Innovating Beyond Outsourcing

Next-generation technologies will gain popularity by responding to a workforce that is more distributed, independent and less affiliated with a single employer. The outcome is that, through "worksourcing," both employees and employers will be more empowered than ever before.

By Jim Madden

The HR profession is on the precipice of an emerging transformational workforce-management technology that has the potential to not only change how workers are managed, but to empower people around the world to manage their own work schedules and achieve a greater and more satisfying work/life balance.

Decades ago, we witnessed the first phase of workforce technology innovation with punch cards and time tracking (e.g. Kronos). While today this seems antiquated, at the time it was a significant time management solution for HR. This later evolved into basic HR data capture and information (think early Peoplesoft). The next iteration was specific scheduling applications and systems (SAP, Oracle, specialty applications by industry, etc.)

Today, thanks to the advent of big data, robust analytics software and massive improvements in computing horsepower (theoretically unlimited via the cloud), the next phase is exponentially more powerful. With it, comes a new industry of services based on leveraging analytics for workforce optimization. These applications can be used to record time, location, attendance, and to optimize the scheduling of workforce. The result is similar to a crowdsourcing approach for empowering the workforce to bid for their desired position and schedules. Let's call it "worksourcing." Simply put, employees bid on when they are willing to work and at what price point, while employers get access to huge pools of talent, so they can efficiently schedule service delivery to meet consumer demand.

A Changing Labor Market

The demographics of the U.S. labor market are changing dramatically. Since 2008, the percentage of people who work part-time has substantially increased, and a larger part-time workforce is here to stay. This trend, coupled with the increasing "virtualization" of the workforce-offices and cubes increasingly replaced by homes, cars and airplanes-has created a workforce reality where the employer-based view of schedule optimization is not near enough.

What will be required is a two-way matching system of demand meeting supply. This is already institutionalized through services like eLance. However, it has not yet come of age for longer-term jobs and for many other industries including two of the largest-retail and healthcare. 

Recognizing the need to make services available to accommodate consumer demand and to balance their own infrastructure costs, Kaiser Permanente offers 24 hour MRI centers in many locations where patients can schedule their MRI off-hours when it won't interrupt their "day job." As this expands to more outpatient and diagnostic procedures and other healthcare providers move in this direction, the cost savings and benefits of applying a worksourcing process will become too great to ignore. The benefits are symmetrical-both to employee and employer. If I want to have an MRI at 10 p.m., and the imaging center has a scanner available (and unused) yet depreciating every day, everyone wins.

In the case of retail, imagine a learning system at your local coffee shop. When you come in at 7:30 a.m., the line typically goes around the block, but at 2 p.m., you can hear crickets chirping in the store. What if the employer offered materially higher pay for the early morning (busiest) hours to fill the demand, and lower pay for the mid-afternoon?  Employees could in effect bid on the hours they want to work. A mini-market gets created by finding the point of equilibrium between how many people the employer needs, and how many are willing to show up at 4:30 a.m. to open the store.

The Naysayers

Some will object that this is too fluid, and the employer can't plan ahead for labor. But the employer can always put parameters around the flexibility of the market match, or only allow the matching process for a set number of days in the future (e.g. not tomorrow). Taking this to a logical extension, a teenager over the summer working at a fast-food restaurant could be given two options: a guaranteed base shift, or flexible hours that he or she can bid on from their mobile app 24 hours before. A retired senior citizen, who may want to work only a few days and hours when he or she wants, could use the same application to work hours for a floral delivery service, a coffee shop or a Kinkos.

Arguably, this system works best for less-skilled labor. No one is suggesting that Boeing open a bidding system for people to bid on assembling plane parts. But don't forget the make-up of the U.S. economy; we are talking about a solution that would apply to more than 60 percent of the total U.S. workforce. According to recent data from the Bureau of Labor Statistics, only 27 percent of jobs in the U.S. economy require a college degree. Looking ahead, the agency projects that the economy will create 50.6 million job openings by 2022 and only 27.1 percent will require college degrees.

What It Means for HR

Over the next 10 to 20 years, this will become a standard way of managing workforce in a variety of different industries. It will also fuel a sea of start-ups able to tap into the same workforce as their larger competitors. HR leaders will need to be proactive in thinking about how to operate in this environment; apply the technology, manage benefits, entice employee loyalty, structure offers, etc.

This will be a defining point for HR in those industries that fully embrace this technology. They must figure out how to capitalize on this workforce trend. They will need to get tech-savvy, and fast, so that they can leverage their institutional expertise to take control of how the technology is applied. They will need to re-think their approach to talent and how to distinguish their organization when talent is no longer a competitive differentiator. The opportunity for HR decision-makers is huge. Those who can capitalize on the trend, will effectively take ownership of a critical component of corporate operations directly tied to a more profitable bottom line.

In conclusion, like all "disruptive" technologies, this too will likely create unexpected issues and outcomes, but over the long-term it will be empowering for both employees and employers. Our prediction is that this transformational technology may have the greatest impact on the way the next generation balances work and personal time, since the Internet empowered a generation of people to work remotely.

Jim Madden is a co-founder and managing director of Carrick Capital Partners, an investment firm focused on operationally scaling growing businesses that provide software and technology-enabled services.

Jun 17, 2015
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