PROTOTYPE YOUR TALENT STRATEGY
Talent strategy is at least 10 years behind product development in the adoption of agile methodologies. 1099 independent consultants can be the key to an agile talent strategy and operating model.
Product development has adopted agile methodologies in recent years, and product ideas are now prototyped with rapid iteration. This lean process helps product teams learn how users interact with a product, enabling teams to quickly pivot to focus on the most valuable products and intuitive designs. Talent acquisition, however, is largely stuck using the equivalent of the waterfall method of product development. More than 10 years after agile product development has gained widespread adoption, talent strategy in the US remains stubbornly committed to an outdated, inflexible operating model.
Just as an “old school” waterfall product developer might build technology based on a best guess of user requirements, most HR teams and hiring managers make big bets on team-members based on what they think they need at the time. Put simply, companies often hire W2 employees before they really know the skills and capabilities truly required by their organizations.
An agile approach to talent strategy and talent acquisition overweights 1099 independent consultants, allowing organizations to adapt to the ever-changing needs of their businesses and evaluate team-members before committing to a full-time hire or team structure. With an agile talent model, teams can prototype the composition of their teams and continually iterate based on ever-changing needs.
If leadership were to “prototype your talent strategy,” five potential advantages would accrue to the organization:
Try before you buy
Experts on demand
Learn more about these five methods in this article as well as a 2019 Associated Press article featuring Talent Response CEO, Chris Richardson titled Forgoing staffers, many businesses turn to freelancers.
Demands on your business are ever-changing. External factors such as the acquisition of a new marquee client can unsustainably stretch your existing team. Internal factors such as a reorganization can shift your team’s priorities on a dime.
The process to hire a W2 employee, particularly at a more senior level, can be painfully long. Even if the organization is aligned on the skills and experience required, the hiring process rarely takes less than 6-8 weeks. If alignment is off or if the hiring process isn’t prioritized, the process can take months.
For many team leaders, this delay puts goal attainment unacceptably at risk. For those unwilling to risk failure due to inadequate resourcing, 1099 contractors offer a compelling alternative. Through Talent Response’s technology-enabled service, we are typically able to put available, personally vetted independent consultants in front of our clients in days rather than weeks or months. Given that those individuals are typically not tied to full-time positions, many are available to start immediately.
There are always trade-offs between hiring 1099 independent contractors and W2 employees, but the process to bring on a 1099 contractor is nearly always faster than hiring a full-time employee.
Just as you can “hire fast” with a 1099 independent contractor, hiring managers can also fail faster with 1099s. Failing fast is a foundational aspect of design thinking in general and prototyping in particular, and the principle should also be applied to talent strategy, albeit carefully.
From a hiring manager’s perspective, a W2 employee is the “pig” in a classic joke: Question: In a bacon and egg breakfast, what's the difference between the chicken and the pig? Answer: The chicken is involved, but the pig is COMMITTED!
This bilateral commitment with a W2 employee is not without its benefits. For example, a W2 employee is solely dedicated the success of one organization: yours.
The flipside of that bilateral commitment, however, is that W2 employees rightly expect an organization to do most-anything in its power to make a full-time hiring relationship work - at least for several months. This makes a fast change-in-course challenging from ethical, economic, and legal perspectives.
When a hiring manager brings on the “chicken ” -- AKA an involved, but not fully committed participant -- she preserves the right to fail fast from two important perspectives. First, if the contractor isn’t a good fit, a contract can be ended quickly without too much collateral damage. Second, it is easier to make necessary changes quickly if the team structure isn’t working or if business requirements change.
To be clear, a decision to “fail fast” with a contractor should not be taken lightly. For contractors, projects represent their livelihoods. Nonetheless, the bilateral commitment between a contractor and an organization is less steadfast than with a full-time W2 employee. In short: fail fast, but fail ethically.
Try Before You Buy
Consultants go the independent route for a variety of reasons. Some are dedicated independent consultants committed to controlling which projects they undertake. Others temporarily pursue an independent consulting path as a result of layoffs, family changes (e.g. new baby), or to extend the runway of a startup venture. Those who fall in the latter category can be open to a full-time role, given the right opportunity.
This “try before you buy” approach otherwise known as contract-to-hire is a great risk mitigation approach for both sides. Both the contractor and the organization get to test out an operating rhythm in a lower-risk way. If it works well, you can seal the deal. If not, perhaps things end after the first project or two.
A common hiring process of three interviews and a case study is insufficient to evaluate a long-term fit. Imagine if marriages worked like that! For such a serious investment as an employee, it sure is preferable to spend a bit of time dating first, i.e. “try before you buy.”
Experts on Demand
There are times at which you need a certain capability on an ongoing basis. For example, you need a team of account managers to manage active client accounts, keep customers happy, and keep an eye out for renewal or upsell opportunities. This is an ongoing need which likely is more effectively delivered by a full-time W2 resource.
At other times, you need expertise for strategic planning or for managing a transformation. For example, you need an expert to integrate two commercial teams as part of a major acquisition. Yes, this M&A integration could be led by an employee, but the work is project-based in nature -- perhaps 3-9 months -- and could be just as easily performed by an outsider. Better still, an outsider may bring perspective from having completed several similar integrations, ultimately increasing the likelihood of success.
When leveraging 1099 independent consultants, you can hand pick experts to meet the requirements of your business at a specific point in time.
To paraphrase Dickens, businesses experience the best of times and the worst of times. Sometimes those ebbs and flows can happen over years, other times in weeks or even days. Sources of variability can vary from the macroeconomy to competition to structural changes in an industry. An upturn or downturn can be structural (things will never be the same again), cyclical (this type of thing happens every year or every business cycle) or simply a one-off event (loss/gain of major clients, good/bad press, political changes).
Irrespective of the source of variability, one thing is almost certain: volatility in the demands on your business will be greater than the volatility in your number of full-time employees. With the exception of major layoffs, full-time employee counts tends to change slowly while business conditions can change quickly.
Agile organizations look to respond to business volatility with flexible, dynamic workforces. A relatively fixed base of resources may be required to keep a business humming in all environments, but ebbs and flows above that level can often be addressed by a network of project-based resources.
Reinforcing this point is a quote from Talent Response CEO Chris Richardson in the New York Times, "Independent contractors are less risky, particularly in 2019's uncertain macro-economic environment. Should business contract, it is much easier to end a project with a contractor than to pay severance or unemployment expenses associated with a layoff,"
Businesses are fickle beasts. Yet most organizations hire W2 employees with the expectation that they will be with the organization for at least a year or two - often irrespective of performance or the evolving needs of the business. Agile organizations are more likely to respond to the fickleness of the business by hiring quickly and failing fast. Agile organizations also share a preference for testing a relationship with a contract-to-hire structure, AKA “try before you buy.” Finally, as the needs of the business ebb and flow, agile organizations will meet those changing conditions head-on with on-demand experts and other 1099 independent consultants.
As Darwin famously said, “It is not the strongest of species that survive but the most adaptable.” An agile operating model allows hiring managers to prototype both the structure of a team and the individuals that comprise that team. This agility and adaptability are most likely to lead to success in an environment in which business cycles are becoming shorter and shorter.
This adaptive process is akin to a product team cobbling together a quick-and-dirty prototype before sending to production at scale...it can help avoid a lot of wasted effort. The result is a team composition most appropriate for each moment in time of the business.