Recruiting Future with Matt Alder - What's Next For Talent Acquisition, HR & Hiring?

Ep 53: Are You Ready For The Future Of Work?

Predicting the future of work is not an exact science, however one prediction that most people seem to agree with is that there will be a significant rise in freelance and contract working. This trend is already here; recent years have seen both a significant rise in the contingent workforce and the advert of talent marketplaces shaping the “gig economy”. My guest this week is Connor Heaney, Managing Director of CXC Corporate Services. I first met Connor last year when I spoke at CXC’s future of work summit in Dublin. Since then Connor has been running future of work think tanks all over the world and has some important perspectives on how companies should be preparing themselves for the future of work. In the interview with discuss: • The positives and negatives of the rise of the gig economy • The lack of government readiness to understand the changes and give the new workforce the support they need • Predicted growth rates for the contingent workforce and its implications for traditional companies • How ready companies are for the legal and tax implications of larger contingent workforces • The evolution in Employer Branding that is needed make sure companies are attracting the right contingent talent. • Recruiters versus algorithms Connor also talks the most interesting technology innovations he is seeing in the space and gives us his view on the future Subscribe to this podcast in iTunes

Duration:: 23m
Broadcast on:: 19 May 2016
Audio Format:: other

Predicting the future of work is not an exact science, however one prediction that most people seem to agree with is that there will be a significant rise in freelance and contract working. This trend is already here; recent years have seen both a significant rise in the contingent workforce and the advert of talent marketplaces shaping the “gig economy”.

My guest this week is Connor Heaney, Managing Director of CXC Corporate Services. I first met Connor last year when I spoke at CXC’s future of work summit in Dublin. Since then Connor has been running future of work think tanks all over the world and has some important perspectives on how companies should be preparing themselves for the future of work.

In the interview with discuss:

   •   The positives and negatives of the rise of the gig economy

   •   The lack of government readiness to understand the changes and give the new workforce the support they need

   •   Predicted growth rates for the contingent workforce and its implications for traditional companies

   •   How ready companies are for the legal and tax implications of larger contingent workforces

   •   The evolution in Employer Branding that is needed make sure companies are attracting the right contingent talent.

   •   Recruiters versus algorithms

Connor also talks the most interesting technology innovations he is seeing in the space and gives us his view on the future

Subscribe to this podcast in iTunes

Support for this podcast comes from CXC Corporate Services, part of CXC Global. They are the leading global advisor on contingent workforce solutions, helping companies reduce cost, mitigate risk and improve multi-country compliance across their contingent workforces and supply chains. To find out more about how CXC Corporate Services can help you, please visit www.CXCcorporateServices.com. That's www.CXCcorporateServices.com. CXC facilitating the future of work. There's been more of scientific discovery, more of technical advancement and material progress in your lifetime and mind at all the ages of history. Hi everyone, this is Matt Alder. Welcome to episode 54 of the Recreating Future podcast. Predicting the future of work is not an exact science. However, one area which most people agree on is the predicted growth of freelance and contract working. This trend is already here, with a recent significant rise in the contingent workforce and the advent of the talent market places which is shaping the geek economy. My guest this week is Connor Heaney, MD of CXC Corporate Services. I first met Connor a few months ago when I spoke at CXC's Future of Work Summit in Dublin. Since then, Connor has been running Future of Work think tanks all over the world, and he has some very important perspectives on how companies should be preparing themselves for the future of work. Hi Connor, and welcome to the podcast. Hello Matt. May I say good afternoon to you from a very sunny London, hyped things up in Scotland today? Yeah, I am in Scotland today, really sunny, slightly windy. I've just been out on the beach, so it's all very lovely. Could you just introduce yourself and tell everyone what you do? Sure, Matt. Matt, thank you very much for having us on the show. Myself and the rest of the team at CXC were really huge fans of the podcast and of your work in general, so thanks very much. Just in relation to myself, my name is Connor Heaney. I am the Managing Director of CXC Corporate Services. We are part of the CXC Global Group of Companies, and what we do, Matt, is we provide global compliance, contingent workforce management programs. That's quite a mouthful, I know, other than a advisory services to some of the world's largest companies and managed service providers. We operate in 68 countries, Matt, and typically we work with multiple stakeholders across account acquisition, HR, procurement, finance, and the associated recruitment funders to bring cost transparency, best practice, good governance, and risk management across the contingent worker population and associated supply chain. So, really what we do in summary is that we help those companies manage reputational risk, deemed employment risk, tax chain liability, or financial risk in relation to their contingent workers. So, we've been in operation for the last 24 years. Next years are 25th anniversary, so we're very excited about that. Something that we're really passionate about as well, Matt, as you know from speaking at one of our many future work forms in Dublin last year, is around the growth of the contingent worker, and also the gig economy, and really how that's creating both difficulties and opportunities for how contingent workers are doors procured, on board, at paid, engaged, and managed, and how that creates problems, actually, for both the end users and governments as well, Matt. So, that's pretty much what we do in a nutshell. Now, you mentioned your future of work events that you've been doing, and I know you've been doing these all over the world, I think. The one in Dublin last year, which I spoke at, it was fascinating just to hear the different points of view that you guys had gathered around the contingent workforce, the future of work, and all the issues. What's been most interesting for you? What's the most interesting topic, the most interesting aspects of the way that work's evolving that you've learned about those events? Great question, Matt. I think there's a couple of strands to that. I think the first one is really the growth of the contingent worker. So, as it stands, according to recent research from art and partners, roughly 35% of today's total workforce is comprised of non-employee workers, so that can be in anything from tempt to freelancers, to statement of work contractors, to the traditional IT type contractors or independent contractors that we would know here in the UK. What's equally infested about that is that those numbers are expected to grow to 50% of the total workforce by 2020. So, in four years' time, we'll be looking at a really interesting mix of the workforce in many different and diverse organizations. One of the things that we're particularly interested in, Matt, is what are the implications for that for both the end users, the workers themselves, and also the governments in terms of how they can collect their taxes, how they can get their money in, and how those companies protect themselves from things like deemed employment or taxi and liabilities. The other thing, Matt, that really is of interest to us is how the gig economy or the sharing economy or the on-demand economy is creating almost like a new type of workers. So, if you think of some of the ways that we move around, we can order a driver through the flick of an app or the school through of an app, and those companies are injecting heavily in technology, but really, interestingly, they have very few employees directly with themselves, and their model is almost to transfer the risk to the worker themselves. So, if you think about the workforce that's 20 years ago or even 30 years ago, many, many people had a job for life. That concept is certainly changed with the growth of the contingent workforce. It's certainly changed with the recession that would just emerge out of some years ago, and it's certainly changed with people's work-in-habit and preference for a more flexible way of working. But to go back to the companies in the sharing economy, they don't have really any capital expenditure. For example, in the driver analogy, those companies don't tend to invest or buy cars for the drivers to operate. They don't have any pension liabilities. They don't have any holidays to pay. They don't typically have any variable or bonus payments or car alliances or healthcare, etc. So, that has seen an unprecedented shift in our view to the worker. And typically, the worker now is responsible for their own tax affairs, in that case. They're responsible for the maintenance of the vehicle. They're responsible for their own healthcare. And that puts a tremendous burden on those particular workers that we haven't seen. I don't think for over maybe 100 years or more since the Victorian times. And many of the advocates of the gig economy, and we are advocates of it as well as self-smart, but we want there to be certain protections for those workers and also for the companies that are engaging those particular workers as well. So, it's something that we are seeing a huge amount of interest in through the future work forums. And our next one is due to triplets in London in September. So, just to go back to, you mentioned governments in all of this. Now, my impression is that a lot of governments in many countries have been caught, have kind of already been sort of caught out by this shift. And I know that the UK government in particular, hasn't really, I'm trying to think of the right word, but hasn't been very pleasant to self-employed contractors in the last couple of years. Do you think governments understand this enough? Do you think they're doing enough to protect workers? Or are they still playing a massive game of catch-up in this kind of big workforce shift? Absolutely not. I don't think governments are doing anything like enough to look into this area and protect those type of workers. Even if you think about, for a self-employed worker, whether they're a driver or a delivery driver or self-employed freelancers like yourself, mad or others, if you look at the tax system, the tax system works roughly a year behind. So, if you're a delivery driver and you're being paid weekly and that money's gone into your pocket, you don't have that level of sophistication. You may not even have an accountant or a tax advisor, probably not. And that money's gone into your hand and it's basically gone out again in terms of you haven't to live and pay your mortgage or your rent or whatever that is. And when it comes to the next tax year, when you have to find your returns and actually pay the tax money, the exchequer is suffering terribly as a result of that. And it's not our job, I suppose to be the tax collector from it, but certainly the tax framework has not caught up with the gig economy for us from it. And I think it's a really interesting topic and you tend to see sort of very black and white opinion on it. So, either it becomes all about, either it's all about the workers' rights and the risks and companies are kind of exploiting them. But on the flip side, there's obviously a tremendous freedom for people to work globally, to sell their talents to various organizations. And I think that there's obviously a tremendous positive piece to it as well. How do you find sort of more traditional companies reacting to this? Are they growing their contingent workforces? Are they doing well in terms of dealing with a different makeup of their, dealing with this different makeup of their workforce? Yes, certainly not. If you look at your traditional banks or tell co-organization, their contractor workforces are growing and they're growing considerably. And there's probably five reasons for that. And our view that the first is that there's less on-risk burdens. They don't have to pay the pensions, the holidays, taxation. They're not liable for redundancy claims, there's no bonus requirements. And the workers, as you rightly point out, want more flexibility. And also the end-user or employees do. Typically, work these days is very much project-based. But also, the previous recession has definitely led to a climate of economic uncertainty and cost reduction, where large and small companies want to reduce their fixed cost base. And typically, that means that they've reduced their permanent employee income, but increase their contingent or contractor workforce on the flip side. The fourth element of that really is the growth of this kind of contingent workforce is around technology, as we mentioned, the out-brother gig economy. And the fifth thing, which has often been discussed by organizations like the RNC, Matt is around the war for talent. Workers typically can earn more as contractors. They can go to market in a much more speedy fashion. But to answer your question, in relation to how organizations caught up with that, I think it would be fair to categorize organizations maybe in three ways, Matt. And this might sound controversial, but I think that they could be summarized as "don't know, don't care, and do care." And some organizations don't know really what lies beneath when they're engaging. There are contingent workers, either directly or through maybe a traditional agency supply chain. They're not aware of some of the risks that they can really be liable for, particularly around tax chain liability or deemed employment risk, and particularly in some of the countries like Germany and Amsterdam. So they're just not aware of that. And then the next category might be "don't care." And I don't think that's a deliberate. It's "don't care," but it's often because they've entrusted the sourcing, engagement, and management to all contractors to third parties. And in their view, that's all well and good and everything's above everything's in order. And all the right compliance checks have been done, and quite often that is the case. But sometimes there is considerable risk there, nonetheless. And in terms of due care, a lot of the companies that we work with are global enterprises, not where they've got a large contingent workforce in many different countries, with many diverse and onerous regulations when it comes to the engagement and management and payment of contingent workers and contractor workers. And they're very keen to have, I suppose, a clean set of use and be as compliant as possible with the workers themselves, so they don't have any deemed employment issues, and also with the tax authority. So in some of the European companies, the tax authorities will actually come and they'll come to your premises. So there's been cases in the past in the Netherlands where large telecoms, companies, and system integrators have had their offices rated because they've incorrectly engaged freelance workers. So some companies are certainly ahead of the curve in terms of getting the right type of supply arrangements, the right type of procurement arrangements, and ensuring that there are contingent workforce systems compliance across the board. But there's quite a few organizations that still have this decentralized approach to the procurement management and payment of contingent labor, and they're sitting on, I suppose, a ton of risks in our view. The thing that I spoke about when we met in Dublin for the future of work, something that you had, was kind of all about how companies actually attract the best people as contractors, and the notion of an employee brand or employer brand being perhaps becoming somewhat out of date in this sort of shift to a more contingent workforce. In my view, I haven't seen a huge amount of companies really get to grips with how they make themselves an attractive place to be a contractor at, which could very much be the future. Are you seeing that discussion being had amongst employers? Do you think that they do need to behave in a different way to attract the best sort of contract talent to their business, or can they just sort of carry on in the way that they always have? I think that some of the companies are certainly gearing up their employer branding to attract contractors, specifically through maybe their MSP provider that might be managing their contingent workforce in terms of sourcing it, and also engaging and paying those contingent workers. They've got some quite sophisticated freelance management systems now that can attract and build up those talent moves of contingent workers, and I think that's working for some companies for sure. Plus, I think for many of the other companies out there, I don't think they would consider the branding side or the talent attraction. I don't think of infested the resources in attracting contingent workers, and I definitely think there's some some work to be done there. You also mentioned technology as a major driver of this. What's the most interesting technology innovation that you've seen in the last couple of years or so? I think for me, it's been the growth of what I would call on-demand sourcing platforms or tools. I'm thinking of one in the UK, which would be elevator, elevator direct or hard.com in the United States. I know it often comes up as a question on your show, but will algorithms effectively replace recruiters? I always pity the people that have to answer that question, because it's such a difficult one to address and answer, but I think the growth of the on-demand, sea-lands management platforms is fascinating, because in some cases, there is actually an algorithm replacing what I would call the sell side of recruitment, which would be some of the agency type recruitment. But even with the growth of these platforms, it still doesn't remove the need for someone to screen, interview and fit those particular contingent workers or workers that are coming through those platforms. That's human element. I don't think can and should be replaced. Equally, in relation to technology, I think technology is getting a bit of a bad name in the recruitment world for many different reasons. At the moment, I started my career in staffing in the recruitment 10 years ago. Most people on your show have had a very varied career. But 10 years ago, when I was starting in recruitment and staffing, the greatest innovation was a function in CRM system, and that was a real enabler for staffing companies to acquire and attract the talent that they needed to provide to their end customers. Even thinking back to my time then, I worked with some older gents that were telling me about the fax machine and what an enabler innovator that was for when they were in the recruitment and staffing world in the 1980s, it meant that they didn't have to type CVs and deliver them by hand. Even if you look at LinkedIn as well, that's been a huge bonus for recruiters and staffing companies. What I would be a performance of is that recruiters and MSPs should adopt and embrace technology wherever possible and use that technology to embed themselves in their clients and lock out the competition if it's all possible. Thank you very much for asking yourself the recruiter algorithm question there. That's brilliant. I think that's a great answer as well. The combination of technologies and enabler and humans, screening humans, basically. Final question. What does the future look like? If we're already at whatever it was, you said, 35% contingent workforce, what happens in the future? What does work look like in a few years' time? It's a really difficult thing to predict the future, but I think one thing for sure is that the demand and the growth for contingent workers is certainly going to increase. Probably the main reason for that is that the cost burden is so much less on risk for the end user. One of the most common two words I hear all the time are cost transformation and cost transparency when I'm speaking with large and medium sized customers. I think that's going to be something that those companies are going to be interested in moving forward. They can achieve that cost transformation and cost transparency by continuing to engage and accrue the contingent workforce. In terms of the future of work, I think people should definitely be concerned with automation. I know there's two screws of thought there, really, the utopian and the dystopian. Technology will free ourselves, and it will people to do less work and enjoy like more. The robots will take over, and we won't be able to do anything. But to go back to my earlier point, I think technology is definitely the game greatest. It's definitely enabling the future of work, and I think it's definitely contributing to the growth of the contingent worker and the freedom answer. Connor, thank you very much for talking to me. Thank you, Matt. It's been a pleasure. My thanks to Connor Heaney. You can subscribe to this podcast on iTunes or via your podcasting app of choice. Just search for a recruiting feature. You can also find all the past episodes at www.rfpodcast.com. On that site, you can also subscribe to the mailing list and find out more about working with me. Thanks very much for listening. I'll be back next week, and I hope you'll join me. [MUSIC] This is my show. [MUSIC]