The US economy has come roaring back, fueled by fast-returning services jobs and the explosion of demand for technology and light industrial roles. The Chief Economist for Moody’s described the first two quarters of 2021 as “the strongest wage growth we’ve seen in a quarter century.” Companies without competitive purpose-built labor supply chains are quickly seeing their most strategic projects lag or fail, as they are unable to keep pace in this volatile, continuously changing market.
Just one example, from a customer we’re currently working with:
Feeling the crunch of the tight global semiconductor supply, the new CEO of a leading semiconductor manufacturer reached out to his supply chain leadership team to ask why key suppliers were putting the company at the back of the line compared to higher margin customers.
Turns out the company was dramatically under-paying suppliers. They were 25-30% below market for critical US manufacturing roles and needed to increase run-rate investment to $4.3M/year to get to market median—and even more than that if they wanted to get back to the front of the line.
This is a very well-run Fortune 1000 company—so how could this happen?
Simply put, the market is moving too fast for this company’s—for most companies’—current approach to referencing work types, targeting rates and acquiring labor. For that matter, even companies with staffing MSPs (managed services providers), whose value-add is meant to be the ability to access skilled labor in a competitive market, are failing to keep up.
Enterprise labor buyers, whether sourcing on their own or through third parties, need to re-set their sights, for the high-fidelity, real-time game of extended workforce management.
Fortunately, a plan for doing so exists. In our experience, there are four levers for companies to pull, to ensure the competitiveness—and economics—of their contract labor acquisition efforts:
- Taxonomy: As companies everywhere accelerate investment in—skill-centric—technology job, the question of “what’s market” is increasingly divorced from the limiting historical basis for comparison of job titles. Labor buyers need to be able to design and benchmark work at an atomized, skill-based level.
- Timeliness: With rates changing 3-10% per quarter in some job roles and locations, the idea of updating a rate card once a year and then notifying suppliers across the following months no longer suffices. Companies must be continuously optimizing rates, to meet the market where it is now, thus imbuing the labor supply chain with the same agility they have built into supply chains for goods elsewhere in the business.
- Location: The work-from-anywhere phenomenon is rapidly impacting the mobility and flexibility (and resulting retention risk) of employees. Companies need the requisite cross-market intelligence—which is in fact available—to nudge hiring manager behavior to liberate sourcing-from-anywhere, rather than fighting the battle to squeeze yet another software developer from the same tight labor market the last (overpriced) software developer came from.
- Technology: Decision-support applications enable hiring managers and executives to not only access real-time labor pricing for the extended workforce supply chain but to model real-time the relationship between price, sourcing, speed, and job design. This puts the power of intelligence into the hands of business planners and project operators alike to source the right teams from the right sources at the right price.
The good news is that it is possible to pull all four of these levers, not through massive reinvention of the entire labor buying process and organization, but with an intelligence system overlay on current information sources. And, with just a handful of changes—and across just a handful of weeks—companies can achieve a far more competitive stance.
If you are interested in how Brightfield is helping companies use its AI-powered Extended Workforce Intelligence Platform to build labor supply chain resilience and gain competitive advantage in the war for talent, please reach out to us directly.