Employers unprepared for increased reliance on external workers, MIT and Deloitte find

Dive Brief:

External workers — a category that includes freelancers, contract workers and app developers, among others — are essential to global organizations’ success, according to a recent report by MIT Sloan Management Review and Deloitte. But organizations may not be prepared to increase their reliance on such workers.
A survey of 4,078 international leaders and managers found that 74% of respondents said that effective management of external contributors was critical to success, yet only 30% said their organizations were prepared to manage a workforce that relies increasingly more on external contributors.
The report’s authors created an index evaluating organizations on how well they “orchestrated” their internal and external contributors. Those that scored highest on the index generally coordinated internal and external contributors across functions; were more likely to hire and engage the internal and external talent they needed; and more likely to support managers who sought to hire external workers.

Dive Insight:

External workers, often referred to as contingent workers, are in high demand as employers continue to face talent shortages. A December 2021 survey by freelancing platform Upwork found that the share of non-temporary freelance workers grew from 33.8% in 2020 to 35% in 2021.

Still, a number of challenges hinder employers’ capacity to hire, absorb and retain external workers. In interviews with corporate talent leaders, MIT Sloan Management Review and Deloitte found that “legacy practices and mindsets” at some organizations may cause them to focus on internal talent at the expense of considering external contributors. Others pointed to legal and cultural hurdles.

Such concerns existed long before the pandemic. In 2018, temporary, vendor and contract employees at Google complained of mistreatment and exclusion from benefits and perks afforded to Google employees. Similar stories have played out at other employers in recent years. Earlier this month, contract workers at video game publisher Nintendo surfaced experiences of inappropriate workplace conduct and an exploitative work environment, Axios reported.

Even where employers are successful at landing external contributors, retention may still present a conundrum. A PRO Unlimited report published in April found that, of a group of surveyed contingent workers who ended their assignments early, more than half had done so within the first two months of their assignments.

Proponents of external contributor work, meanwhile, believe that this category of workers could help employers advance diversity, equity and inclusion efforts. This may present an area of opportunity for organizations that rely on external contributors, according to the MIT Sloan Review and Deloitte report, as only 33% of the respondents said they included external contributors when measuring the impact of DEI initiatives.