Right Talent, Right Engagement: Here's why firms need to engage with independents properly!

Tuesday: Return Driven Strategy FROM THE DESK OF MILES EVERSON: Hello! Have you heard about Return Driven Strategy (RDS)? If you haven’t yet, it's a pyramid-shaped framework that has 11 tenets and 3 foundations. When properly integrated into your business strategy, these principles will help you achieve true wealth and value creation. Today, we’re excited to share with you an important insight about the independent workforce. We’ll tell you why it’s important to hire independents while minimizing your legal exposure. Curious to know more about the topic? Continue reading below! CEO, MBO Partners Chairman of the Advisory Board, The I Institute

Right Talent, Right Engagement: Here's why firms need to engage with independents properly! Today’s business landscape is currently experiencing a drastic change as new ways of working have emerged. Gone are the days where firms relied on full-time employees who worked on-site in crowded office spaces. These days, enterprises across the globe tap the services of independent contractors who work remotely and only stay on for a set period of time. The independent workforce is a valuable source of labor since firms are able to outsource work on a project basis, giving them staffing and financial flexibility. Due to these advantages, it’s no surprise that many companies are expected to hire more independents in the next 3 years. While it seems that contingent labor is advantageous for the most part, some companies have pulled back from using this talent pool altogether. According to MBO Partners’ research, some firms have pulled back from hiring independents due to the risk of employee misclassification. If you’re not familiar yet, employee misclassification happens when an employer incorrectly classifies an employee as an independent contractor. In fact, a Deloitte study found that most companies are not yet fully prepared to outsource work and hire independent professionals, leading to the possibility of misclassification. When misclassification occurs, companies are exposed to audits, fines, penalties, lawsuits, and in some cases, bad publicity. These days, it’s easier for the misclassification of independents to occur due to the rise of online marketplaces, platforms that enable managers or recruits to find and hire independent talent. While these online marketplaces enable managers to hire independents, these platforms put firms at risk because they lack the level of compliance that enterprises usually undergo when engaging talents. For example, a hiring manager can unwittingly expose a firm to the risk of a misclassification claim when he or she hires an independent who wasn’t properly vetted and onboarded. Given these complications, should a firm refrain from getting hiring independents altogether? NO! Even though utilizing contingent labor seems like a risky move due to the complications discussed above, avoiding this talent pool entirely only puts businesses at a competitive advantage. Instead of avoiding independents, firms should understand how to properly engage, hire, and onboard them. By doing this, a company can maximize its competitive advantage while keeping its legal exposure to a minimum. In light of what was said above, here are a few tips on how firms can safely engage with independent professionals: Create a strong and flexible classification program. In the U.S., there are no standard laws determining worker classification. Federal, state, and local government agencies have differing guidelines regarding employee classification. To mitigate this reality and minimize the risk of misclassification, companies must create a centralized classification program that takes changing regulations and standards into account. By doing this, a business can confidently and safely hire independents regardless of the regulatory environment. Establish an infrastructure for contingent labor engagement. One of the biggest risks in hiring independents is trying to engage with them without having a proper program and infrastructure in place. Without a proper infrastructure for hiring independents, there’s a lot that can go wrong for companies. In order to establish an engagement program for independents, a business must first conduct an audit on its current hiring practices to identify gaps and areas for improvement. If a business is having a difficult time setting up an infrastructure for hiring independents, then it should consider partnering with an expert who can help establish an effective engagement program. Make sure contracts are right from the start. A company must draw up contracts that clearly and and accurately defines the role, compensation, and length of service of an independent professional. Once that step is done, the next thing a firm must do is to ensure that it treats and engages with the talent based on the terms of the contract that was signed. By following these steps, firms can easily and safely engage with independents. — As discussed by Professor Joel Litman and Dr. Mark L. Frigo about Return Driven Strategy’s (RDS) seventh tenet: Partner deliberately in the book, “Driven”: “Any successful business leverages the partnership of a whole cast of players outside the firm. The right partnerships allow the business to focus on its strengths and rely on others to do things it ought not bother. The strongest partnerships bring unique assets together that allow the firm to innovate, brand, and deliver unique need-fulfilling offerings.” To thrive in today’s complex business and work environment, firms must do everything they can to remain ahead of their competitors. One of the ways they can do that is by engaging with independent professionals who can give them both staffing and financial flexibility. While hiring independents these days is much easier, a firm has to make sure that it won’t leave itself vulnerable to audits, fines, and other legal complications. So, if you want your firm to remain ahead of the curve in today’s complex labor and business environment, keep the information and strategies we shared with you in mind! These insights will enable you to engage with independent professionals regardless of the regulatory environment! If you're looking to gain a better understanding of RDS, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo. Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm. Hope you found this week’s insights interesting and helpful.     What first comes to your mind when you read or hear the term, “redesigning processes”—is it changing an entire process altogether or improving just one or some aspects of that process? Learn more about the 8th tenet of RDS in next week’s article!