:03]:
There’s so many. I want to be mindful not to paint kind of the stereotypical picture of specific pockets. The ADP Research Institute, which is a research institute, is affiliated with ADP. Obviously we have a lot of data within ADP based just on the scale of our organization. We did a really interesting study in that was released in January or February of this year where we looked at 10 year of data across our thousands of customers and found that about 1 in 6 workers was a gig worker. And in that 10 year period the share of gig workers had gone up by 15%. And I’m just sharing those numbers and you know, other people have other numbers but the economy is really large. It’s over a trillion dollars in and in the US alone. So I don’t want to paint a picture that it’s kind of very specific pockets. It’s really across industries and it can be across capabilities. Where we’re seeing it a lot is in areas such as anything that’s field service related, something that needs to get done in the field. It could be key maintenance, it could be repair of something, it could be an inspection Section of, you know, you name it after a storm and look whether or not cell phone towers are still intact. A lot of that, obviously a lot of media, creative, content creation. There’s a lot of freelancers there. Obviously that’s typically how people think of freelancers on site support, event support, you know, could be security, could be any kind of life event. There’s contractors there. And then interestingly, as we kind of see surges in demand in certain areas because of the pandemic, as you might expect, we saw more contractors in some of the more traditional areas around delivery supply chain, but also in areas such as healthcare and home care, as well as education and remote tutoring with many schools being closed. So we definitely saw some interesting use cases and companies being out of the box already just in the last few months based on the shifts that we’ve seen in the economy.
Matt Alder [00:19:32]:
Obviously managing an extended workforce is a very, very complex thing, particularly if people are working at that task level. You also mentioned that employers might not even be aware of how big their extended workfor or certainly HR might not be aware of how big their extended workforce actually is. Is this something that technology can help with?
Jens Audenaert [00:19:55]:
Yes, absolutely. And the extended workforce kind of includes a lot of different people, right. And so for kind of temp workers, people that typically, you know, you engage for multiple months and they’re not your technical employees, but they kind of work just like employees. There are vendor management systems. And if you think about that wave of technology, you know, large companies, maybe 15% or so had adopted those systems and you know, in the early 2000s and now a vast majority, over 80% of companies have such systems in place and they’re great to help companies manage that kind of contractors. But what we’re trying to do with work market is really create a very nimble consumer grade platform that allows your leaders, your employees directly to engage with the gig workers out there with the talent out there and really take out a lot of the complexity and the bureaucracy of engaging with gig workers. So that’s really what we’re hoping to do and helping companies by implementing our software to really create the right processes and guardrails around how to engage with gig workers to create the visibility and audit trails so you actually know who’s doing what. And hopefully that leads to efficiency and cost savings and obviously also very importantly to manage risk. Right. You know, in the US worker classification is something that’s top of mind of any company that is engaging with gig workers. But obviously in other geographies across the world there are a Lot of regulations around how you engage with workers. And so we just want to make sure that our platform keeps companies safe from a regulatory perspective.
Matt Alder [00:22:01]:
So we said earlier that no one’s got a crystal ball and particularly at the moment it’s pretty much impossible to predict the future. But obviously as an organization you’re doing lots of research, you’re talking to lots of people. What’s on your radar? What do you think we can expect to see in the next two to three years when it comes to the kind of the evolution of work and the workforce?
Jens Audenaert [00:22:25]:
So I think some of the trends that we talked about, which are really around meeting the talent where they’re at. You know, we talked about some of those demographic trends as well as being much more task based. You know, I think that trains left the and companies will really start thinking about that and they will start adapting the right software platforms to help them manage that extended workforce. I think what, what’s kind of the next wave beyond that is really, you know, we touched on it just now is more around how do regulations and how do kind of government provisions keep up with that? You know, the workforce is evolving, demographics are evolving, the way that companies do business is evolving. But I’m going to be a little bit US centric here. But the kind of labor statutes haven’t been evolving. Right. And we talked about worker classification just now. But it’s more than that. You know, people want to work independently, but they also want to be able to get a mortgage. And you know, guess what, to get a mortgage you got to Show Typically a W2 form and stable income here in the United States. And they also want to be able to have access to benefits. And so I think from a regulatory perspective there’s more work to be done to really make sure that the regulation, statutes and the provisions really allow both companies and workers to engage in the way that they want to engage.
Matt Alder [00:24:03]:
And how do you think things will develop from a technology perspective?
Jens Audenaert [00:24:08]:
From a technology perspective, I would say we’re going to see more adoption of what I kind of talked about systems like work market, freelance management systems where workers within an organization can very quickly and very efficiently engage with gig workers. And then what we need to see is for all of the different systems to come together so things like VMSs and FMSS to really become an integral part of the overall human capital management ecosystem so that HR leaders and business leaders can really start looking and thinking through all of their labor and want.
Matt Alder [00:24:53]:
And so final question, where can people find you and where can they find out more about the work and research that ADP are doing?
Jens Audenaert [00:24:59]:
That’s a good question. They can find out more about Work Market by going to our website workmarket.com and they can request demos there and engage with the team. They can obviously also go to ADP.com and find out more about the research that the ADP Research Institute is doing. And if they want to get in touch with me, they can easily find me on LinkedIn or on Twitter. My handle is Jens Ottenberg, which I say easily, but good luck spelling that.
Matt Alder [00:25:33]:
Of course your name will be in the show notes so people will be able to see how it’s spelled. Jens, thank you very much for talking to me.
Jens Audenaert [00:25:39]:
Thanks so much Matt. This is amazing.
Matt Alder [00:25:41]:
My thanks to Jens Audenaert. You can subscribe to this podcast in Apple Podcasts on Spotify or via your podcasting app of choice. Please also make sure you follow us on Instagram. You can find the show by searching for Recruiting Future. You can search through all the past episodes@www.recruitingfuture.com on that site. You can also subscribe to the mailing list to get the inside track about everything that’s coming up on the podcast. Thanks very much for listening. I’ll be back next time and I hope you’ll join me.
