Cassondra Batz-Barbarich, Steven Hunt, and Autumn Krauss, HCM Research, SAP SuccessFactors
Mitchell Ogisi, SHRM Research
In a survey conducted by SHRM and SAP of over 1000 HR professionals, 50% of respondents said it is critical to align external workers to organizational goals and 70% think that engaging external workers more would have a positive impact on their organizations’ ability to reach business goals. But, these same respondents indicated that a major challenge to engaging external workers is the complex legal landscape and concerns about co-employment.
In light of this complex and confusing legal context, organizations must make thoughtful choices about how and to what extent they “embed” their external workforce in their operations and company culture. These choices, in turn, impact their external workers’ “psychological embeddedness,” or the extent to which they identify with the company, want to embody its values, and choose to exert themselves on the job.
While one might argue that external workers do not really need to identify with the company or embody its values or frankly even exert discretionary effort on the job, that way of thinking is likely tied to an outdated view on external workers where they only fulfill ancillary, supportive roles that are minimally important to the business. Today, however, 64% of organizations state that external workers are critical for companies’ ability to meet their operational demands, innovate new products and services, and execute their business strategy. Today, external workers often have such size and impact within a company that they can no longer be considered a “necessary evil” with minimal expectations associated with them; instead, they need to be viewed (and treated) as a critical workforce segment and key factor for business success.
Through the joint SHRM and SAP SuccessFactors research program on the external workforce, many company representatives have shared the view that their “hands are tied” in terms of engaging these workers. Alternatively, others have voiced that despite the potential legal risk, they seek to include and integrate external workers just as they do internal employees because “the value of their role and contribution is so great that they cannot afford to treat [external workers] any differently” than their internal employee counterparts.
Research supports this perspective regarding the importance of engaging your external workers in the company’s mission, values, and goals – and treating them with the same respect that permanent, internal employees are allotted – will maximize their contributions to the business. As such, taking the risk may be worth it for three key reasons:
1.) To be an employer of choice for external workers as well as internal employees. As demand and competition for external workers grow, organizations must position themselves as an employer of choice by offering these types of workers opportunities for increased participation and engagement. For example, organizations may choose to include external workers in relevant training and development opportunities, which not only benefit the organization in the short term as far as the worker’s capability to deliver on their assignment but also the external worker in the long run as far as future career opportunities with other employers. Just integrating external workers entirely with internal employees and giving external workers the same access to programs and resources might not necessarily make the most sense either. Instead, companies might consider the unique external worker experience and how they can be sensitive to and supportive of it. Examples here might include offering external workers their own version of a “suggestion box” that gives them an ongoing opportunity to share their input about their unique experience in the organization or implementing a specific external worker exit interview process to gather input from a workforce segment that, by definition, is expected to exit the company at a regular interval. If companies do not acknowledge that external workers are part of their total workforce and, likewise, a part of their company’s employment brand, they risk the perception of two different employee experiences in the marketplace (one for “real employees” and one for “other”), which will undoubtedly be shared quickly on sites like Glassdoor and negatively impact the company’s brand image in no time.
2.) To deliver positive and consistent customer experiences. Many roles that are filled by external workers involve some degree of customer interaction, often with the customer thinking that the external worker is actually an internal employee of the company that is serving them. If you think about it, are you sure that the last service you received as a customer was actually delivered by an employee of the organization or did you just take that for granted? It seems hard to counter the argument that if your expectation as an organization is that both external workers and internal employees should be delivering a similar experience to your customers, which can often entail “going above and beyond” to meet their needs, then you likely need to invest in the external worker to ensure they are as knowledgeable and motivated as your internal staff. This means that organizations need to recognize that external workers represent the face of their organization and in order to ensure customers have a positive experience with their organization, they need to ensure that external workers are sufficiently aligned to the company’s customer brand and engaged in the work that they do. To accomplish this, organizations may spend extra time, energy, and money so that the importance of the external role is clearly conveyed and external workers receive robust onboarding and training to deliver on the customer promise, possibly including external workers working closely with internal employees so they can receive coaching and support to ensure they are delivering a consistent customer experience.
3.) To “walk the talk” of the company culture. Many organizations today espouse a deeply held corporate value regarding an engaged and collaborative workforce. So, if an organization has a cultural norm where business success requires workforce participation, collaboration, and teamwork, then it is imperative that they also include their external sources of talent in this type of work environment as well. In this context, if an organization does not engage and include its external workers, there may be both operational and cultural consequences. Operationally, goals such as collecting and operating off of current and accurate information may be a challenge if external workers are not sufficiently included in business processes and able to access systems. Culturally, even if a company really only cares about its permanent workforce, an argument could be made that it should still thoughtfully consider its external workforce. The internal employee population is often very aware of how external workers are treated (differently), and they can easily identify organizational practices that they view as incongruent with a company culture that touts “collaboration” and “inclusivity.” This can have a negative effect on the permanent workforce’s impression of and commitment to the organization. Further, companies should not forget that their external workers are often providing services to their internal employees, which can impact the internal employee experience. For instance, a company may “contract out” its facilities’ staff, receptionists, IT support, or even HR functions. These external workers need to identify sufficiently with the company so they can deliver a good cultural experience to the permanent workforce. Consider this (true) example where an external worker hired as a receptionist treats a new hire poorly as they enter the building on their first day, stating “I’m just a contractor, I don’t know who you are, and I don’t really care.” It does not take much to see how poorly engaged external workers can negatively impact the company’s culture. With all this in mind, organizations may elect to integrate and include their external workers in practices such as all-company meetings and systems like social collaboration platforms to ensure that there is a sense across the total workforce, including external workers, that they are “in the know,” both operationally and culturally.
In light of these key reasons to engage external workers, it is critical that organizations first seek an accurate and complete understanding of the legal guidelines regarding employing external workers, but then move to continuously engage, include, and value their external workers to the extent that is possible within the confines of the law.
This article is part of an extensive ongoing research program currently being conducted by SHRM’s and SAP SuccessFactors’ research groups on the challenges affecting the use and management of external workers including contractors, temporary employees, contingent workers, and freelancers. If you would like to learn more about this research program, including opportunities to participate, please contact Mitchell Ogisi from SHRM Research at Mitchell.firstname.lastname@example.org or Cassondra Batz-Barbarich from SAP HCM Research at email@example.com.