🚨 Recruiters: You’re only seeing HALF the picture.

workforce. If you're listening but not watching, I'm using air quotes because I had no idea what extended workforce meant. And apparently, I'm way out of the loop because it is a lot of different things. I thought it was, you know, contract and gig work, you know, consulting and stuff like that. But it's much, much more than that. And so, I'm very curious to kind of unravel that mystery with everybody today. And we couldn't have a better spokesperson for the industry than, than Jeff, uh, came highly recommended. So welcome, Jeff. Say hi to everybody.

Uh, thank you, Shelley. Hi everybody. And just kind of a quick word about the name. Everybody gets 3 mics and then we have a conversation. So you got 2 left and then we'll have a conversation.

No need to have a conversation, Jeff. I got you.

Happening forever. So nice to meet you and super happy to be here. And also to the audience, great to be speaking with you today.

It's awesome. Yeah, thanks so much. You've been— you've actually done keynotes at various conferences and you've been in the industry for quite some time working in, you know, different aspects of human capital from, you know, recruiting to, you know, straight-up HR retention. You've done development, human resource development and everything. And even, you know, software, right? Human capital management software. And you spent some time, 5 years at Deloitte as the head of human capital research and insights. That is a big title, leading all of the global HR workforce and workplace technology research for Berson. Berson from Josh Berson. Berson by Deloitte. Is that right?

That's correct. And so if you know how professional services firms work, there's big titles and there's big domains and there's a lot to do. And a lot of it depends on the influence you can have. But yes, I did lead the, the research team for the Burson offering and then ultimately the research and sensing offering, which has been folded into something else since then. So I had a great team of researchers, analysts, advisors, and we did a lot of really fun stuff there.

Yeah, it sounds like it. And so you developed a deep expertise in, in the extended workforce. Why don't you just put me out of my misery, man, and like explain to me what is— I mean, I've heard the term, and but I didn't even really know what it was. What does it really include, extended workforce? And if you can dive into in particular, where do most TA teams, TA people get it wrong when they try to manage their workforce? Let's cut to the chase.

I'll start by saying TA is my first love. When I started in people side of business, I was as a recruiter and absolutely loved it.

We love you too.

So, and I never, like throughout my entire HR career, something I always said was you want to be strategic, you have to understand TA no matter who you're talking to. So I just wanted to start with that. So I don't know if they're getting it wrong. I think they see it. But to go back to your question, the extended workforce is You know, everyone's probably heard of the contingent workforce. So maybe temps.

That was the name that I remember from before.

So the industry is still called in many, in many ways, the contingent workforce. At Deloitte, we tried for a while the alternative workforce. And now something that's taken hold is the extended workforce. And the extended workforce, more broadly speaking, and I can get into some categories, but broadly speaking, is really Who are the people who provide their expertise and their experience to your organization or your enterprise in order to build value in return for something who are not FTEs? And so that can include everything from, we've talked about temps, we've talked about temps that you direct source or sometimes called payrolls, silver medalists or alumni, freelancers or gig workers is very common. One of the categories that gets skipped though, and people don't think about necessarily, is really statement of work resources. So when you go to a Deloitte, you go to a niche professional services firm to provide something of value in the term of services, they, you know, essentially sell you their people to provide a service or to generate value in some way. So one of the ones that gets lost, and there's a movement to try to incorporate it, is all those people who might work for partners or for professional services firms, um, on statements of work, those should be included as well.

And those are consultants and advisors. And so they might not— they're not really a contractor because they're not on contract for a specific project that starts and ends. They're delivering a service that was, you know, acquired from a partner company. And so Necessarily the same.

That's, that's broader, but a lot of times, uh, you know, statement of work are consultants who are there for a very specific project. And so there is a start time and an end time.

You can go a little bit broader with that project, but they're with Deloitte full-time, correct?

Right.

Or whatever. So not there— when I think contractor, I think the person goes to work for Company X for 6 months and then leaves. Um, what you're talking about is the person works for an advisory firm or partner You know, and then they, they work on many things, but, you know, they have a project that starts and ends.

That's correct. And one of the, one of the things, I don't know if I want to call it a secret or something that's being kind of emerging or exposed in the industry, is a lot of those statement of work contracts are essentially staff augmentation, um, uh, you know, projects or engagements because the staff aren't available through freelancer, through temps, or through FTE. So they'll go to a firm that's known for, you know, a specific level of expertise and they'll engage them. But at the end of the day, it's really you're buying people from this firm to do work for your organization.

Could be the time. So it could be time, like hourly. It could be project-based. It could be— it may even actually not be paid as well. Am I correct in that understanding that volunteers are also part of this? This universe?

I would consider volunteers as part of the extended workforce. And a lot of our enterprise, a lot of enterprises do the same. And the reason is because they still have to go through some level of onboarding, background checks, and credentialing and provisioning in order to volunteer. So it's still a person, you know, working to add value to your organization, even if they're not paid. So you've got to do the security background checks.

And they need access to your systems. They need an email address, a user ID. All that stuff. Yeah. Wow.

So they need to be offboarded too. So when the time's up, right, you've got to make sure the equipment's collected, their deprovisioned access is removed, those sorts of things, right?

So in the world of recruiting that I know, and, uh, you know, which is everything from staffing firms to, you know, corporate recruiting and, and everything in between, I'm very familiar with contract. I actually started out placing contractors where it was you know, specifically they go to work on a 1099 basis. Um, and, um, I'm so familiar, familiar with that. And as a consultant and advisor, I'm familiar with that as well. Um, you know, statement of work. But a lot of this other stuff, I, you know, like for example, temps. And, and I never worked in, in that space. Um, the closest I got were contractors. So Do recruiters just like— I mean, do recruiters just not really get involved in this part? Who runs this? Who runs the non-full-time employment contract recruiting, you know, contingent workforce, extended workforce part of the, of the business?

Yeah, so that's a great question, and it's a great time for that question. So on a broad scale, when you have large numbers of contingent workers or extended workers coming through, maybe you have 5 or 6 suppliers, we'll say staffing agencies. Typically on a broad scale at the enterprise level, that's been managed by the procurement team, and it's been looked at as, okay, we want to get this staff, we want to get these people on board, and, and the primary function or the primary purpose of procurement is obviously that compliance element and making sure, you know, making sure that the costs are minimized. And so what's been driving the procurement function for the past couple of decades has been removing that, you know, lowering the cost and making it as efficient as possible. If I could add, HR has typically stayed away from it because of, you know, concerns around whether they're founded or not around co-employment and misclassification. And the concerns are there. There are things you have to do, but a lot of times HR has been arms length. It's not employees. It's not been me. It's not us. That's been changing a lot, quite frankly, over the past couple of years.

So now I think something just kind of hit me. I remember working with Beeline and Deal. Are those examples of software that are in the— am I in the right realm here?

Yeah, exactly. So Beeline is in a category called, you know, vendor management systems, and they were invented— the early vendor management systems like Beeline, there's Fieldglass— were invented in the late '90s, early 2000s. You've heard of Fieldglass. There's been many others. A lot of times the managed service providers would create their own software, a VMS, to be able to manage, you know, manage the contingent workforce. The challenge has been they were developed really more as procurement tools and not HR tools or people tools. So over the past half decade or so, there's been an evolution to keep VMSs as the system of record. So you can keep that, you can keep that separation of systems of record for compliance purposes, but are more people-friendly rather than kind of just purchasing-friendly. So Beeline definitely deals a little bit different, deals in a category of employer of record or agent of record.

So for that contingent work, they got you.

That's correct. So they'll, they'll, they'll manage payment, they'll manage compliance, they'll manage— it's kind of like a payroll function, but they'll do that either for, you know, temporary employees, or they can do it as agents of record, they can do it for contractors or— sorry, freelancers.

So what do we miss in recruiting? Like, I understand recruiting someone that would come and work on a contract basis. I understand recruiting someone that would come and work full-time. I can even understand recruiting volunteers. Volunteers. I actually was a volunteer myself. I was in the Peace Corps. So I get the recruiting process might be a little bit different in different areas, but some of these others, I mean, you don't recruit a statement of work resource. Like, you don't, you know what I'm saying? So help me with, with kind of breaking that down.

Yeah, so for, in my experience in talent acquisition and recruiting, it's really been overwhelmingly focused on bringing in the FTE talent. Sometimes there's been relationships, but if a business unit leader says, I need a project team to do this project, typically that would go through the business unit, maybe through procurement, or maybe directly with the supplier. So it hasn't really been in the recruiter's field of vision as much, other than, you know, back in the day when I was doing this, we'd have the staffing companies just kind of skirt us in HR and go directly to the hiring manager. So there hasn't been a lot of visibility to it. And what ends up— what has ended up happening is that mandate has still been focused on FTEs. That has slowly started to change into, you know, as the enterprise wants more, say, flexible and on-demand workforces, that requires you open up your options a little bit more when you're thinking of sourcing. So, okay, instead of thinking I've got, you know, I've got a requisition for this particular job role, which as you probably know, that whole idea is changing a little bit. It's starting, it's starting to move towards what are the outcomes we're after and what are the best ways to get the outcomes. Sometimes that can be, you know, an FTE depending on what's happening with the organization. Sometimes it can be, you know, a statement of work provider. Sometimes it can be a freelancer. And in many cases you might have to go freelance if you want a specific, uh, specific type of talent. And I'm speaking specifically more about, um, like AI talent right now, uh, is harder to find good experienced people, um, who are willing to go FTE. Um, so you go to freelancers. So it's really about broadening your perspectives, working with the business leader to broaden your perspectives on what's the outcome and then what's the best category to get you to that outcome in terms of speed, quality, and cost.

Okay. Interesting. Really kind of a whole nother world that I really haven't— and I'm trying to transition kind of the topic here into like, what can a recruiter do? And I'm assuming it's so really, I'm assuming, but here's the question. Let's say a recruiter wants to future-proof their role. There's a lot of change in the market right now. A lot of, you know, let's just say chaos, if you will. Should recruiters that are interested in kind of long-term future-proofing the role, should they start learning how to source and manage, let's call it, non-traditional talent, right? Freelancers, SOWs, temps. Should they learn that, or is that just not going to be in their purview?

I think it depends on the organization and potentially the, the the, maybe the HR department or the talent acquisition.

I'm thinking the career of the individual, right? Like, I'm a recruiter, maybe I'm going to get laid off and I don't want to fight that. I just want to move on to my next job. But should I be thinking about learning this aspect in order to improve my career outlook, or is that just too far of a, of a, a gap to cross?

I don't think it's too far of a gap, but I wouldn't say, you know, run out and go learn about the different categories of labor first. What I would say, what I've always said to the HR people I was working with or advising is you have to really understand what it's like to be a talent partner with, you know, the business units or your internal customers.

So beyond just recruiting for full-timers, got it.

Understanding what the business needs are and then connecting yourself with all the different options of pursuing that. So yes, you should be looking at, you know, even just asking the question, what would it take to get a freelancer in here? We've had this rec open for 6 months. The business unit leader is down my throat saying, where is it? I need to do this, or they're going to pay 5 times as much as they need to by going to an SOW. And SOWs have their place. I want to be clear. But being able to bring more options and more resources and more solutions to the table as a TA professional, I would say it's good to start to educate yourself on what's happening in the extended workforce. Yes.

So, somebody mentioned don't forget RPOs. So, I wanted a heads up to that. So, what I'm understanding is, okay, you're, you know, you're working on filling— you're a recruiter or you're a recruiting manager, team leader, whatever. And you've got positions that are hard to fill. What you're saying is one of the tools at your disposal that you could be applying is to go back to the hiring manager and say, 'Hey, while we fill this job, which is becoming, you know, obvious that it's difficult to fill and it's going to take time because of the nature of the market, the role, whatever. While we fill this, have we considered a a contractor, a consultant, a statement of work, a gig worker, and introduce that as a possibility to maybe not necessarily replace the headcount role opening, but to, you know, somehow curtail the bleeding of productivity loss. So, you're kind of saying introduce this, know about it, and introduce it in the conversation so that you can help the manager complete their job, even if it's not by filling a requisition.

Yes, absolutely. And that's going to require a mindset shift from I'm being measured on requisitions that I fill to the job I was thinking and the contribution I made to this, you know, to this outcome through acquiring the right talent.

Right. I mean, for sourcing, that would be huge. You know, imagine if— so the recruiters that are like, well, you know, you've got a quota of whatever, 30 hires or whatnot. If they don't fill those jobs because they found contingent workers or extended workforce, then they're not— they're going to be looked at as like, well, you didn't do your job. You didn't fill these jobs. But they did.

Yeah.

So, you know, a hire— maybe, maybe we need to redefine. Maybe we need to redefine hiring from a recruiting point of view by saying that filling the rec vis-à-vis a hire may, may be something that can be done with resources other than full-time direct hires. And you're still doing your job. You're still filling the rec. The requisition, after all, um, somehow along the line— I don't know if you, you feel this way, but somewhere along the way, we, we kind of in this industry lost track of what a rec is. A requisition is a request for a work process. You know, you can requisition a maintenance person to come and fix your office. You can, you know, there's— requisition is basically you're asking for a service from the you know, the, the enterprise. So we lost track of that. Um, and somehow rec becomes job opening, like a rec is a job opening, a job— you see what I'm saying? So I think we need to kind of separate those two and go back to understanding a rec as it's a work order. We, we need someone to do this job however they— like whether they're a gig worker or whatever. Makes sense?

Yeah, absolutely makes sense. And I might even take a little further, and this is, this is where the context of the team— and just to go back to a question you said, I'm seeing more and more contingent workforce is being run by TA leaders. And so they're, they're folding in contingent workforce, you know, program directors into their, their TA teams, you know, to provide some cover, to provide that, you know, to provide that help in that transition. But absolutely, it's, it's a work order. And if you want to take it even a step further, is, you know, by understanding the work order, what is the outcome that we're pursuing here? What is the outcome of this person or this request? And what's the best way to achieve that outcome through people? And so, yes, it requires a shift in thinking and a better understanding of the business, which I think is going to be required anyway amidst all this chaos that we're experiencing.

I love chaos, but you know, there's good chaos and bad chaos. Before I jump into the whole philosophy, like, you know, entropy or whatnot, There's the chaos that keeps business going there, and you hear it in conversations like, uh, fail fast, right? Um, keep experimenting until you find something that works and you can get an advantage. And then there's the chaos of like complete disorganization where one part doesn't know what the other part is doing. And it seems like not understanding this extended workforce can lead to some of that kind of chaos. I think where you have pulling, you know, someone— what if there's a statement of work request out there while you're still trying to fill the job and like, you know, you end up putting candidates in and it turns out, well, no, we already hired an outside firm. And it just— I just feel like that could get messy.

That's happened to me individually on the job in the past where when I was a recruiter leading recruiting, hi, we need these people to do this, was, you know, 15 years ago, need to do this AI build. For whatever we were, whatever application. And I can't find the people because there's only so many, only so many of them. And so I'm going to go to this firm that approached the leader who said, I got people for you right now, whether they do or don't, they provide that level of credibility. I'm working on a rec and I find out that the people are already showing up, you know, through relationship with IT. So that can happen. And so being able to bring that option and an understanding of how that works And then more specifically, how to optimize whatever channel you're using to build that talent or to deliver that talent is going to be a way that you can offer a solution and again, partner with the business.

Right. So recruiting as a solution to deliver on the work, not necessarily just to hire.

That's a great way to say it. I haven't heard it that way before, but I think you should patent it because that's a great way to say it. It's really delivering on the work, not filling a rec.

Yeah, that's what I'm thinking. I'm listening to this and, you know, I'm analyzing. I like to kind of, you know, make things kind of package them in a digestible chunk, um, just for me to be able to absorb it. But yeah, so, um, let's bring some light to what legal or political landmines can be triggered in, in this. Like, where are some of the unforeseen as a recruiter bringing this into the light? Uh, what are some of the unforeseen things that might, you know, I might trigger with, I don't know, compliance, or, uh, that I don't know about, right?

Yeah. So the first, the two main things you'll need to school yourself on if you want to do this is a basic level of understanding of co-employment risk and misclassification risk if you want to go kind of what can go wrong really quickly if you're not paying attention. And you can probably look up at any given time, there's someone getting in trouble for misclassification. Not as much co-employment because there have been different situations. Now you've probably been around long enough since Microsoft had this thing called permatemp way back in the late '90s where they had the temps forever and, you know, there was action. I'm not providing legal advice, and, you know, obviously, the typical caveats.

Oh, I was at Microsoft, and I remember the T- and the V-.

Yeah, yeah. So, and some of those are kind of interesting, but I mentioned already systems of record need to be different. And so that's the difference between someone who's an employee and someone who's not. Lots of, you know, a lot of that depends on how your organization defines it and the risk tolerance you have in your organization. The other one is—

So it's, there are systems that you should not be able to access if you're not an FTE. This is what you're saying?

Well, that's correct, but I'm speaking more specifically about the system of record. So, and this is, again, I've seen this even the past couple of months. Some organizations are okay having their contractors run through their HCM. Some are absolutely opposed to it for, you know, due to their risk profile and how, how conservative they are. And that's where a VMS, you know, a system of record for non-employees, is really useful because then you have them separated. That's not going to be the only thing that keeps you a foul, you know, keeps you from, from running into trouble. But that at a baseline is going to be a challenge. The other thing is, to what degree do you treat them like employees? And one thing that's very common is, um, you know, are they, are they allowed to join company SIGs? And generally the answer there is going to be no because those are for employees. So they get to go to the the holiday party, right?

No.

Then the challenge gets— he gets kind of two classes of workers. And so you have to manage that as well. At the end of the day, though, it's, you know, you can— your managers, the way they engage those individuals on a task or on a job, you know, they should— they should be able to, you know, get the work out of these people without having to be experts in co-employment.

Right, right. Break down co-employment real quick for those that don't understand that. It's, uh, it's the risk of, uh, well, you obviously can explain it better, but it just— it's, it's— there's a risk inherent in being a contractor, subcontractor, that has to do with the employer, um, treating you like an employee, and therefore you are owed, you know, the benefits that would come with that, right?

Your own benefits, your own, you know, other, you know, 401(k). In Microsoft's case, I think they went after equity after a time. And so essentially it's, are you essentially doing everything that an employee does and are you doing it the same way that an employee does? And this is an important part that a lot of organizations do to manage it. For how long are you doing it? If you have a contract that says this is a 6-month or a 1-year contract, then it's over, then that might, you know, a lot of organizations see that as, okay, that's going to help protect us against co-employment. If it's been 4 or 5, 6 years they've been doing the same work you know, they're going to the holiday parties and essentially they can make the case, I am an employee except for the— except for where my check comes from, then you might have to— you might have to deal with a little bit of risk there.

So be aware of it. Like, it's— again, you're not— you're not an attorney and neither am I. And recruiters aren't going to be attorneys. But just kind of be aware of that. That's out there.

You should be aware of it enough to address it. If, like you say, a hiring manager or a business unit leader asks you about it, right? And then the advice and guidance should come from the legal team in the organization.

But it definitely opens— I mean, you know, as recruiters, we need to be aware of a lot of other things that I think sometimes we aren't. There are a number of legal entities and oversight organizations that have access to and can actually levy fines and things like that that I think recruiters aren't even aware of for the most part. So it's a pretty complex— you know, that makes me think I should probably write a paper about that. It's a pretty complex legal system. We just kind of, as recruiters, tend to let HR and legal handle that. And, you know, as long as we're doing it by the book, we're okay. But the truth is that there's a lot more to it than that, and there is some risk and exposure. So it's a good idea to be educated in the plethora of ways you can deliver on the work as opposed to filling a rec, but also be cautious about, you know, not overpromising and say, oh yeah, we can easily, you know, do this, and then step into some kind of political landmine or, or triggering, you know, an audit or something like that, right?

The other one I should just say, I feel compelled to say, is misclassification. That's similar to but different than co-employment. Misclassification is when you hire someone as a contractor, but, um, they're, they're, they're— and this is really related to like payroll taxes, um, and Social Security but, but based on IRS rules, they're actually an employee. And so then you can get yourself into trouble. And, and the gig, the gig, um, the gig companies run into this all the time. If you're interested, there's a lot happening in California. Is it a contractor? Is it an employee? Um, and so you have to be careful of making sure that, okay, I'm going to hire someone as a contractor. Am I getting them benefits? I'm not paying, I'm not paying, um, you know, Social Security or payroll taxes, you can— that can add up very quickly and get a lot of trouble if you're not paying attention there. Again, finance and legal are the ones who are going to provide the guidance and the level of risk. As a recruiter, you just need to be aware of it and be able to answer the questions, you know, based on your employer's or whoever's paying you to source, their risk profile and their policies.

You know, way back when, even a little bit earlier than I started in the business, which is a long time ago, there was a segment of our business that made money off of representing or acting in agency of as an agent to the candidate where your job was to get the candidate a job and you would get paid by the candidate side. So that was kind of early on. It doesn't really happen much anymore, but there's still like agents in Hollywood and stuff like that. Seems to me like that kind of model would lend itself pretty well to being able to represent someone that could be an FTE or a contractor or an SOW, or it seems like there's a lot more flexibility. Is this just more accepted now? Why is it— what is happening in the world that extended workforce is much more acceptable now?

Yeah, I think I would start with maybe the business driver and the CHROs and the business leaders that I've been talking with and also IT. It's been kind of a combination of two things. One has been in the past few years, this may change depending on what field you're in, but there's been a shortage of talent. And so, you know, going the FTE route, we're going to have a tough time getting there with the FTE route. The other thing has been the increased volatility, I think, of business cycles. When things go up and down, it's expensive and time-consuming to bring people on as employees. And then when business, you know, changes direction, you've got to make a shift. There's a lot of risk associated with and a lot of work and expense that goes into downsizing your workforce. And so a lot of organizations, especially those in cyclical businesses, Pharmaceutical manufacturing, for example, is one of them. They might have huge surges. Do they really need to go out and hire all these people to do their work? Maybe. It depends on what they need to do. But is there an option that might be more flexible? You know, oil and gas is very similar. You know, the price of oil and gas is very volatile. And so it's tough to ramp up a full-time workforce and then bring it back down as the price changes. So I think So those two factors have been driving this both greater recognition that there's more out there than FTEs or contingent workers or temps. And the risk profile is changing because of that volatility and because of the risk associated with hiring people and then letting them go.

Okay. So kind of want to wrap this up a little bit in the whole, bring it back to Ms. Kitagawa. I can't even say that— miscategorization. Uh, and so the way I understand it, co-employment is like sharing the parenting, and misclassification is like calling your kid the neighbor's so you don't have to pay fees.

It's, it's a good, it's a good analogy. Yes. So you're hiring them in a category, particularly a tax category, um, and employment has less that is not appropriate for the work they're doing and how they're doing the work.

Yeah. And that may be intentional or not, but the point is that it's a conflict of legality or fees or other type of regulatory classification versus just kind of doing it right. Co-employment can be done right legally if it's well managed and it's documented and there's boundaries. You were talking about the you know, what you have access to and stuff like that. So co-employment is not bad. It can just, it could be done incorrectly, but misclassification is the one that's kind of risky. And do both of those go away in like statement of work? Because that's not really, I mean, that person, I myself as a consultant, when I go work with a client, um, it's my company that is, has the contract and I'm delivering on the work, but I'm not an employee of that company. So with a statement of work, this doesn't apply, right?

I would say it's mitigated because in particularly the misclassification, it's mitigated because someone's paying payroll taxes and Social Security on that.

Right. I'm under the payroll of the company that—

right.

Exactly.

And likely they're, you know, even if they're a consultant, they get benefits and those sorts of things. So they're technically an employee of somebody else. It's going to be— I'm never going to say the risk is going to be gone. but it's going to be mitigated because of those, of those, because there is definitely a clear employment.

Um, and so gig workers would— could be any of the above, really.

Gig workers could be any of the above, that's correct. And this is where, again, like the deals come into place. Part of the role of a company like a Deal is to assume that risk of classification and make sure everyone's done. So in return for that, they handle payment They handle a lot of the, a lot of the, the EORs and AORs offer benefits like the old payroll companies. And so you pay them a fee to assume that employment risk based on, you know, based on the categories of work that you have. One thing I would add, if someone who wants to educate themselves pretty quickly on this, there's been a lot happening in California, obviously, obviously with Uber. But if you, if you just search for California ABC classification then you'll probably find half a dozen law firms that are willing to give you a summary of what that means. And the ABC test in California, which is really, is it an employer, is it a contractor, a basic level. Again, before you do anything, you want to get the right legal cover for it, but that'll give you probably the fastest way to educate yourself on this particular issue.

Okay, so you got your 1099 independent contractor, you got your temp W-2 through a vendor payroll agency, you got your SOW who's a consultant under the, you know, paid project, correct? And then you've got your gig workers that are technically not— I mean, they're, they're getting paid for the piece of work, not by the time, right? Like, like, I think TaskRabbit or Fiverr or, um, Upwork and so on, where I'm— they're not gonna— they're not— the employer in this case is not really employer, but the hiring entity is not watching my time because I'm not billing by the hour. I'm expected to— I'm paid $5 to produce, uh, a widget. And so that's a different— another different class. And then you've got freelancers, um, that usually applies more for creative maybe, or it depends.

I think I would, I would, I would maybe categorize like the TaskRabbits and the freelancers because they're usually associated with the platform that acts like the EOR. So TaskRabbit has a platform, um, Fiverr or Upwork, for example, you might have heard of. Those are freelancer marketplaces. You'll pay Upwork. Upwork assumes the risk of classification and, and, and they'll act as a supplier, but they're also for, you know, employer in the sense of the 1099.

Yeah, so there's— so you're hiring a freelancer through Fiverr, um, Fiverr's handling the employment side of it, but it's still a gig work, right? So, and then there's your interns and volunteers. I'm assuming interns and volunteers may fall under the same, you know, classification because they both have to have access to the systems, but interns are probably getting some kind of wage versus volunteers are not.

Sometimes I think the companies that I worked for, at least the good ones, paid their interns.

Yeah, you're supposed to, right?

And so they'll get a 3-month agreement, employment letter, a contract. You're an intern for 3 months, here's what you get. Here's what you don't get, you know, build your experience and do good work. Volunteers are a little bit different, I think, because they're not being compensated. There's no, you know, there's no payroll taxes or that sort of thing that are not happening. I think volunteers are gonna be a little bit more challenging because, you know, who's gonna volunteer long-term for nothing? Probably the people who wanna make the contribution, they're probably not gonna pursue legal action unless something something crazy happens, like, you know, harassment or something like that, right?

Which is now a whole different VM, right? And so then there's like, and then there's the MSP, which is more like a contingent workforce stream of VMS and, and all that stuff. But there's two that we haven't really touched on, and that's, um, as somebody mentioned from LinkedIn, uh, RPO, which is the entire, you know, outsourced team where you're outsourcing or offshoring at BPO, KPO, RPO, all these O's that are— that means outsourcing. So that's a whole function or project or whatever, it's kind of a bigger piece that's all done by one external vendor. And I'm assuming that's why that's being handled because it's a vendor that is employing all those people and you're hiring the vendor. So then again, you're not in the co-employment business.

That's correct. And MSPs operate essentially the same way, but for the extended workforce. They'll charge—

MSP through VMS versus offshore. I gotcha.

Yeah. And usually they'll charge— MSPs typically charge a fee percentage based on how much you know, spend goes through. And they'll either, they'll either manage your suppliers, or they'll be maybe like a master supplier and have, uh, sub-suppliers.

Sub-suppliers.

But to your point, they're providing a service for a fee, and they dedicate their staff to providing that service for you.

And so the offshore team, or the outsourced team— well, it doesn't have to be onshore, offshore— but that team is an entire, um, you know, there's like a monthly invoice that covers, you know, all of it. And there may be some incentives within the program, but there are not— you're not keeping track of everybody's time or anything like that. But you probably are in some cases giving those people access to very, you know, to provisioning them to a lot of the same things. So what's the— how does that— where's the, the risk there?

The risk there— so I imagine you're talking about like RPOs. They're going to have access to these Yes.

Right. Yeah.

And so, and so maybe have a company email account and things like that. The first thing that comes to mind is, you know, PII and that sort of thing. And can you trust, can you trust these non-employees with PII? Again, you have to trust your employees with PII as well, but you have to consider that when, when you're hiring somebody. Is this trustworthy? And that's probably going to be the biggest risk is security and data access. And then, of course, but isn't that the responsibility of the employer?

Because you're hiring XYZ RPO, and they're the ones that are responsible for those people.

That's correct. As the employer, you have to, or as the customer will say for this service, you have to make sure you're comfortable with providing that information. But typically what I've seen in RFPs, for example, is show me your security and your training and your accountability for things like PII or for system access, or a lot of times IP IP agreements are going to be built into the master services agreement. And then there's another one between the service provider and the employer of that service provider.

So yeah, in that case, you know, they're an external vendor, but they're, they're representing as an internal team. So you might have like, I don't know, SOC 2 compliance and other types of audits that guarantee and maybe even insurance and things like that. They guarantee. Yeah. So and then the last group that we didn't talk about— yeah, I haven't talked about yet— are PEOs. I only just learned about PEOs 4 or 5 years ago, and I ran into them once into a PEO. And then about 3 years ago, I had a little bit more contact with them, and particularly in Brazil. For some reason, it just so happened that it was a lot easier from an HR and compliance point of view for the PEO— sorry, for us to work through a PEO in Brazil. Because it's something to do with the way— I don't know exactly, but the government of Brazil had certain requirements that we— it would have been really difficult for us to meet. And so going through a PEO made it possible for us to do business in Brazil. So I just learned about that, and that's a completely different— first of all, what is PEO?

I think it's Professional Employer Organization.

Okay.

So I admittedly, I'm not in depth with PEOs. My understanding of what I've seen is that the EORs and the AORs are kind of moving into that space and maybe more of a technology-based platform for that activity versus PEOs, which is essentially, I want to payroll somebody. I need to hire somebody for so long. I'm not putting them on my payroll for whatever reason. A lot of times it's headcount. I want to payroll them through whatever staffing company or PEO and they'll take the risk of employment.

Yeah, in the case I'm describing, it was because of legal reasons of the Brazilian government code of employment required things that we weren't, that we just weren't set up to hire for. So we basically brought a company on who was our partner, and they had— everybody was employed by them as a, you know, almost like an RPO, but not really, because they're not, they're not providing any kind of process outsourcing. They're just providing employment as a service.

Absolutely. And typically, globally, that's done for two main reasons. One is for the employment law that you mentioned, and also for tax reasons. So it can be really complicated if you're paying employees from the US and Brazil to manage all the nuances of the tax code. There may even be, you know, specific rules country to country regarding tax and employment, and it's easier to pay a service and less risky to pay a service locally than it is to try to pay people locally as well. So typically tax and employment are the reasons you do that globally.

Yeah, I think tax had a lot to do with it. It had a lot to do with it. Uh, I just found that fascinating. I'm like, that kind of seems like you're getting around— but, but, you know, at some point they explained to me what the law was, and I was like, I don't understand it. So yeah, that's exactly why they do it.

Well, think about, like, for example, in Germany. Germany's got very complicated employment laws. And you also have worker councils that you have to do— you have to engage every time you make a decision. And so why not have somebody who's an expert, who's local on the ground, to navigate all those nuances that can trip you up pretty quickly if you're not careful?

Got it. All right, so to wrap up the trip up— yeah, I like that— wrap up the trip up: looks like an employee, maybe misclassification. Two bosses, potentially co-employment.

That's a really simple but powerful way to look at it. I'd say you're probably 60% there, and that's probably probably, you know, a recruiter is not going to need to know much more to be much more than that.

That's right. Now, if they're invisible to TA, then it could be something that's not even related to workforce planning, and you might not even be aware of it.

So, right, that's, that's correct.

Yeah. And if you source directly, now you own the compliance risk.

Uh, typically, yes, if you source directly. Are you talking about as a, as a, as enterprise recruiter? Yeah, yeah, you're gonna risk, or you're entering the risk, right? The risk. If you're a, if you're a hired gun, then however you have yourself set up to do that, you're gonna, you're gonna own the risk of sourcing. Your customer's still gonna have the employment risk, right?

Right. Wow, okay, that covered, that covered quite a lot. I think, I, I think I understand extended workforce now. Um, yeah, so what else? What am I missing? What, what have we not talked about that, that is, I don't know enough about you know, this sector to even really qualify for, you know, following up on that? What is this thing?

And I appreciate your asking. And it's probably most of the people who are involved in employment at some level or another. And it's really about the data. So what I frequently say is if the contingent workforce is not— or extended workforce is not in your people analytics, your people analytics is incomplete. And so you have to, if you're thinking about ROI for your people, now we're going to the finance unit, VP, CFO level. What are we getting for our people spend? Okay. A lot of times people analytics, the holy grail right now might be productivity or outputs. What are we getting for the outputs? Are we getting for the investment in people? You should be adding the extended workforce in there as well. So we have this project build, we have so much budget for this project build. Is it better to go to the contingent workforce? Can we get it done cheaper and faster, or should we go to FTEs? And where this— where the— where the industry is or the field is right now, it's really been apples to oranges. They kind of measure and manage different things. And so the thinking and the practices need to evolve— evolve, sorry— to incorporate, you know, what are we getting from our, our, our, our internal team versus what are we getting for the spend we have on external workforce versus what are we in costs.

And you might be shocked to find the, uh, the answer to that.

Yeah, I mean, the general, the general understanding or the general kind of impression is that, you know, extended workforce is going to be more expensive because people are just looking at that bill rate. Perhaps they're not thinking about the burdens that come with, you know, you have, um, services companies, you have benefits, you have overheads, you have, you know, other things that you have to pay for. And so that's where I think the field of people analytics itself, maybe not so much recruiting, needs to evolve to start thinking about apples to apples versus, you know, FTEs and then everybody else is a problem.

That's a, that's a big blind spot. I think that's a big light. I mean, so, you know, traditionally from, from most of the world that I've had visibility into, you got your HRIS. And you got your ATS and that gives you, you know, we expect the full workforce intelligence, but there's a whole piece that's not even being measured in that. So, you know, you're basically bringing up a visibility gap. It's like that part in the rearview mirror where you can't see the cars behind you because you don't even think about it. And it's that chunk and it could be a pretty big chunk.

It could be a chunk. I don't know if you remember when we were talking about digital transformation or so a decade ago, the hardest question to answer was, is, you know, how many people do you have and where are they? Yeah, a lot of the, a lot of the, you know, the HCMs have started to address that problem. But think about when it's managed by spreadsheet and email in the contingent workforce, that problem still remains. And so again, that's one of the value props of a VMS is to get people— well, first it has to be user-friendly enough to get people to use it. And secondly, it provides that overall visibility. Then if you have the right platform, you can pull analytics from it.

Right away. Yeah, funny story. During my time at Fiserv was the first experience I ever had where I, where I ran into the need to, um, to have a robotic employee. So in order for me to provision some of the things that I was doing with, with workforce analytics, um, to provision the data requests from, from a couple of different systems, I basically ended up having to create an identity of a, of a user, just like it would be like Shelly the user, you know, Billy the robot. And that user had like access privileges and all that. And that user was a robot. It didn't exist in, in the physical sense, didn't have any, you know, payroll or tax implications or anything. But it was treated as an employee because it had an employee ID so that it could be granted access to certain systems that required classification under employee ID. It was fascinating. I'm like, wow, it's literally a virtual employee. Like not really an employee because you're not paying, but it's like a virtual— I don't even—

it's that's starting to come. That's starting to surface again because of, you know, agentic AI.

Yeah, yeah, exactly.

Looking at what they're calling the digital workforce, which is essentially software agents or combinations of agents to do the work.

And obviously those agents need access to systems and security and tracking and logging to make sure who, you know, who did what.

That's correct. And so I don't know if you're familiar, Salesforce has what they're calling Agentforce. Force to deploy and track them. They're starting to get a little bit more into— like, so my background recently has been in public sector. A lot of states and locals are starting to look at deploying agents. Call centers are looking at deploying agents. Workday, interestingly enough, has come out recently with an agent system of record. So you have your HCM, which is a people system of record. Now they're doing an agent system of record that's going to coordinate and track and log and provision and deprovision agents as people get more used to using them.

I get that, but I mean, it's almost like you need to put them both in the same place because of what you were saying. What if the agent is doing the job and you're tracking productivity of people, but you're not tracking productivity of the agent? You're missing on a giant chunk of productivity. Just thinking out loud here, you know?

Absolutely. You have to track outcomes, too. Everyone's really excited about what you can automate and shorten the time. What's the impact on the customer? What's the impact on the work? Could be good, could be bad. I think the assumption is that, okay, well, it's going to save us money in the short term, let's go do it. But really, it needs to be thoughtful. And to your point, you need to be analyzing all of those different areas. So both, you know, contingent workers, full-time workers, and now what are you getting in return for your investment in agents?

Yeah, I mean, if you can't measure it, should you even be allowed to hire it? You know, no. Okay, all right. That's a straight answer.

Whether it is a person or whether the it is a, you know, is a, is a software, you need an entity.

Yeah, yeah, you got to be able to—

yes, creativity. Like, there's, you know, you've heard the, the cliché, you can't measure what you can't— or you can't manage what you can't measure, right? But that doesn't mean don't manage it if there's not a measure developed. So what needs to happen is— that's why I said the field of people analytics or work analytics needs to evolve to incorporate new ways of thinking and new paradigms of working.

Wow, this is fascinating. It definitely sparked a lot of ideas. I had one last question related to this that I wanted to ask you, and then we probably should get to wrapping up here. But the question is this: why do we treat data about full-time employees like gold in people analytics and extended workers like almost like a rounding error?

It's a rounding error until it hits the P&L or until it hits the CFO's desk. But yes. So your question is, in my opinion, and again, remember, I'm a TA person. I've spent most of my career as an HR people. I love HR people. They don't think about it. A lot of times the word has been, if it's not an employee, it's not my problem or I don't care about it.

And so after today, it could be— I just, you know, I'm realizing it could be 50% of your company.

Absolutely. And so the people analytics function was driven as people analytics started, and for good reason, with the FTE. But I think people analytics has been evolving for 15 years now and it needs to incorporate and address some of these pretty thorny problems in terms of data normalization. It needs to incorporate other ways of getting work done. If you really want to serve the enterprise completely and, you know, as a partner, you've got to expand beyond just FTE.

Yep. Yeah, I mean, like I said, it could be 50% of the population. So wow, fascinating stuff. I really appreciate you, uh, you spending some time with us today, and at least from a personal point of view, opening my mind up to a bunch of other things that I didn't even, um, you know, even consider. So definitely expanding my, my horizons. So thanks for that.

Oh, thank you. Happy to be here. And, you know, some great questions that got me thinking as well, like maybe I should pursue that a little bit further.

Good, good. I love it. Yeah, that's, that's a great— that's a win-win for sure.

Hopefully the audience, uh, gets some value out of it as well. Maybe some inspiration to look in broader— broaden their perspectives, maybe.

Definitely. I think so. I think they will. Um, so to wrap up, there is, there is, there is one thing that I always ask my guests and I think it's kind of a trademark of the show. And it kind of puts you a little bit in a spot, but forgive me the, I guess, taking the liberty. Who should be our next guest? Who do you want to see on this seat?

Well, that's a great question. And I appreciate the opportunity to answer that. So, I'm going to babble here while I think about it.

Yeah, yeah. Again, you don't have to give me someone that you know would accept. I mean, I'll invite them, but you know, You never know. I mean, if you say, if you give me, you know, Michael Jordan or something, I'm gonna, I'm gonna try. But yeah, whoever you think I should invite on the show, go ahead, Babbel.

I think, again, kind of continue our conversation, it would be really challenging. Bring someone from, you know, a people analytics leader or people analytics thought leader, and maybe continue this discussion as to why or why it hasn't happened, or maybe to be a little bit more focused or, you know, make sure you don't, you know, run into a brick wall. Where's the evolution of people analytics when it comes to the recruiting function? So what, what do we do beyond, beyond, you know, time to fill and cost per hire? I know kind of the— we'll call it the golden fleece— has been quality of hire, and that's really super complicated. But as we get more analytics, how can, how can we get more granular and maybe more detailed and nuanced with analytics around recruiting, which then the recruiters in the audience can say, well, Here's more value I'm bringing than just filling these number of recs. So that's my first reaction.

Okay. So do you know someone that can fit that definition?

I'd have to dig around. I don't know if anyone is— I don't have anyone who'd say yes to answering those questions right now.

It doesn't matter if they do. They might be a great guest on the show anyway.

I probably know a dozen really great people analytics leaders who've been doing it for a long time. That I can, that I can— if you want me to name some names right now, I can do it.

Um, drop a name, I'll reach out.

So, um, there's someone named Madhura Chakrabarti. Um, she is in the UK, um, right now. I can give you her contact information. Andrea Durler is with Vizier, who— Vizier is a people analytics provider. Uh, she's in the middle of everything, so she would be really good. So those are the first two that I would suggest, and I've obviously worked both, so I'm I'm a little bit partial to their capabilities, which are both very excellent.

That's great. No, I, that's— I'll reach out. But if you think of any others, I always look into, you know, add to the conversation. And I like the angle of looking at the people analytics side of it because that, you know, workforce analytics and people analytics is something that I've been working on the last few years. So, well, thanks a lot for being on the show, um, once again, especially last minute for those of you that, that don't know what's going on, we had that— we had someone that had an unfortunate cancellation. And Wednesday I reached out to, uh, Jeff and he said that he would be able to do it. Or was it Wednesday? Or I think it might have even been yesterday. Yeah. And he was like, yeah, I can do it. And I was like, wow, awesome. So, uh, folks who got his contact information, uh, thanks so much for tuning in. Next week we have Julia Arpog coming on board and be— she'll be our next guest, and she has some exceptional, I mean, just stellar wins in, in the contingent workforce, you know, staffing side of the world. So I'd encourage you to come back if you're at all interested in that side of things. Definitely an expert in the field. So that'll be our next guest. Until then, please be kind to yourselves. Take care, everybody. Bye-bye.