Were you aware of the growing trend of public, ASX listed companies shifting their workforce strategy to include contingent workers? That’s right. Public companies are seeing the commercial and strategic value in contingent labour.
But let’s step back for a minute…
For some time now, organisations have been leveraging the benefits of hiring contingent workers. This shift has been a global phenomenon, one that is steeped in operational dexterity, efficiency of output and often a sharper, leaner means of doing business.
It’s a shift that’s been undertaken with strategic intent. No longer seen as a short-term solution to talent or skills gaps or to contain workforce overheads, contingent workers are now being actively included into staffing strategies for the long-term.
And it’s a trend that isn’t limited to SMB’s or the growing army of start-ups across the globe.
Across many industries in which Australia’s ASX listed companies operate, the increasing usage of contingent workers is something worth recognising.
What Drives Public Companies to Utilise Contingent Workers?
With the competition facing organisations in all industries today, listed companies are looking for clever – perhaps even unforeseen ways – to attain competitive advantage. This point is even more relevant given 2020’s pandemic maelstrom.
Whether public companies have performed well, or suffered losses over the past 6-12 months, many industries are looking to a contingent workforce strategy to achieve:
- A reduction in headcount and labour costs
- The ability to shift direction or strategy with greater efficiency
- Being able to assess and respond to the needs of the business, on the move. Rather than taking a ‘set and forget’ approach, a contingent workforce instils a mindset of flexibility and acuity, offering the ability to pivot to market forces and shareholder sentiment
- Access to new insights and experiences. A contingent labour force opens public companies up to ideas, innovation, fresh perspectives and creativity
What about by Industry Group?
Of course, some industries are taking a major negative hit in 2020 thanks to COVID-19, while others are reaping a significant boost to share price.
From my brief research of the major industries in the ASX top 100, I’ve compiled a sample list of companies by industry and we can see the year-on-year lift or decline in the share price. Take a look below:
*Source: Market Index (as at close 21 July 2020)
(Obviously, these are an arbitrary selection of ASX companies by each industry group nominated. Yes, there were some that defied these trends; they were anomalies.)
How do Sharemarket Winners and Losers Leverage Contingent Workers?
My reason for sharing these examples above is to highlight the present opportunity for companies on both sides of the scale.
Yes, that’s right. This situation in 2020 is two sides of the same coin for public companies in Australia, and there’s an opportunity here for both categories to shift their workforce strategy, by including contingent workers. Take a look at the simple comparison below:
Additional points to consider for public companies on both sides of share price movement:
- Public companies are always keen to demonstrate to shareholders, proven initiatives for cost-cutting and improving value. A contingent workforce enables them to save time and resources on overheads like employee insurances, and statutory obligations
- Public companies need to seek out innovation. To see and move beyond the norm – particularly in 2020. Historically, once a company goes public, the quality and consistency of innovation can decline. And so too, the exodus of highly skilled talent along with their IP is very real. In 2020, that thinking needs to change
- The inclusion of a contingent workforce as an innovative workforce strategy holds up to public scrutiny as long as the approach is managed with experience, insight and proven management techniques
- With what has been described as a ‘glacial speed of change’ regarding diversity in their workforce – especially gender equality – public companies’ inclusion of a contingent workforce have the opportunity to equalise gender gaps and better satisfy all stakeholders, especially if quotas are to be avoided
Interestingly, according to the Hays study, Temporary Workers: A Permanent Solution? – these are the industries including contingent in their workforce strategies:
- Public sector: 28.9 per cent
- Construction, property and engineering: 21.9 per cent
- Resources and mining: 17.1 per cent
According to the Australasian Centre for Corporate Responsibility (ACCR), there is growing investor interest in the human capital management within public companies. This interest extends to workforce composition, diversity, gender issues, remuneration and more. The general consensus of shareholders has been that reporting is too light-on. To this end, the ACCR’s recent report on workforce disclosures is a worthy read. You can access it here. My reason for raising this point is that where a contingent workforce strategy is embarked upon by a public company with the right partner, risk is reduced, compliance issues are met and costs decline. All great insights for happy shareholders.
Seems like a no-brainer!
As one of the world’s leading providers of contingent worker management solutions, CXC is well positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across five continents and decades of experience, we can assist with every aspect of your program.
If you would like to find out more about how we can help please contact us here.