Australian contingent labour usage among the world's highest

The current global economic downturn has added a new dimension to an already challenging talent management environment. Before the global recession, organizations were already faced with a growing number of baby boomers retiring, and fewer younger workers available to take their place – along with the need to acquire and retain ever more skilled workers to better compete in today’s high-tech economy. A recent study by SuccessFactors Research, the BPM Forum, and the Human Capital Institute demonstrated this intensification of global talent competition1. That study confirmed the findings of other recent work showing that the growing battle for talent is making talent acquisition increasingly difficult and expensive, putting strains on the quality of customer service, and reducing business flexibility. Most importantly, the competition for global talent has been a major reason that labor costs in most major economies are increasing.

With approximately 70% of an organization's operational expenses being various labor costs, it is critical to look at ways to both increase productivity and manage labor costs2 with more agility than in the past. – This is necessary to be able to compete and survive in today's economy. Even in a deep recession, organizations must attract and retain top talent. At the same time, they need to reduce, or at least, manage labor costs in a way that protects dwindling profits. In this paper we report on a study conducted by SuccessFactors Research and the Human Capital Institute, on two related approaches to this problem:

• Using a flexible approach to workforce mobility to ensure that the best person is doing each job in every location and that key talent is not lost through an inflexible approach to workforce mobility. Supporting workers who want to relocate to a new office (or, perhaps, who want to work part or full-time from home), as well as those who don’t want to move, can pay off with more engaged workers and a workforce that is distributed in the most effective and competitive way possible. It will improve talent acquisition by allowing top recruits a choice in where they will work. But most importantly, it is critical to retaining top talent and, thereby, both maintaining the high levels of productivity of top performers and reducing the costs associated with replacing those top performers if they are not supported.
  
• Using the contingent workforce, as well as other types of non-traditional employment (telecommuters, etc) to reduce labor costs. Organizations across the globe are moving to these non-regular workforces in order to move from fixed to variable labor costs3. Variable labor costs (e.g., prorated health care or other benefits, decreased office space due to telecommuting) are easier to manage and reduce than fixed costs – and are a key method of reducing overall labor costs and capturing more of the productivity of workers as profit.
  

The need for a flexible approach to workforce mobility is not isolated to one country or region. When organizations in one country lower their labor costs through effective management of workforce mobility, they will have a competitive advantage in today's economy over business in their own and other countries. Our study deals with the current state and potential future directions of workforce mobility in three key regions – North America, Western Europe, and Asia/Pacific. Our research was designed to discover:

• The level of support and importance assigned to Workforce Mobility among organizations in the United States and Canada, Australia and five European countries – France, Germany, the Netherlands, Sweden, and the United Kingdom.
• If or how organizations in the above countries are using Contingent Workers, either in concert with, or separate from, a flexible workforce mobility strategy as a method to reduce labor costs.

We developed two key metrics that provide an overview of the state of global workforce mobility: the Workforce Mobility Index and the Contingent Worker Index. Workforce Mobility Index – many organizations are providing good support for workforce mobility. However, organizations in all countries could be doing much better and many are particularly challenged at dealing with these issues – whether it is the relocation of workers or the flexible use of contingent workers. Two countries in particular stood out in our Workforce Mobility Index. France scored significantly lower than average, while Sweden scored significantly higher than average. While French organizations are being challenged by several workforce mobility issues, it is their significantly lower support of employees who want to work at home that has the greatest negative impact on their Workforce Mobility Index score. In contrast, Swedish organizations provide a higher than average level of support for many aspects of workforce mobility and, most strikingly, are significantly less likely to lose top employees because of unwanted transfers.

Source: Human Capital Institute and SuccessFactors