Tag Archives: organization structure

Reality Check: The Contingent Workforce is Here to Stay

worker

Are you an employee or a free agent? In May 2008 at ISM’s 93th Annual Conference in St. Louis, I heard Daniel Pink speak about the “Changing World of Work”. When Pink’s “Free Agent Nation” was released in 2001, there were independent free agents, especially in consulting roles, but the number in comparison to the total workforce was small. While many doubted the disruption of the contingent workforce in 2001 and even in 2008, there’s no doubt of its impact today in everything from how we travel by car to the workforce at Fortune 500 companies.

When you think about it for procurement, it makes sense that an independent agent with experience and knowledge in a category of spend can quickly assess the supply market, benchmark price and cost, develop a strategy, negotiate an agreement and then move on to the next assignment. This leaves the supplier relationship mangers to execute the contract and manage the relationship for the term of the agreement. This year, particularly, the contingent workforce has been a hot topic in procurement media and research. I recommend reading and listening to Ardent Partners research and Contingent Workforce Weekly podcasts, Art of Procurement’s podcasts on the contingent workforce and SpendMatters research and upcoming “GE Digital on the Future of Work” webinar to gain insight on where we are and where we need to be to optimize the “free agent nation.”

For CPOs, the contingent workforce will play an increasing role. While the budget for contract labor will increase, but companies will be released from the burden of taxes, healthcare and insurance costs, and other full-time employee costs. The key to success is to capture expertise in the short term, then have the contractor move on. The CPO can manage more strategic priorities with the right balance of FTEs and contingent workers.

It’s important to understand that the ways we work are constantly changing and evolving. With artificial intelligence (AI) and the internet of things (IoT), it’s apparent that some of the work humans currently do will be replaced through business system integration across the supply chain. We’ve certainly evolved from the days when Eleanor Roosevelt said “We have reached a point today where labor-saving devices are good only when they do not throw the worker out of his job.” Now the work and the labor force has changed – we can see the way forward to work more strategically and drive innovation.

I am structuring my company’s organization to reflect the value and opportunities available using contingent workers. What about you?

Was Daniel Pink right?

The CPO’s biggest vulnerability – Building and refreshing the team

team

On this day after “Super Tuesday” for the US political race, it’s easy to see that the voting population today is not the same as 4 years ago. Campaigns are scrambling to reach both the younger voter and the older voter (Millennials and Baby Boomers) and the establishment isn’t working. The same is true for businesses: org structures that worked 4 years ago are not working now. In the Deloitte Global Human Capital Trends 2016 new study, 92% of the top executives surveyed cited organizational design as a top priority and the report highlights the rise of a new “network of teams” org model. I see this in my own practice, especially in procurement and supply chain. For CPOs, leading teams is a real challenge.

To add even more complexity to the team building and refreshing process, ManpowerGroup’s 2015 Talent Shortage Survey found 38% of companies are have difficulty filling jobs due to lack of available talent. No longer can the chief purchasing officer rely on finding individuals who have demonstrated technical and strategic procurement skills. Today, the job requires individuals who are well-rounded and have financial, relationship, influencing, financial, political and collaboration skills. The job no longer requires just the ability to negotiate, communicate and transact. The job now requires architecting the supply chain, integrating suppliers along the chain, quantifying the added value, driving increased levels of performance and building relationships that make their company shine brighter than the competition. Plus, they need to do this as a team. And, Millennials do not expect to work for the same company for decades, so the team must continue to advance as the individual members change.

I worked with a company recently that had 18 people in the procurement department. Of the existing team, 11 people had well over 30 years’ experience in the company and in purchasing. There was no succession plan and new approaches and ideas were limited. For this CPO, bringing in fresh faces was both a do-or-die and a no-win with the existing org structure and culture. It became essential to understand the talent required for generating the kinds of value extraction that will be required from the supply chains in the future and, most importantly, to find ways to foster a collaborative team process.

What’s a CPO to do? Here are five ideas for building and refreshing the procurement team:

  1. Build strong rotational programs so that new hires will rotate through several departments in the organization enhancing their business knowledge, commercial skills and relationships throughout the organization.
  2. Understand the current culture and the desired culture, what works in the current culture, who has the strongest skillsets and who has the weakest (for now and the desired state) and develop a strategy to strengthen the weak links.
  3. Build a strong succession plan for the entire team.
  4. Move more senior team members to different roles to let the newer members develop leadership and other skills.
  5. If you find the right talent, hire that person whether you have the position now or not.

By building and continually refreshing your team, you will assure your longevity as a leader. If you fail to build and refresh your team, you will become victim of the CEO’s plans to build and refresh the team.

Are you ready for the “network of teams” org structure?