How are Companies Coping with New Employment Models in Today’s Economy?

July 1, 20168:20 am915 views

While most employers prefer full-time employees, more than half are currently using independent contractors and expect themselves and others to use more in the future.

According to a new national survey sponsored and developed by the Aspen Institute’s Future of Work Initiative, the Markle Foundation, Burson-Marsteller and TIME titled ‘Workforce of the Future’ looks at how companies are coping with new employment models such as the growth of contingent and contract work and the On-Demand Economy. The survey was conducted by research firm Penn Schoen Berland (PSB).

According to Workforce of the Future Survey, a majority of all employers, 56 percent, say having a full-time employee makes it easier to accommodate the ebbs and flows in work volume and report that contract workers are less loyal or invested.

Conversely, employers cite using independent contractors both for the flexibility of hiring workers with specific skills as the need arises (90 percent), as well as for cost-saving purposes such as taxes and benefits (86 percent).

Still, when presented with the tradeoff, most employers (58 percent) say full-time hires are better for their company because they provide more value over the long-term despite having to pay more up-front on taxes and benefits.

Key findings from the survey are:

  • A majority of all employers, 67 percent, say their company seeks to limit the number of contingent workers in favour of full-time employees, while 60 percent report using contingent workers. Of those who use contract labour, a majority, 57 percent, expect to use more in the future – and 70 percent of all employers predict that more companies and organizations will move toward a more on-demand labour model.
  • While four out of five employers believe providing workers with benefits is necessary to attract and retain talent a majority of employers do not feel responsible for providing benefits to independent contractors. And 50 percent don’t think they should be responsible for providing training or education to independent contractors.
  • Twenty-two percent of employers believe workers themselves should be responsible for providing benefits, 18 percent believe private companies that help workers manage/gain benefits should be responsible, while just 9 percent say it’s the government’s responsibility.
  • Both employers and workers see the on-demand economy as a completely different way of doing business.Sixty-two percent of all employers believe that the On-Demand Economy is a completely different way of doing business and 52 percent say the On-Demand Economy is creating more opportunities for workers by bringing more wage-earning opportunities to more people.

See: Companies re-look business models amid gloomy economic outlook

  • Almost all employers are satisfied with the performance of contingent workers.Ninety-seven percent of employers who use independent contractors report they are satisfied with their performance, those employers who report they will use more independent contractors are 98 percent satisfied and even those who say they will use fewer independent contractors report a 95 percent satisfaction rate with these workers.
  • Employers have and will move toward more automation, but so far large employers have led the way. Sixty-two percent of all employers say in the last five years, my organization has invested in automating more tasks and functions” as compared to 77 percent of companies with 1000+ employees. In the next five years, 68 percent of all employers “will invest in automating tasks and functions” compared to 81 percent of companies with 1000+ employees.
  • Employers are looking for loyal, engaged employees and independent contractors don’t meet that expectation. Fifty-eight percent of employers who hire independent contractors agree that “non-employee contingent workers are not as loyal.” Additionally, 54 percent of employers agree that non-employee contingent workers are “not always available when I need them;” and 52 percent agree that non-employee contingent workers are “not as invested in their product.”

“More than 80 percent of surveyed employers who use contingent workers do so because it allows them to quickly adjust to changing workforce needs or to hire people with specific in-demand skills,” said Markle CEO and President Zoe Baird.

“This makes it all the more important to ensure all workers have the skills they need in today’s ever changing labour market, whether they are full-time employees or contingent workers. A more highly skilled workforce, one that can easily find pathways to train and retrain, is critical to enabling everyone to see themselves in the digital economy.”

“The consensus that held the 20th Century social contract together is coming apart,” said Bruce Reed, co-chair of the Aspen Institute’s Future of Work Initiative. “While companies prefer full-time employees, more and more are using independent contractors to reduce costs, and two-thirds say providing those workers benefits is someone else’s responsibility.”

The Workforce of the Future Survey also reveals insights regarding the On-Demand Economy, defined for respondents as an industry that encourages consumers to share the use of goods and services rather than own them individually.

Employers are both familiar with (71 percent) and favourable (68 percent) towards the On-Demand Economy, with 35 percent of employers saying they will use and provide more On-Demand Economy services in the next five years.

While the survey reports clear sign indicating, traditional employment is still the most common model governing the workplace, there are definite changes to the traditional model as a result of emerging workplace trends, which will impact the workforce of the future.

Also read: Highly-Skilled Contingent Hires to Drive Growth of IT Industry in Singapore

Image credit: spielraum.xing.com

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