Supply chains are the arteries that carry the lifeblood of commerce. Thanks to the ongoing Brexit debate, public awareness of the importance of the intricate supply chains that feed British industry is at an all-time high.B
When imagining supply chains, most people think of trucks, trains, ships and aircraft carrying parts and raw materials. However, the services sector is responsible for 80% of the UK economy. The primary raw material that services firms need is people. Yet businesses have often overlooked the need to efficiently manage their worker supply chains.
The idea of the “just in time” supply chain was originally applied to the manufacturing sector. More businesses are now becoming aware that similar principles should apply to their human resources needs.
Contract workers provide businesses with greater flexibility, allowing businesses to adjust easily and rapidly to workload fluctuations. Temporary workers can be selected for the focused experience and skills required for a particular project. When time is of the essence, recruitment lead-time is minimized. Temporary workers don’t have to give notice and hiring can even take place remotely, since there is less at stake than when hiring a permanent employee.
We read daily about the disruptive effects which tariffs and increased paperwork at borders can have on material supply chains. Yet worker supply chains can be similarly disrupted by the administrative burden of hiring, onboarding and paying temporary staff. Technology and software for temporary staffing can help to radically reduce this administrative burden, thereby increasing a firm’s adaptability and profitability.
The benefits for both companies and contractors are clear. The traditional method of administering payments to temporary staff was to manually fill out and submit time-sheets, which are then manually entered into a payroll system while the relevant tax forms would also be filled out. Nowadays, a smartphone app can be used to instantly log hours worked, to action payment and to automatically generate HMRC compliant tax forms.
The reduced administrative burden helps make the business case for greater use of temporary staff to meet increased workloads just as they arise. Significant savings can be made in relation to company payroll. Temporary staff will also usually cover their own healthcare and other benefits.
Temporary workers make business sense, by offering an adaptable worker supply chain – one which is there when you need it, but which doesn’t cost you during quiet periods in the business cycle. The trend towards flexible working is not taking place for business reasons alone. It is part of a wider social trend, driven by technology and an increased emphasis on quality of life. Contrary to much of the commentary on the topic, the evidence suggests that the trend toward temporary working is being primarily driven by workers seeking more flexible working conditions and greater professional autonomy.
The UK’s gig economy is clearly booming, with an estimated two million freelancers in 2018. These numbers are set to continue rising. The January 2019 ONS UK Labour Market Survey asked temporary employees why they were working temporarily. Only 26.8% said it was because they were unable to find a permanent role. 29% said they simply didn’t want a permanent job while 37% cited an “other” reason for temporary working. Over 73% of temporary employees are therefore working temporarily for a reason other than an inability to find a permanent position. These figures do not include self-employed contractors. They strongly suggest that workers seeking greater flexibility are largely driving the trend towards temporary working.
Technology is the other crucial factor that is causing temporary working to take off. The advent of apps such as Airbnb, Uber and Amazon Flex are making becoming self-employed easier than ever before. We should welcome these trends towards flexibility. A more flexible workforce makes the UK more attractive as a destination for foreign direct investment. More efficient staffing methods can make UK businesses better able to compete internationally as our trading patterns change post-Brexit.
Businesses will need to rapidly adapt to changing social, technological and economic realities in the coming years. Those that adapt quickly, and use technology to create an efficient and adaptable worker supply chain, are best placed to thrive in 21st century global economy.
Julian Pilling, CEO
This article was published in Lawyer Monthly