Workforce ecosystems are on the rise but a third of businesses aren’t ready to manage them. Learn more about this growing trend and how to adapt successfully.
The workforce ecosystem is on the rise. It means looking beyond the ‘walled garden’ of your permanent employees, to increase capacity and expertise with temporary workers.
According to Deloitte, a third of organizations expect to rely more on external talent and gig workers in coming years. And more than 50% highly value the ideas and skills that external contributors bring to their business. But only 28% are prepared for managing a workforce comprising external actors.
This mismatch could spell trouble for ambitious organizations looking to scale through a workforce ecosystem. But we have some tips to help you embrace this new approach to resourcing.
In this article, you’ll learn:
A workforce ecosystem is a new way to structure and strategize your workforce.
Instead of focusing solely on a permanent set of full and part-time employees, your workforce encompasses a wide range of supplementary staff. These may be freelancers, consultants, contingent workers, fractional roles, or other gig workers, that you engage on-demand.
Workforce ecosystems give organizations more flexibility and agility to respond to market needs:
However, a workforce ecosystem isn’t just about using contingent workers to augment your traditional workforce.
It’s about increasing permeability more generally. How can you reimagine traditional organizational structures to allow more permeability and internal mobility – not only within your organization, but even between your business and suppliers, clients, and other complementary organizations?
We define a workforce ecosystem as a structure focused on value creation for an organization that consists of complementarities and interdependencies. This structure encompasses actors, from within the organization and beyond, working to pursue both individual and collective goals." - Deloitte, Workforce Ecosystems: A New Strategic Approach to the Future of Work
A workforce ecosystem is characterized by a diverse talent pool, dynamic workforce management, organizational agility, strategic workforce acquisition and deployment, and tech enablement. Let's take a closer look…
Workforce ecosystems extend the boundaries of a traditional workforce, embracing a community of contingent workers to support strategic aims. This means – working alongside your permanent employees – you may also have:
These people won’t work exclusively for your organization (if they did, they’d be employees) but across multiple organizations.
An ecosystem approach also embraces the concept of fluidity within your organizational structure, making more opportunities for internal mobility and project-based allocations.
While a traditional workforce is managed centrally by a Human Resources team – following a standardized employee lifecycle approach – a workforce ecosystem requires more dynamic management.
Contingent workers need accelerated onboarding and easy-in-easy-out processes. They’re often recruited and managed outside HR – though this isn’t necessarily the best approach, as it limits visibility into your full workforce. Centralized management with agile, customizable practices is better. More on this later.
Workforce management in an ecosystem model includes:
Like traditional workforce planning, workforce ecosystems need a strategic approach including:
However, many experts go further. They say a workforce ecosystem doesn’t just have to deliver strategy - it can actually shape it, by opening up new business opportunities based on talent availability. Food for thought!
The workforce ecosystem approach is about being responsive to market demand. So organizational agility is key. You need to act fast to spot opportunities, secure talent, and deploy them efficiently.
An agile workforce ecosystem is characterized by:
Technology is the main catalyst in most workforce transformation – but especially in transforming traditional organizational structures into workforce ecosystems. If you want to evolve into an agile ecosystem, you’ll need:
A workforce ecosystem model benefits both businesses and workers.
Businesses are more responsive to market needs and can seize opportunities in a cost-effective way, while gig workers get choice and control over their careers.
Plus, if managed correctly, traditional employees have opportunities to upskill and develop through exposure to top talent and internal mobility.
By adopting an agile workforce ecosystem approach, companies can become more adaptable, innovative, and competitive. But it isn’t all plain sailing.
There are downsides to workforce ecosystems.
For traditional employees, more contingent workers may feel like a threat to their job security and progression. Plus experts question unintended societal effects, such as the potential burden on governments to support retired gig workers with no recourse to organizational pensions.
For businesses, a workforce ecosystem requires strategic planning, dynamic management, and a more centralized approach than many businesses currently achieve.
But while human capital management can become more challenging in this approach to staffing, for organizations that ace it, the benefits are more than worth it.
Navigating these challenges requires proactive management to ensure contingent workers are integrated and managed appropriately, traditional workers feel secure and empowered, and current agility is not at the expense of future growth.
Deloitte’s report on workforce ecosystems surveyed thousands of global business leaders to understand their take on this future work trend.
It found 87% of respondents included external contributors in their workforce composition. But also concluded that ‘managing employees and managing a workforce ecosystem structure are fundamentally different processes.’
Most workforce-related practices, systems, and processes focus on employees, not external workers. Workforce planning, talent acquisition, performance management, and compensation policies all tend to focus on full-time (and sometimes part-time) employees. Consequently, organizations often lack an integrated approach to managing a workforce in which external workers play a large role."
To fully benefit from the workforce ecosystem concept, businesses need to change not only their structure but their management practices. Here are some tips we’ve gleaned from the experts.
The the liquid workforce, contingent workers, gig workers, freelancers… whatever you want to call them, they’re on the rise.
Research from McKinsey & Co found 36% of employed respondents identified as independent workers in 2022 – a ‘notable increase’ from 27% in 2016. And Deloitte found that many workers consider themselves to be ‘free agents’, even when they are permanent employees.
This desire for autonomy at work, freedom, and control is changing the recruitment and retention landscape. As more and more people turn their back on traditional roles, organizations need to adapt to this growing trend or find themselves fishing in a dwindling pool of traditional candidates.
There are important management practice differences involved in managing internal and external contributors side-by-side.
In some organizations, the workforce ecosystem comprises more external workers than in-house employees. So traditional leadership practices – focusing on internal engagement and management – are no longer suitable.
Workforce ecosystems are more open and flexible structures, encompassing a diversity of worker types and environments. This may be quite different from an organization’s legacy context and may require new leadership practices," says Deloitte.
Leaders need to find a way to engage all elements of the ecosystem. For example, extending ‘staff surveys’ to contingent workers, and looking at training and benefit programs. ‘It’s about pulling everyone in,’ says Major General Ronald Clark of the US Army. ‘We can’t have people who are not inside the family being treated differently.’
The workforce ecosystem is about making all roles more fluid and flexible, to create more value for the business. So while you might start by using external talent for higher agility, look internally too.
‘The mechanistic, process-driven view of work focused on optimizing job performance has largely given way to a team-based, project-based view of work that’s focused on speed, innovation, and relationships,’ according to Deloitte.
These changes are compelling some leaders to make new decisions about how to orchestrate their workforces. The transition to project-based work creates new requirements and opportunities for organizations to bring in external talent for specific engagements or to use internal talent marketplaces that enable employees to move easily among departments to meet emergent demands.
Workforce ecosystems let organizations create value from a wide range of workers and contributors. But the scope and complexity of all of these interactions – and the failure of organizations to implement fit-for-purpose ecosystem management processes – means the approach can be fragmented and decentralized.
To fully realize the benefits of a workforce ecosystem, you need a 360° understanding of all actors in your business – whether they’re permanent in-house staff or temporary contractors. ‘True competitive differentiation comes from understanding the total workforce,’ says Arun Srinivasan of SAP Fieldglass.
By centralizing all resource management into a single central function, you can better understand the skill sets available to the organization as a whole, identify trends in demand, spot spare capacity, and dynamically assign all available resources more effectively.
Implementing a workforce ecosystem has huge implications for management, workforce governance, and processes. ‘If you’re managing an ecosystem, your organizational design has to be different,’ says Tobia Kretschmer, professor of management at Ludwig-Maximilians-Universität München.
In organizations with less mature ecosystem management practices, there are separate processes for managing internal and external workers. HR typically manages permanent staff, while individual departments, procurement and IT typically recruit and onboard external workers.
Shifting to a workforce ecosystem needs an integrated approach to managing internal and external workforce to ensure consistency and visibility, and reduce fragmentation and risk. But be careful not to become overly bureaucratic. Remember, a key tenet of a workforce ecosystem is agility.
In traditional structures, organizational strategy determines staffing. But in a workforce ecosystem, the opposite can be true. Availability of talent and skills can determine strategy and direction, as Carmelo Cennamo, professor of strategy and entrepreneurship at Copenhagen Business School, explains.
We tend to see the workforce as a top-down process. We set strategy; we have goals. Then it comes down to operations: ‘We need these resources, and human capital is one. Do we have these people? No, let’s hire them.’ But the other way around — bottom up — will be that the resources you have might actually push you to explore other directions. Some of this pool might be seen as a way to leverage innovation opportunities or strategic directions for the company itself."
Don’t just ‘borrow’ people from the talent market - lend them out to partner and complementor organizations too.
Just as you benefit from external experts, offer your own skilled professionals to enhance services for clients and provide invaluable learning opportunities for your employees. This reciprocal exchange not only enriches your capabilities but also strengthens professional relationships and fosters a culture of continuous growth and collaboration within your industry.
Brian Baker, from creative agency WPP, says they lend out internal employees to clients with openings in marketing functions. In these cases, WPP and its clients become part of each other’s ecosystems. ‘We give the employee an actual experience of someone they serve every day and have our own people growing our clients,’ Baker says.
Further reading: Contingent Workforce Management Best Practices: 15+ Tips for Success ➡️
The likelihood is that workforce ecosystems will continue to evolve. We expect to see more businesses embracing the dynamism, agility, and financial flexibility of on-demand workers – as more people embrace the freedom and autonomy of freelance life.
However, we also expect to see businesses struggle with the transition if they lack the strategy, leadership, processes, and technology to manage their extended workforce.
As organizations become more fluid, we believe the future of work is actually the future of resource management. It’s all about understanding the talent and skills available to you, and assigning them dynamically to meet business needs.
Resource management software provides the visibility you need into your entire workforce – providing a single central place to coordinate all types of workers, see the skills and capacity available to you, and put people to work where they create the most value.
Discover why hundreds of businesses are managing their resources in Runn.
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