workforce of the future presentation

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v

JUNE 2016

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Table of Contents• Overview• Key Findings

• Employers are Recognizing the Benefits of New Workforce Trends• Workforce Trend: Use of Contingent Workers• Workforce Trend: On-Demand Economy Principles• Workforce Trend: Automation

• Companies are Questioning the Social Contract• Companies Prefer Traditional Employment for Now

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OVERVIEW

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Purpose and MethodologyThe Workforce of the Future Survey by Burson-Marsteller, the Markle Foundation, The Aspen Institute Future of Work Initiative and TIME sheds light on how hiring practices have been and will be affected by new models of employment such as contingent work and the On-Demand Economy.

From June 5-16, 2016, Penn Schoen Berland (PSB) conducted 800 interviews with employers, defined as: Employees or business owners who make hiring decisions for their organization. The margin of error for the total sample is +/- 3.46% and larger for subgroups.

This survey builds off the November 2015 On-Demand Economy Survey by Burson-Marsteller, The Aspen Institute and TIME, which surveyed 3,000 adult Americans to understand the size and composition of the On-Demand Economy in the United States and to provide insights into trends surrounding the On-Demand Economy and its participants (both workers and users).

There are interesting parallels between the two surveys and particularly between the opinions of workers and employers about this new way of doing business. Therefore, there are times throughout this presentation where the results from both surveys are compared.

Overview

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Audience, Sample Size and Margin of ErrorAudience Audience definition Sample Size Margin of Error

Employers Employees or business owners who make hiring decisions for their organization 800 +/- 3.46%

• Company Size: 1-100 Employees Employers whose organizations employ 1-100 people. 357 +/- 5.19%

• Company Size: 100-1000 Employees

Employers whose organizations employ 100-1000 people 252 +/- 6.17%

• Company Size: 1000+ Employees

Employers whose organizations employ more than 1000 people 191 +/- 7.09%

• Uses Independent Contractors

Employers whose organizations use independent contractors 478 +/- 4.48%

• Does not use independent contractors

Employers whose organizations do not use independent contractors 322 +/- 5.46%

• Will use more independent contractors

Employers who state that in the next 5 years their organizations will use more independent contractors 331 +/- 5.39%

• Will use fewer independent contractors

Employers who state that in the next 5 years their organizations will use fewer independent contractors 331 +/- 5.39%

• Will use and provide more On-Demand Economy services

Employers who state that in the next 5 years their organizations will use and provide more On-Demand Economy Services

280 +/- 5.86%

• On-Demand Economy Workers

From The Future of Work Survey: People who offer services as part of the On-Demand Economy 645 +/- 3.86%

Overview

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KEY FINDINGS

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Summary of Key FindingsWe are at a critical point in the evolution of the modern workforce. The traditional employment model is shifting as companies increasingly use contingent workers and embrace the principles of the On-Demand Economy. These trends have the potential to change conventional employment and are forcing employers to reevaluate the social contract and other core elements of the employer-worker relationship. Though the workforce has not yet changed dramatically, it is clear that we are witnessing a fundamental shift.1. Employers are Recognizing the Benefits of New Workforce TrendsIndependent Contracting and On-Demand Economy forces are becoming key parts of the workplace and present clear cost and scalability benefits, threatening the traditional employment model.

2. Companies Have Doubts About the Continuing Applicability of the Social ContractNew workforce trends are making companies re-evaluate the social contract, and the relationship between employers and workers is evolving.

3. Companies Prefer Traditional Employment Arrangements for NowEmployers prefer traditional employment and will still hire full-time employees instead of contractors when they can, because full-time employees provide more long-term value and are more invested in their companies.

Overview

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KEY FINDING: EMPLOYERS ARE RECOGNIZING THE BENEFITS OF NEW WORKFORCE TRENDS

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WORKFORCE TREND: USE OF CONTINGENT WORKERS

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The majority of companies are currently using independent contractors in some capacity

All Employers

1-100 Employees

100-1000 Employees

1000+ Employees

60

50

66

70

3

2

3

4

37

48

31

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Respondents were shown the following:We would now like to ask you some questions about your company and workforce. The next series of questions are about non-employee contingent workers. These are workers who work for an organization on a non-permanent basis and typically work on a Form 1099, as opposed to full time, W2-based employees of an organization.

Contract or non-employee contingent workers are also known as freelancers, independent contractors, or temporary contract workers. They do not include workers, part time or full time, who are issued a Form W2.

Does your organization use non-employee contingent workers? Showing %

Yes Don’t know No

Workforce Trends: Contingent Workers

…And they use these workers predominantly for low-skilled work or ad-hoc projects

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Employers who use independent contractors

Satisfaction with independent contractors is extremely high, even among those who say they will hire fewer in the future

IF USES INDEPENDENT CONTRACTORS: Generally speaking, how satisfied have you and your organization been with the performance of the non-employee

contingent workers that you’ve used? Showing %

Series1

50 45 59

47 53 36

-3 -2 -5

Total % Very Satisfied Don’t know

Total % Somewhat dissatisfied

Total % Somewhat Satisfied

Total % not Satisfied at all

Will use more independent contractors

Will use fewer independent contractors

97% satisfied 98% satisfied 95% satisfied


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Independent contractors allow companies to save money on benefits and tailor their workforce by size and skillset

Below is a list of potential arguments an organization could make in favor of hiring a non-employee contingent worker instead of a full-time, W2-based employee. Please indicate whether, based on your experience, you agree or disagree with these arguments for

hiring non-employee contingent workers. Showing % among employers who use independent contractors, Ranked by Total Agree

Allows my company to quickly adjust our workforce as neededSaves my company money on benefits

Allows for completion of specific tasks or deliverablesTheir flexibility makes it easier to find workers right away

Allows for hiring more specific skillsNon-employee contingent workers can start working right away

It is simpler dealing with the tax situation of non-employee contingent workersSaves my company money on administrative costs

Saves my company money on salaryThe process of hiring non-employee contingent workers is simpler

Non-employee contingent workers have fewer demands and expectationsAllows for greater choice of candidates

It is easier to find non-employee contingent workersMy organization spends less on tools, equipment, and office space

My organization spends less on trainingNon-employee contingent workers take less time to train and get up to speed

Non-employee contingent workers are more efficient

4150

3736

413336

343534

2929

2628

2623

17

4936

4747

4149

43454344

4944

4540

3941

33

71013

13131314

1517151522

2121

2324

37

332344455663

69

111010

11

1

41

111

12

312

3

% Strongly Agree Don’t know % Somewhat Disagree

% Somewhat Agree

% Strongly Disagree


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Those currently using independent contractors are much more likely to see contractors as a solution for increased demand

All Employers

Uses Independent Contractors

Does not use Independent Contractors

56

41

77

2

2

3

42

58

20

Which of the following is closest to your view? Showing %

Contracting work out makes it easier to accommodate ebbs and flows in demand and work volume

than having a full-time employee because we pay for work only when we

need to.

Having a full-time employee on hand is easier to accommodate the ebbs and flows in demand and work volume because they are trained to do

the job and can react quicker.

Don’t know


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The majority of employers have used more independent contractors in the last 5 years and those who use contractors are most likely to use more in the next 5 years

All Employers


41

31

17

12

41

57

…more independent contractors.

…fewer independent contractors.

Don’t know

In the next five years, my organization will use…

All Employers


36

31

2

1

62

67

…more independent contractors.

…fewer independent contractors.

In the last five years, my organization is using…


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WORKFORCE TREND: ON-DEMAND ECONOMY PRINCIPLES

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Employers are familiar with and favorable towards the On-Demand Economy

Respondents were shown the following definition:

The On-Demand Economy can be defined as an industry that encourages consumers to share use of goods and services rather than own them individually. Using online technology, consumers have access to goods and services provided by companies and other consumers, and can use those goods and services when needed and offer their time or property to earn extra income. Services within the On-Demand Economy typically include ride sharing, accommodation sharing, on-demand professional services and food delivery, and on-demand car rental services. Workers in the On-Demand Economy are principally non-employee contingent workers. Proponents of the On-Demand Economy argue that this provides workers with added flexibility, while critics argue they do not have the same benefits as traditional full-time employees and their status is a cost-saving mechanism for the companies of the On-Demand Economy. This economy has also been called the sharing economy, gig economy, or 1099 economy.

71% of employers say they are familiar with the On-Demand Economy

68% say they are favorable towards the concept

Workforce Trends: On-Demand Economy Principles

35% say they will use and provide more On-Demand Economy services in the next 5 years

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Both employers and workers see the On-Demand Economy as a completely different way of doing business, and agree that the On-Demand Economy creates wage-earning opportunities


The On-Demand Economy is…


All Employers

Will use and provide more On-Demand Economy services in the future

On-Demand Economy Workers

30

34

31

7

1

7

62

65

62

…a completely different way of doing business

…not that different from the traditional way of doing

business

All Employers


On-Demand Economy Workers

39

22

32

10

11

52

78

57

…creating more opportunities for

workers by bringing more wage-earning

opportunities to more people.

…eliminating traditionally

secure jobs and creating part-time, low-paid

work.

The On-Demand Economy is…

Don’t know

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Nearly half of Employers feel they will use and provide more On-Demand Economy services in the next five years

Which of the following is closest to your view Showing % among All Employers

In the next five years, my organization will……use more On-Demand

Economy services

…use fewer or no On-Demand Economy services.

Don’t know

34 19 47


…be providing more On-Demand Economy services

…not be providing more On-Demand Economy services

In the next five years, my organization will…

42 15 43

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Employers who will use and provide more On-Demand Economy services are optimistic about the On-Demand Economy’s benefits

Do you agree or disagree with the following statements:Net Agree (total agree-total disagree), ranked by employers whose organizations will use and

provide more On-Demand Economy services in the future

The On-Demand Economy will make it easier for workers to develop skills that make them competitive in the job market

The On-Demand Economy will give more opportunities for work for more people

The On-Demand Economy will make it easier for workers to build careers

The On-Demand Economy is good for society

Working in the On-Demand Economy is a good source of primary income

Some full-time jobs and tasks within my organization could easily be replaced by On-Demand Economy services

The On-Demand Economy helps companies take advantage of workers by not providing benefits and protections

On-Demand Economy companies are exploiting a lack of regulation for immediate growth

The move towards an On-Demand Economy will mean workers will have fewer opportunities for training

75

70

69

67

61

54

47

24

23

38

49

30

33

30

17

49

24

24


Net Agree, All EmployersNet Agree, Employers whose organizations will use and provide more On-Demand Economy

services in the future

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WORKFORCE TREND: AUTOMATION

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Employers have and will move towards more automation, but right now automation is limited by the scale of the company

Which of the following is closest to your view Showing %

All Employers 0-100 Employees

100-1000 Employees 1000+ Empoyees

3654

2418

22

15

6245

7577

…invested in

automating more tasks

and functions

…not invested in automating more tasks

and functions

All Employers 0-100 Employees

100-1000 Employees 1000+ Empoyees

2538

1610

78

48

6853

8081

…invest in automating tasks and functions

…not invest in

automating tasks and functions

Don’t know

In the last five years, my organization has…

In the next five years, my organization will…

Workforce Trends: Automation

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Employers are split as to whether automation will replace workers, or allow more workers to be hired through efficiency


All Employers

0-100 Employees

100-1000 Employees

1000+ Empoyees

40

31

48

46

13

21

5

9

47

48

47

45

Automation in my organization will lead to

more workers being replaced as technology

allows it to operate leaner.

Don’t knowAutomation in my

organization will allow more workers to be hired as

technology allows it to grow.

Workforce Trends: Automation

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KEY FINDING: COMPANIES HAVE DOUBTS ABOUT THE CONTINUING APPLICABILITY OF THE SOCIAL CONTRACT

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The strong majority of employers feel that companies will move towards a more on-demand labor model

Do you agree or disagree that more companies and organizations will move towards more of an on-demand labor model? Showing %

All Employers




70

75

64

88

10

6

15

3

20

19

21

9

% Total Agree Don’t know % Total Disagree

Companies Have Doubts About the Continuing Applicability of the Social Contract

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Almost 7 in 10 agree the social contract should be reformed for independent contractors

How much do you agree with the following statement: The social contract – whereby health, retirement, and other benefits are generally tied to traditional, full-time W2-based employment –

should be reformed as more workers move towards independent contract work? Showing %

All Employers




20

20

20

32

48

50

45

52

7

5

10

1

16

17

15

9

9

8

10

5


% Somewhat Agree

% Strongly Disagree


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Employers and workers disagree on whether workers should be provided benefits

Do you agree or disagree with the following statements: Showing % Net Agree (total agree – total disagree)

52

37

34

28

27

27

21

-12

44

44

40

54

28

24

32

11

Net Agree, All Employers

Net Agree, On-Demand Economy Workers

On-Demand Economy workers don't have the financial safety net other workers do

On-Demand Economy services are reliable

On-Demand Economy companies are trustworthy

On-Demand Economy workers should be given more benefits as part of their job

On-Demand Economy companies care about peoples’ privacy

On-Demand Economy companies don't invest in training of their workers

On-Demand Economy companies care about their workers

On-Demand Economy workers have the same job security as employees at traditional companies


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There’s a large discrepancy between benefits offered to full-time workers and independent contractors

Please indicate which of the following benefits your organization offers to full-time, W-2 employees and to non-employee contingent workers. Select all boxes that apply. Showing %, ranked by benefits provided to full-time

employees

HealthcarePaid vacation

Tax withholdingMaternity leave

401kDental

Bereavement leaveFamily leave

VisionPaternity leave

Education ReimbursementNon-401k retirement planning options

Work from homeStock options

Public transportation subsidies or reimbursementsParking reimbursement

8080

7672

7070

6868

6656

5147

4640

3332

1713

2619

1214

2219

1516

1413

3213

2119

Offered to full-time, W2-based employees (among All Employers)

Offered to independent contractors (among employers who hire independent

contractors)


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Two-thirds of employers feel they should not be responsible for providing benefits to independent contractors, but don’t agree on who should

Which of the following parties do you believe should be responsible with providing benefits for non-employee contingent workers? Showing % among All Employers

Workers themselves

Private companies that help workers manage/gain benefits

The government

Worker associations

Unions

Other

Don't know

22

18

9

6

4

1

6

From employers

…And half of employers do not believe they are responsible for providing training to independent contractors

34 66

Not from Employers


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KEY FINDING: COMPANIES PREFER TRADITIONAL EMPLOYMENT FOR NOW

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Employers prefer hiring full-time employees and think full-time employees provide value over the long term

Companies Prefer Traditional Employment for Now

Which of the following is closest to your view Showing %

My company generally seeks to limit the number of full time employees in favor of non-

employee contingent workers.

Hiring a non-employee

contingent worker is better for my

organization because it saves us money on taxes and benefits we would

otherwise have to pay hiring a full-time

employee.

My company generally seeks to limit the number of

non-employee contingent workers in favor of full-

time employees.

All Employers



67

63

73

6

5

9

27

33

19

All Employers



58

49

71

5

3

7

37

48

21

Hiring a full-time employee is better

for my organization

because they provide more value over the

long term despite having to pay more

up front on taxes and benefits. Don’t

know

31

Employers evaluate full-time employees and independent contractors on the same criteria

You will now see a list of attributes someone might take into account when considering a candidate for hire. Please drag these attributes into the adjacent container in order of their importance when

considering...Showing Attributes Ranked by employers who use independent contractors

Past Professional Experience

Relevant Years of Work

Education

Professional Portfolio

Writing and Speaking Ability

References

Desired Compensation

Professional Network

Cultural Fit

Past Professional Experience

Relevant Years of Work

Education

Professional Portfolio

Writing and Speaking Ability

References

Desired Compensation

Professional Network

Cultural Fit

123456789

123456789

A full-time, W2-based employee: An Independent Contractor:


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Offering benefits to employees remains a critical component of attracting talent, and employers expect workers to grow with their companies


All Em-ployers 79 3 18

Providing workers with benefits is necessary to attract and retain

workers.Don’t know

Providing workers with benefits is not necessary to attract and retain

workers.

All Em-ployers 78 3 19

I expect workers to stay on and grow their careers with my organization in

the long term.Don’t know

I expect workers to stay on with my organization in the short term, then

find an opportunity elsewhere.


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Non-employee contingent workers are not as loyalNon-employee contingent workers are not always available when I need them

Non-employee contingent workers are not as invested in their product

Non-employee contingent workers are harder to retainNon-employee contingent workers are not as reliable

Non-employee contingent workers do not understand my organization or objective

Relying on non-employee contingent workers increases administrative burden because of more frequent recruitmentNon-employee contingent workers are not as skilled as full-time employees

Non-employee contingent workers are not as motivatedNon-employee contingent workers take longer to train and get up to speed

Non-employee contingent workers are more expensive

It is harder to find non-employee contingent workers

The process of hiring non-employee contingent workers is more difficult

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14

15

12

12

11

10

12

10

10

12

8

10

42

40

37

35

31

32

33

30

30

25

22

26

22

24

31

31

33

34

35

36

33

35

39

35

40

38

17

13

15

20

22

21

19

24

24

24

30

24

28

1

1

1

2

1

1

1

1

2

1

2

2


% Somewhat Agree

% Strongly Disagree

Employers are looking for engaged, loyal employees and independent contractors do not meet that expectation

Below is a list of potential arguments an organization could make against hiring a non-employee contingent worker instead of a full-time, W2-based employee. Please indicate whether, based on your experience, you

agree or disagree with these arguments. Showing % Total Agree (Strongly + Somewhat Agree) among employers who use independent contractors


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ConclusionThere are plenty of signs indicating traditional employment is still the most common model governing the workplace. But, dig a little deeper, and one can see some changes to the traditional model as a result of emerging workplace trends:

• Most companies today are using independent contractors in some capacity and are satisfied with their work

• The criticism against contingent workers is they are not as invested in the company they work for or their output as much as full-time employees

• Employers feel companies will, in time, move to a more On-Demand labor model and agree On-Demand Economy principles signal a shift in how work gets done

Given these factors, it is clear that the short-term benefits of contingent workers and long-term value of full-time employees are odds in today's economy, and as employment models change, so too will the employer-worker relationship.

Conclusion

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