The workplace is looking very different. Today, there are some 4.6 million self-employed workers in the UK and that figure is set to grow in 2016 as more professionals seek gigs instead of full-time jobs as the sharing economy and freelance marketplace expands. 

What’s more, Generation Z will be entering the workforce from May and jaded from the recession and suffering from student loans this new generation is set to become even more entrepreneurial. And we can’t forget that the full-time skills shortage is set to continue to bite too. UK productivity in 2014 was 20 percentage points below average compared to other major G7 economies so the UK’s continued shortfall in productivity levels will be of major concern to UK employers and workforces. An organisation’s ability to be flexible and agile – already acknowledged to have been vital to the UK’s resilience within the downturn and recovery to date – must be of paramount importance to UK plc. The upshot of all that means the impact and pressure on HR will certainly be felt.  More than ever, knowing what skill sets and talents you need to drive your business forward, planning your headcount accordingly to stay ahead of a skills gap that could hinder your company’s growth and competitive advantage will be vital for HR directors and their management teams and will present a number of challenges. Effective management and transparent communication will be vital.

While the growth in freelance numbers is, overall, positive, it is a mixed blessing for employers; whilst it gives companies the ability to flex the workforce in ways that permanent employment doesn’t allow, they have to reconsider how to attract freelance skills, and how to juxtapose their employee value proposition and the proposition they use to attract freelance skills. They will then need to learn how to obtain and retain visibility of the sum of employed and non-employed workers and to manage them as one workforce which is a new phenomenon that the vast majority of employers are yet to grasp.

But they need to grasp it quickly as managing the two types of workforces effectively will be what sets one company ahead of the rest. A few months ago, the Pension and Lifetime Savings Association (formerly the National Association for Pension Funds) released a report entitled “Where’s the workforce in corporate reporting?” and highlighted the lack of reporting on how businesses manage their workforces. The report suggested that if a business understands its workforce it can deploy it properly and went on to recommend that corporations review the composition and stability of workforces, skills and capabilities as well as the motivation and engagement of the workforce. It also questioned the employment model and its sustainability.

It was pleasing to see a report putting human capital at the core of its agenda. The report also highlighted that only 11 percent of FTSE companies measure the number of temporary workers they take on. Indeed, it is possible that HR departments don’t even know how many temporary workers are in their organisations. Often it is a procurement decision without HR input being necessary. But who is responsible for the welfare of the workers? Presumably the firm fulfilling the outsourced function and there would be an outcry if workers were being exploited. Sports Direct has made the headlines of late for exploiting its workers, many of whom are employed through agencies on a temporary basis. I would argue that the hiring firm has a moral duty to ensure that there is no exploitation throughout the supply chain, even for services or functions that are outsourced. So this suggests that HR and procurement teams need to work closely together to avoid potential reputational damage through dubious working practices further down the supply chain. Choosing a supplier purely on price alone might not always be the best decision. 

In the future, those companies with an employee-centric focus will be at a competitive disadvantage to those which are learning how to embrace the extended enterprise. The question is whether organisations will pull themselves into action or they will be pushed by external suppliers (notably, of HR systems) to gain the real-time visibility required to realise the cohesiveness required. It is important that everyone involved in any project knows what the objectives are, the specific outcomes anticipated and the timescales of that project and who they should be reporting to during the project. Before your freelancer begins work, be sure to familiarise them with your organisation’s internal culture. If they understand the context of the project they are undertaking and the environment they are less likely to be working in a vacuum.  It is also important that a freelancer knows how his or her work will be evaluated: Did they deliver and meet the objectives? Were they integral to the success of the project? Do they fit with your corporate culture? Are they easy to communicate with? Their strengths and weaknesses, did they go the extra mile? So my advice for 2016 to all HR directors and management teams out there is to be better informed about the number of contractors and freelancers who are working within your midst. They need to be part of your overall business strategy because they are key to your future success in 2016 and beyond.