Contractors and Australia's quest for productivity

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Matthew Franceschini outlines the key elements leading to the rise and rise of white collar contractors.

The latest IPro Index, an annual study into life as a white collar contractor in Australia, confirms something that many have suspected for some time. White collar contractors are a highly focused and committed workforce. What's more, they are just as, if not more productive, than their permanent employee peers. 
 
Once a rarity in business, white collar contractors (otherwise known as Independent Professionals or IPros) have become comparatively common. So much so that today, most medium to large organisations have engaged an IPro at some point in time. The wide range of professions, skills and experience now represented within the contractor market make IPros an appealing and effective way of quickly sourcing additional labour.
 
The benefits of this growing workforce are well-documented. IPros provide agility, enabling responsiveness to changing business circumstances. They bring new skills and knowledge into an organisation, supplementing existing human capital. Less well known is the fact that IPros also offer a way of increasing an organisation's productivity.
 
Doing more with less

Productivity has become something of a national mantra in the past twenty years. Successive governments, peak industry bodies and business leaders have discussed at length the importance of achieving more effective outputs with fewer inputs, if we wish to stimulate incomes and ensure ongoing improvements to Australian living standards. In 1998 the Howard government went so far as to create an independent body, the Productivity Commission to focus on identifying ways of achieving a more productive economy.  
 
One of the most important factors affecting productivity – regardless of whether it's at the national or enterprise level - is labour. Simplistically, labour productivity is all about the quantity and cost of the people needed to produce goods or services. If an organisation can cut its labour requirements while maintaining or improving production levels, its productivity and therefore competitiveness increase. IPros facilitate this by providing an on-demand workforce that lessens the financial overheads which are typically associated with the permanent workforce.
 
The IPro commitment and productivity fallacy

Some employers have held back from engaging IPros due to the belief that real commitment and productivity can only come from permanent staff. Recent research conducted by Monash University and sponsored by Entity Solutions, shows that this fear is in fact a fallacy. The findings are contained in the 2012 IPro Index, an annual study of the attitudes and experiences of Australia's IPros.  
 
Approximately two-thirds of IPros experience a sense of commitment to their current client. The majority also believe that this feeling is reciprocated. Almost three-quarters say their client organisation cares about their opinions and that their client organisation is available to help them, should they need it. They believe that their client organisation cares about their wellbeing and takes pride in their accomplishments at work.
 
IPros are largely classified as knowledge workers; however, knowledge work is not easily measured.  In the 2012 IPro Index, to gauge productivity, IPros were asked to score their attitudes to 15 statements ranging from “I consistently do things right first time, every time” to “I adhere to agreed work schedules” and “I meet work/project goals as quickly as possible”. The responses provided researchers with information across the three key facets of knowledge worker productivity: efficiency, quality and timeliness.  
 
The results confirm that far from being disinterested participants, the vast majority of IPros hold their clients’ interests at heart and are determined to meet client quality standards and timeframes. They perceive they are productive contributors to their client organisations and consider themselves trustworthy, professional, efficient and effective in their client dealings.

The 2011 UK study by recruitment group, Hudson, found that twice as many employers believe contractors to be more productive and more engaged with their work than permanent employees. The reasons for this are explored in detail in Professor Linda Gratton’s new book (The Shift: The Future of Work is Already Here) where she suggests that traditional employment is fundamentally changing – with one result being that notions such as permanent workers being loyal to an organisation have disappeared due to “shortening contracts, outsourcing, automation & multiple careers”.

Gallup (2009) also stated categorically that “engagement is the key” to productivity – supported strongly by Hewitt Associates (2010) findings that high engagement firms yielded a 19% increase on earnings per share from 2009 to 2010 while low engagement saw a 44% decline.
 
The hybrid employment model

In a business environment based on continual growth, organisations must always seek to do more with less, thus enshrining labour productivity as a key competitive differentiator. No business can afford to carry the costs of over-staffing yet there has to be a capacity to respond quickly to periods of peak demand or to develop and implement new initiatives.
 
This is why a growing number of organisations are adopting a hybrid staffing model based on a core group of permanent employees supplemented by IPros. These organisations have already experienced what the IPro Index confirms: Australia's IPros are energetic, connected and committed.

The nature of their engagements means IPros tend to be task or project-oriented and they have a high awareness of time. Contrary to past mistaken beliefs, they are a particularly effective and positive contributor to productivity.
 
You can download a complimentary copy of the IPro Index here: http://www.entitysolutions.com.au/FormPromo.aspx
 

About the author

Matthew Franceschini is CEO, Entity Solutions

  • David Clarke (find me on LinkedIn) on 12/02/2013 1:04:39 PM

    I absolutely agree.

    I have found over the last 12-24 months that employers and project operators recognise that the 'best' people they are trying to recruit are already contracting themselves out - that’s where you can find them!

    However, what is raising concern is principal contracting terms are being passed down to the independent contractors who often cannot comply nor afford the requisite insurances leaving them considerably exposed during and after completion of their services.

    Personally, I can provide the advice/products to rectify this but there are thousands of contractors out their unknowingly 'signing away'.

    Having said that, Principals have on most occasions agreed with my advice and amended contracts or accepted contractors additional expenses (at cost plus!!).

    I look forward to the continued evolution and values add of Ipros.

  • Adam Trimboli on 14/02/2013 11:39:52 AM

    I agree also

    It is for this reason that 3rd party contractor management companies, like gnaustralia.com.au , are becoming increasingly beneficial to independent contractors as they provide a cost effective way to obtain the necessary insurances without having to take the policies out themselves. It avoids the hassle, removes their liability and exposes them to a range of additional contractor services such as salary packaging and relocation services.

    adam.trimboli@gnaustralia.com.au

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