Will we all be contractors in the future?

The trend in the job market is toward increasing levels of contractors, new evidence suggests. What does this mean for HR professionals?

A leading talent acquisition practitioner in an ASX top 10 company recently revealed that, by 2020, it expected that half of its workforce would be contractors. Currently, they employ 60 people globally in their resourcing team and all are on contract.

The growth in the flexible workforce is a rising trend in Western economies with both employers and employees looking for different ways of working.

Along these lines, The HR Job Index from The Next Step shows that the growth of contract openings was one of the major features in the HR market in 2016. Flexible opportunities, such as contractors and interim appointments, rose 25.8 per cent over the year and now make up well over a third of all roles in HR.

The Next Step has been collecting data since November 2013, drawing information from major employment and company websites, to provide a clear indication of the trends that are occurring in the HR market.

What are the dynamics behind the growth of contractors in HR? Like most market changes, there is no one reason according to Craig Mason, Founding Director of The Next Step.

“Firstly, as everyone knows, for a range of reasons there is a rise in the so-called gig economy and the flexible workforce.

“Specifically in HR, I think there are two major factors for this being accentuated. Firstly, the sheer amount of change over most sectors and organisations has ramped up significantly and this has needed to be supported and most HR teams are relatively thinly resourced, they therefore need to be additionally supported,” says Mason. Additionally, HR teams don’t necessarily have all the capabilities and these may need to be augmented by people with specialist skills.

“A second key reason Leaders are bringing in HR contractors is that they’re uncertain of what their HR operating model will look like in 12 months time, so their preference is to hire people on an interim basis.”

It’s not just in HR and it’s not just in Australia. In Singapore, Hays employment reports that the number of contractors has more than tripled over the past 18 months and the growth is expected to continue, with demand primarily coming from IT, Finance, Technology and the Banking sectors.

We reported last month that HR is a sector where there is predicted to be oversupply this year. If this turns out to be true and the trend towards outsourcing HR skills and knowledge continues, then how HR professionals can distinguish themselves in a competitive marketplace becomes very important.

A key differentiator Mason believes will be HR professionals taking charge of their own development, and a clear way to demonstrate this is by being professionally recognised by HR certification. This shows that they have skills, knowledge and behaviours demanded by modern business.

“Certification gives an employer confidence and a practical reference point. If I was an HR professional in the market I would want to do my best to differentiate myself and certification provides that.”

Mason makes the point that if HR professionals are looking to work in the flexible market as an HR contractor or interim, then, perhaps more so than other HR practitioners, there is an imperative to manage their own ongoing professional development.

“Whether you are working permanently or doing contract work, certification is a good way to build HR capability and demonstrate your commitment to professional development. You could argue that it is more important as a contractor to qualify for AHRI professional certification as it is creating a baseline for you to be recognised by your peer group,” says Mason.

The HR in healthcare

Another key trend to emerge from The Next Step index was that the healthcare and medical sector was an increasingly important employer of HR professionals. Again, Mason suggests there are multiple reasons.

“Firstly, it is of course a growing sector because of the ageing population. But, additionally, in the past it was very fragmented and decentralised and therefore HR practices tended to be under-sophisticated and relatively transactional in their approaches.”

“We’re seeing this sector being radically transformed as a range of businesses in public, private NFP and non-secular are consolidating the market. These larger organisations recognise that a key to achieving their future business goals is the alignment of their people practices to complement their overall business.. For instance, talking recently to a CEO of a very large 13,000 strong services organisation, with a geographical distribution across Australia, she told me that talent acquisition and retention are among their top three business issues. It is just so hard to find high-quality people with the remuneration levels they have available, in the locations in which they operate. They would offer more money if their pay models weren’t squeezed but they have acknowledged that aligned people practices would go a long way to alleviating the issues and therefore recognised the need for a high calibre HR function.”

Join us at the “HR Metrics & Analytics” event in Johannesburg (6th – 9th June, 2017)