Task by Task: How the Extended Workforce is Shaping the World of Work

Transcript:

Bruce Morton: Allegis Global Solutions (AGS) presents the Subject to Talent Podcast, a hub for global workforce leaders to unleash the power of human enterprise. Listen in as we explore the most innovative and transformational topics impacting business today.

Bruce Morton: Hi, I am Bruce Morton, the host of the Subject to Talent podcast. Today I'm joined by a very good friend of mine, Jeff Nugent.

Jeff is the co-founder of the Contingent Workforce Institute. He almost doesn't need an introduction, but I'll go with one anyway. A very distinguished figure in our industry, he's been a founder of several companies going back in the day, including Flextrack, People 2.0 and more recently Independently. He also serves as a national board member and the chair for the Canadian Staffing Association, and is a heavily sought-after speaker and consultant.

I'll end the intro there otherwise we'll run out of time. But welcome to the podcast, Jeff. We're so pleased you could join us today.

Jeff Nugent: Thanks, Bruce. And it's always a pleasure talking to you over the years at various conferences and events and things like that. We've always had such great conversations on where the industry is going and what's happening, right? So thank you for having me as a guest.

Bruce Morton: Yeah. We always seem to be in sync, we arrive at the bar at the same time. I don't know how that happens, but anyway.

Jeff Nugent: That's where a lot of creativity happens, I think.

Bruce Morton: Exactly, exactly. So, on AGS Subject to Talent podcast, we always ask our guests the same first question. That is, how did you get into this wonderful industry? And what was your journey to get to where you are today?

Jeff Nugent: Well, like a lot of people, you don't expect when you grow up to be a recruiter, right? But I was in business school, and this was before the internet, which is kind of a funny... I do want to date myself to a certain respect, there's somewhat of a pride in that. And thought, "Wow, technology is incredible."

The computers were just coming out and every few years they were advancing so greatly, that you buy a $3,000 piece of hardware and a year and a half later you buy another one. So I thought, "Okay, I got to be in IT."

And as a business student, you end up thinking about where your career is and often goes into consulting. So I applied to a newspaper ad, Bruce, newspaper ad. Just want to also date myself on that. And thought I was joining a big four consulting house for IT consulting. And it turned out it was a smaller shop, but it was more of a recruiting house.

And I found I was really good at it, and the money was great, and helping people find jobs was pretty awesome, I thought, at the time. And kind of the rest is history, of getting into what you introduced. Worked for a large staffing firm, helped them build their managed service provider (MSP) and vender management system (VMS) solutions, before they were actually called MSP/VMS, right? And we made those acronyms up as a way to market it.

And then got really heavily into the employer of record and agent of record game in around that era, so that would've been early 2000s or so. And then started my own firm that merged with People 2.0, to be one of the founders of People 2.0. And kind of the rest is history.

We sold the company in 2021. And instead of golfing, I found out that I'm not a great golfer, I decided, "Hey, had a bunch of great conversations with people and there's so much happening in our industry," that I've come back into it and founded another company called Independently, a technology-based company.

Bruce Morton: Great. Well, I want to get into that a bit later. But today we're going to dial it into the future of the contingent workforce space. But can you give us some context on the lens that you look through of how the contingent space, and indeed the whole of the world of work, is changing and has changed over the last few years?

Jeff Nugent: Well, there's a bunch of things that have really transformed it, right? There's what we've seen even recently, but, as we know, there's economic cycles up and down. And each time that has happened, the relationship between the worker and the organization, it's really severed the loyalty of both, right?

To the extent that now we're seeing companies not even having the grace to have conversations, human conversations, with people they're about to let go. They just cut off their access to a system, they cut off access to a location or a property and you find out by the information security people that when you're trying to log in, you no longer work for the company.

And that's kind of baloney really. And I'm trying to keep my words nice for this. PG, let's call it. And that has progressively happened over the last 15 -20 years and really has peaked.

So when you start thinking about that, it really moves towards contingent workers. And the general tenure of an employee these days is a year and a half to two years. And a very sought-after consultant, guess what? Their tenure often is longer, in that 18 (months), two years, three years with employers, than full-time employees.

And so there's always exceptions to those rules, but when you look on averages, there's a real convergence of not knowing what's full time or what's contingent anyway, so you're seeing a real push towards this flexible workforce. So that's really one thing that's really driving it.

Demographics is another, right? Demographics, we had the baby boom, the large population, now we're whittling it down as they're going into retirement. And so you've got a very loyal, older, lots of wisdom in that generation, is now exiting the workforce. So that's changing the dynamics. And you've got a much smaller group of individuals moving into that management role, but often not ready in terms of the tenure experience, the knowledge of what happened.

And then you've got millennials that are the CEOs of their own company, or want to be CEO on day three of the company. So they're upwardly mobile and don't really take no for an answer, and they'll look towards being consultants as well.

So you look at all the demographics, the loyalty equation between workers and organizations, and then you have a pandemic that has really accelerated this remote flex work arrangement on a global basis. So now at any given time you can work for any company around the world through this beautiful technology that's enabled working together. And then, of course, the freelance platforms have really enabled that as well, that allows you to find a job or find a worker anywhere in the world.

So it's a really exciting time in our industry, and I see that only continuing, that flex work, that knowledge work, the remote work, the globalization of the workforce, which is exciting.

Bruce Morton: Yeah. It's interesting that here we are only a few years away from pre-pandemic, and if you'd have said to somebody three years ago, "Oh, let's jump on a video call, I want to chat with you." They're like, "That's a weirdo, why would you want to be on video?" And then here we are now my whole day, and I'm sure yours as well, is spent in this format.

Jeff Nugent: Oh, yeah.

Bruce Morton: And the idea of an actual phone call is, "Wow, that's pretty unique, you're just speaking to somebody."

Jeff Nugent: Well, I'm forcing myself to do it, so I get exercise, right?

Bruce Morton: Yeah.

Jeff Nugent: Yes, really, I'm walking and talking, I call it, so that I get a little bit of exercise, versus sitting in this chair all day looking at a screen and having to be somewhat presentable.

Bruce Morton: So those changes you mentioned, Jeff, I think there's another element that we've spoken about a lot, is the fact that none of this could have be done without the advancement of technology as well.

And even at an individual, independent worker level, they're able to be on a freelance platform because they have access to great technology that they can then submit their work on, or create whatever they're creating and so on. So I think that in itself has been an expediter.

And you shared a story with me, I'd love you to share it for the audience here, the Taylor Swift story. Which has nothing to do with the Kansas City Chiefs, but he told me, "Let's be Swifties for a second."

Jeff Nugent: Yeah. Well, everybody's got to jump on the Swifty bandwagon. But the whole idea of making money through the internet is just so easy, there's so many side hustles you can do that then turn into full-time hustles.

And so the Taylor Swift story, of course, there's such demand for the tickets. She's a phenomenon and there's such a great following that a friend of mine actually wanted to get tickets, didn't get tickets through the (code process). If anybody's a parent of girls, and/or Swifties, let's call them, I won't say mainly girls, but I have two 20- and 19-year-old daughters that wanted tickets. And I think we were, as parents, having to go through that process of getting a code, then logging in at a certain time. And it was just a pure lottery, basically.

A friend of mine said, "Oh geez, I didn't get the code, but I really want to provide the experience for my daughter." And so she took it upon herself to say, "Huh, why don't I think about paying the exorbitant prices that you're now seeing on StubHub and online, the reseller market?" And she started her own little business selling Taylor Swift gift baskets for Christmas, and custom design mugs, et cetera.

That she actually didn't have to put any money up, it's all drop shipped. And she designed them, but it's all online through the various marketplaces that are produced and drop shipped right to the customers all over the world via these various technologies.

And she ended up making more than enough to buy top tickets for Taylor Swift, getting a flight across the continent, and an unbelievable hotel room right at the concert. Which, I'm a Torontonian, or in Canada there's a hotel right at the stadium where she's playing, and so she's staying where Taylor Swift is. And it was all paid for by doing these interesting gigs and selling things online. Which is the creator economy, that's often called, right?

Bruce Morton: Yeah, that's just such a great example. Thanks for sharing that.

So as a couple of... Well, I'll age myself and you can take it upon yourself. As an aging baby boomer, I've been in the industry 45 years now. And as head of strategy, I sometimes call myself as head of frustration, because you're trying to get things changed at the speed of light and things take time.

But how can we help organizations and individuals move past those viewpoints of yesteryear and truly take on this new world? And actually benefit, utilize and exploit everything you've just been talking about, but at the enterprise level as well as the individual level?

Jeff Nugent: Yeah. It's interesting, because the workforce is longing for it, especially after the pandemic. And what we're seeing the organizations, again, we've had a little bit of an economic cycle, so that the loyalty has been broken a lot of the times.

But also even if you are working, you're being asked to commute back into the office often. And the workforce is not taking highly to that and they're looking for alternatives, be it alternative jobs with other organizations that have hybrid or more flexible work arrangements, but ideally that they don't have to go in to work at all and they're working on their own terms.

And I don't blame organizations, because I do believe there's more productivity by being in the office and engaging with your colleagues. The learning is fantastic, but the world of work has changed. In terms of it's really in the hands of the workforce versus the employer saying, "Thou shalt." And top talent will be mobile if you tell, "Thou shalt," to them, they just will be.

They're going to say, "I want to work this way." And you tell them otherwise, they've got an eye out the door and there's technology enabling them, other organizations, enabling them to change.

To take advantage though is really... I love the word pilot. And so you start to have to think around doing things strategically, and testing them and experimenting with them. And calling them pilots, where you see it as an experimentation, is the best way to at least try some of these new ways of doing things.

Hiring people through platforms, crowdsourcing, where you’ve got a task to do and you bid it out onto the crowd to get multiple viewpoints and multiple people working on them simultaneously to get the task done. Actually even changing the way you do work from the person in the seat on a 40-hour work week to, “Hey, I need this done, this task done. And it really doesn’t matter if the person takes 40 hours in that week to do it or two hours, and I’ll pay for this task.”

So, there’s a lot of neat ways and neat things happening, but old ways tend to take precedent. It’s what people know, how organizations know, how governments know how to govern and create regulations, is that traditional way of working. And so it’s going to be a slow way to do it, but I find that word pilot and experimenting is key to at least trying it and gaining confidence that its can see some successes.

It's just like when we got into the industry way back when and we started talking about the MSPs and VMS technology, it was a good time. They were invented well before 2008, 2009, but it was the economic downturn that actually helped us sell it as a free way to save money for organizations.

And we went into that vendor-funded model telling clients to, “Centralize and you're going to save a boat [load] of money and it's not really coming out of your pocket." And that's how that centralized workforce management was created.

But even then, you were piloting them and choosing what departments. You didn't do the big bang, “We're just going to do a big global implementation right off the bat," you took baby steps to move towards the bigger goals.

Bruce Morton: Yeah. And you think that's about finding the right organization to go on that journey? Or is it about the individuals in the organization? How do you choose the (way to go)?

Jeff Nugent: I think it's both, right? So if I was to say to an organization, it's got to have the right culture. The culture that allows for failure, allows for learning, versus deeming it failure and pointing fingers and potentially exiting someone based on an experimentation gone sideways. So I think that's a key thing, is to have a culture that allows for that.

But 100% it's about individuals. I haven't seen any implementations that started from scratch, let's say, and we often call them gen one, that didn't have someone being the champion, and really driving it forward, and being creative, and moving it forward. Or someone that's done it before being transplanted to a new organization to run the programs, and start them up and run them.

So I truly believe it's that expertise, and that knowledge, and that willingness to take some risks and do the crazy thing we call centralizing a contingent workforce all through one technology and one program. Has lots of caveats to it and lots of balls that you have to juggle. And usually it's someone a little bit crazy, I would say, to take that on.

Bruce Morton: Yeah. And I think experimentation is such a good word, because it gives people permission to try things out. And it's a pilot, and, "Hey, you don't have to boil the ocean, let's just experiment in this function or this location." I like that a lot, and I think that's great advice.

So as we think about, you mentioned earlier how easy it is now, or how much easier it is to get work done anywhere in the world, that obviously means the globalization of work. And I think that right now we're seeing, certainly across our client base, a real demand to put that work elsewhere in the world where the people are.

And that isn't just about labor arbitrage anymore, it's, "Where's the talent?" Because we take technology in the US right now, and as of this month it's sub 2% unemployment, which probably means zero. So you've got to put the work elsewhere. And we're starting to see these hubs of expertise popping up in these different locations, which I think is fascinating.

And I'm guessing that's one of the drivers for you to launch your latest venture, Independently. So can you just share with the audience just a few sentences about that?

Jeff Nugent: Yeah. My experience, of course, for the foreseeable past, 10 - 15 years, has been in the employer of record and the agent of record, so it’s employer of record, payrolling and independent contractor (IC) compliance.

And specifically, the last four or five years was with People 2.0, when we essentially did a lot of mergers and acquisitions across the globe and we could employ both temporary employees and ICs in 50 to 60 countries, where we were the in-country specialists.

And the demand for that service continued to grow. The complexities of the regulations, and the variation of the payroll taxes, and the currency exchanges, and all of those types of things really is an obstacle to often engaging these global talent.

And I'll talk from a buyer in North America. A buyer in North America hires someone in Texas, and let's call it a W2 or a temporary employee, and it's 11% government remittances for that W2, plus a markup, let's just say is 5% market plus 11, you're 16% on top of that $100 an hour. And those are fictitious numbers, don't quote me, I haven't been payrolling for a long time, so I don't know what the statutory are, but it's $116 for a $100 an hour worker.

Same worker in Italy, you thought you were going to get $100, and it turns out to be about $175 or sometimes closer to double. And the reason being is they have very different statutory, and they also have different employment laws that workers are paid their vacation pay for two months.

So, they have this mysterious thing that a North American buyer goes, "What the heck is 13th and 14th salary?" And it's two-months’ vacation pay. And so that what you thought [was that] you're getting the best talent and you're going to pay a reasonable price, it becomes a little out of reach.

So the whole idea of smoothing that with the trends in independent contracting, first and foremost, there's a lot of senior people. There's such a trend with the platforms out there where more and more of the workforce is actually choosing to be ICs. And there's reasons why they're doing this, for not only the lifestyle flexibility, but a lot of governments, payroll taxes and income taxes have gone incredibly high for high-income earners.

And so to have a small business with lower tax rates and being able to write things off, versus high personal tax rates as a temporary employee, they're motivated financially to be ICs too.

And so both that smoothing of, "Hey, I'm just going to invoice you at $100 an hour plus maybe some sales tax, and you're going to pay that no matter who you hire around the globe." And then on the other side, the talent choosing to be small businesses, because it's optimized tax structure for high-income earners. I saw those trends, and in doing that said, "What is the obstacle for that to happen?"

Well, the regulations are complex. And so to build just a very simplistic app that becomes that standard compliance operating system, that vets ICs in global jurisdictions, as well as what I would call the 50 “United Countries of America,” because each of them have different tests often for ICs too, to make it simple. And that the end buyer uses a standard background check tool, to then have confidence that they're buying the services of an IC, no matter the source, be it a staffing agency, an online platform or direct for that matter and run it through accounts payable.

That's one of the obstacles to that happening. And so that, for some reason I decided to take on the crazy task of doing it. And we just launched late last year and it's been going well so far.

Bruce Morton: Great. Well, congratulations on that. A much needed service, so good luck for the future with it.

So one final question before I ask our final question, so penultimate question. Just to get your view on the evergreen topic of who should own the contingent labor force inside an organization, procurement or HR, or a mix of both? And are there any trends of that? We have our view from our lens, but where do you think that that journey is at right now?

Jeff Nugent: Well, it's been interesting, that centralized management of the contingent workforce came during that 2007 to 2010 cycle, economic downturn.

And it was deemed a free way to cost save. And we did. The industry by centralizing it, managing rates properly, creating visibility, did save enormous amounts of money for organizations. And so it made sense at that time, and the champion was procurement, even though it was talent, because often it's called external talent or external services. And so procurement grabbed those reins.

And HR often said, "Well, that's external talent. I like nurturing relationships with my internal full-time employees, et cetera.” And so that's how it began.

But the trend towards it actually being talent and recognized as talent has constantly and constantly marched forward. And the whole discussion around direct sourcing and the scarcity of resources that we have in the marketplace today is where organizations have to take responsibility to find this talent. You're finding more and more HR and talent acquisition jumping into being a lot more involved. And, in a lot of cases, potentially taking it over.

This downturn has also shone a light on duplication of things within an organization. And direct sourcing, why would you have a direct sourcing tool that looks a lot like an ATS, and a curation team that you're paying for, on the procurement team that's finding, "Oh, the tasks that they're actually doing looks a lot like the recruiters in the TA team."

And so organizations are saying, "You got to pick where this is going to be," and usually it's a talent conversation. So we're seeing more and more shift towards talent. And the direct sourcing conversation has been actually shedding a light on that as people are escalating it and saying, "I need money for curation, or a technology that centralizes the tracking of candidates," which sounds a lot like an HR system, right?

Bruce Morton: Yeah. It's interesting how direct sourcing has almost been that conduit between HR and procurement [so that they] are now hardwired.

Jeff Nugent: In saying that, though, it's still external resources that you need to deal with a vendor contract. And guess what? It's a heck of a lot of money and spend, still. And I asked a lot of HR folks about that, and they don't like using their calculator and negotiating hard with vendors. So having procurement skills within the HR groups, I think, is that optimum scenario, right?

Bruce Morton: Yeah. Well, I don't want to get into skills-based organizations, but perhaps in the future those will be skills that will be in HR, will be procurement.

So to come to our final question, and we always ask the same one to all of our guests, the dreaded crystal ball. But if we are having a beer in five years’ time, how does the industry look different to how it does today?

Jeff Nugent: It's just going to continue advance the seedlings we're seeing right now, where the gig economy, the platform economy continues to grow.

Interestingly enough, though, when I say that, it doesn't say... I'm not saying traditional staffing firms are going to go the way of the dodo bird, they're catching up with being technology-enabled staffing firms. And we're seeing a lot of the platforms putting enterprise solutions behind the curtain. And what that means is actually putting people behind the sexy technology interface.

And so you're seeing this convergence of singularities, but I see that continuing to drive forward. Because as consumers we're getting used to self-checkout. We're getting used to a lot more self-service. And so that technology enablement of staffing and the technology that's already there with the platforms will continue.

I think gig work and the whole idea of task-based work will continue to grow. And we've talked about the global workforce, I think that will continue to be a trend. Because that whole idea of regulation [that]  technology is starting to solve some of those complexities that would've been, "Ah, no, I'll just hire someone local," as well.

And so I do see those trends as well. And lots of opportunity everywhere to continue to be in the staffing industry and the contingent workforce management industry. And that's why I continue to not golf and continue to be in this crazy industry.

Bruce Morton: You and me both, brother. Well, thank you so much for your insight and conversation today. It's been a lot of fun, very insightful as always. Really, really appreciate you, Jeff.

And just one last thing, where can people find you online to connect with you?

Jeff Nugent: I'm pretty easy to find online, on LinkedIn primarily. I run a LinkedIn group that I started back many, many moons ago that has a lot of individuals in it, called Contingent Workforce Strategies. But I'm just easy to find on LinkedIn most likely, and my emails and phone numbers are there.

And I'm always open to having conversations with people. This is an amazing industry that's been very good to both you and I, and happy to have conversations about it.

Almost geeking out about it, because I've been to many cocktail parties with friends that are lawyers and accountants and those types of things. And you always say, "This is what I do." And they go, "Are you a recruiter?" And I'm like, "Well, something like that." And so to have others that embrace it and love talking about it too is always fun.

Bruce Morton: Fantastic. Thanks again, Jeff. Really appreciate it.

Jeff Nugent: Take care. Thank you, Bruce.

Bruce Morton: If you enjoyed this episode, please subscribe, rate and review us on Apple Podcasts, Spotify, or wherever you get your podcasts. And if you have questions, send them to SubjectToTalent@AllegisGlobalSolutions.com. Follow us on LinkedIn with the #SubjectToTalent and learn more about AGS at AllegisGlobalSolutions.com, where you can find additional workforce insights and past episodes. Until next time, cheers.