Orchestrating workforce ecosystems: Highlights from MIT-SMR and Deloitte’s third annual study of the workforce
Peer into the future of the workforce and see how leaders can strategically manage work across organizational boundaries by orchestrating workforce ecosystems.
Today’s leaders recognize the importance of managing a complex workforce of interconnected internal and external contributors, and yet few know how to successfully accomplish it. Seventy-four percent of respondents to the MIT Sloan Management Review (MIT-SMR) Deloitte global executive survey of 4,078 leaders and managers agree that effective management of external contributors is critical to their success. Fewer (58%) agree that they have an integrated approach to managing internal and external contributors. And only 30% say that they are sufficiently prepared to manage a workforce that will rely more on external contributors.
Confronting the challenges of intentionally leading and coordinating workforce ecosystems—what we call orchestrating workforce ecosystems—is at the heart of this report. This issue is especially timely given the ongoing workforce shifts brought about by the COVID-19 pandemic, shifting worker preferences, and the changing nature of work.
For the past three years, MIT -SMR and Deloitte have researched the future of work, conducting a global survey and interviews with executives and other thought leaders. This year’s study reveals that orchestrating a workforce ecosystem is a multifaceted effort that involves integration among many business functions. In legacy organizations, we see companies changing basic management practices around how they access, engage, and develop workers; we see leaders adapting to a changing workforce where they have more contributors but less control. In some cases, we see upward of 30%–50% of an organization composed of contingent workers and organizations increasingly relying on third parties to deliver some of their most essential services.
With laws preventing traditional performance management for contingent workers and with companies increasingly relying on arms-length contracting for critical services, some leaders have limited management options with a large percentage of their workers. We see executives often struggling to deal with a range of cultural issues as well: How far should they go to include external contributors in existing corporate culture? To what extent do diversity, equity, and inclusion (DEI) principles and practices apply to external workers?
A strong majority of survey respondents (80%) believe it is important for external workers to participate in the organization’s culture. But achieving this alignment is not easy. For one thing, there are legal and regulatory hurdles and risks inherent in embedding external workers too deeply in internal culture. In addition, external workers aren’t always that interested in participating. PlanOmatic co-founder and CEO Kori Covrigaru recalls that efforts to involve the real estate photography company’s contractors in its culture “fizzled.” “Typically, contractors will have multiple gigs going on,” Covrigaru points out. “They are their own brand; they are their own culture. Trying to get buy-in from people who may be here one, two days a week was difficult.”
Having a diverse base of employees is less meaningful if that base represents a shrinking percentage of the overall workforce ecosystem. Having equity among a base of employees is less meaningful if the base of employees represents a diminishing percentage of the overall workforce and unfair treatment (such as pay inequity) exists across the overall workforce ecosystem. The need to address DEI issues across the workforce ecosystem is, increasingly, on organizations’ radars.
Workforce ecosystem orchestration across functions
In our report, we illustrate how organization functions come together to oversee workforce ecosystems and address key activities and systems essential to workforce ecosystem orchestration.
Around the outside of the shape are critical players, including senior leadership, business unit leaders, and functional areas. The four concentric hexagons represent cross-functional activities and systems vital to orchestrating workforce ecosystems:
- In the center is management practices because workforce ecosystems require fundamental shifts in how organizations approach some of their key practices. For example, many management practices are tied to the so-called employee life cycle model: acquiring, developing, and retaining full-time employees.
- The second concentric hexagon, technology enablers, represents the systems and data that enable the management of all types of contributors. In most organizations, workforce-related technologies and data are fragmented: Different systems in different silos apply to different workforce contributors.
- The third hexagon represents integration architectures. Leaders have decisions to make about how functional areas should work together so they can lead and manage their workforce ecosystems.
- The fourth and outermost hexagon represents leadership approaches. Leading workforce ecosystems may require significant shifts in leadership behaviors and mindsets. In a workforce ecosystem, community-building within and beyond organizational boundaries and influencing without authority become critical elements of a leader’s toolbox.
Read the report to see how we build on this hexagon model to discuss how various functions can work together to orchestrate their workforce ecosystems.
Using our survey data, respondents were grouped into three categories: intentional orchestrators (22%), partial orchestrators (60%), non-orchestrators (18%). Our research shows that companies that are most intentionally orchestrating their workforce ecosystems have five common characteristics. They are far more likely than other organizations to:
- Closely coordinate cross-functional management of internal and external workers.
- Hire and engage the internal and external talent they need.
- Support managers seeking to hire external workers.
- Have leadership that understands how to allocate work for internal and external contributors.
- Align their workforce approach with their business strategy.
Leaders who view their workforce as an ecosystem structure tend to think differently about and act differently toward their workforce than leaders who view their workforce strictly in terms of hired (usually full-time) employees. What’s more, senior leaders and managers of functional areas report seeing the need and opportunities to work together in new ways.
In the report, we build on the 2021 research to dive more deeply into the topic of orchestrating workforce ecosystems. Our findings reflect significant shifts in management practices, leadership approaches, technology enablers, and organizational architectures. Based on interviews with 19 executives—a group that includes senior leadership, human resources, procurement, finance, IT, and business unit leaders—we offer several practical considerations for the functions primarily affected by a shift to ecosystems. Read the report.
Human Capital–Future of Work
Driven by accelerating connectivity, new talent models, and cognitive technologies, work is changing. Jobs are being reinvented, creating the “unleashed workforce”—where work is redefined to create new value and meaning for organizations, employees, stakeholders, and communities. To learn more, visit Future of Work | Deloitte US.
