Our workforces are evolving and getting more diverse – from a group of in-house employees, we now also have freelancers, contractors, crowdsourced innovators, and even robots or artificial intelligence.
But the practices that many companies use to hire and manage resources are primarily designed to account for the in-office, full-time portion of that workforce.
The other parts of the picture haven’t yet been fully integrated, and a lot of recruiters and managers are struggling to bring them together within the traditional workforce structure.
We need a new approach.
A workforce ecosystem considers the bigger picture and strives to unite all of a company’s resources from day one, using tactics to nurture a mixed workplace, such as pre-employment testing, dynamic learning and development opportunities, and opening the doors to external contributors.
Let’s talk about how workforce ecosystems connect all the dots and create a future-proof workforce.
Table of contents
- What is a workforce ecosystem?
- Why are workplace ecosystems seen as the future of the workforce?
- How does a workplace ecosystem approach differ from a traditional employee-based view?
- The expected challenges of implementing a workforce ecosystem
- Develop your workforce ecosystem with skills-based hiring
- ✅ Future-proof your organization with skills testing
What is a workforce ecosystem?
A workforce ecosystem is a structure that manages all contributors, including the internal workforce, external contributors, and the tools a company uses to grow and realize business goals.
The reality of a modern workforce includes more than just internal employees:
- External contributors like freelancers, contractors, gig workers, and vendors
- Remote and hybrid work arrangements
- Full-time or part-time employees, and job sharing
- Apps and tools for automation, management, communication
Compared to traditional workforce management practices which focus on internal employees, a workforce ecosystem is a more holistic and mature approach.
It promotes and supports the use of all these other elements to make a diverse and flexible workplace, fit for the modern era.
The concept was introduced in a 2021 MIT and Deloitte study done by Elizabeth J. Altman, Jeff Schwartz, David Kiron, Robin Jones, and Diana Kearns-Manolatos.
They describe the main characteristics of this approach as follows:
|Workforce ecosystem main characteristics||Explanation|
|Creation of integrated structures and communities aimed at providing value||Organize in a flexible “what needs to be done” way to move the needle; Welcome and coordinate external contributors and flexible arrangements; Open to unconventional solutions|
|Reliance on complementarities to achieve goals||Depend on the collaboration of actors who complement each other and together drive results; All actors work independently but in sync and towards the common goals|
|Interdependence and knowledge transference between units||Departments and individuals learn from each other and jump in to help when necessary; Accountability isn’t set in stone and people can shift into and out of roles as needed|
In a nutshell, a workplace ecosystem doesn’t just account for the case you need external help or better tools – it counts on it.
Why are workplace ecosystems seen as the future of the workforce?
The traditional, employee-based workforce is showing a lot of cracks in its sustainability on a global scale. Consider the current unemployment rate of 3.7% and increasing turnover rates, with 37.4 million employees quitting in 2022.
The costs of constantly hiring and rehiring add up.
But these are just some symptoms of the real core issues that make employees switch companies and put a barrier between employers and candidates:
- Lack of flexibility in terms of hours and location, i.e., the employer only wants workers who can be in the office full-time, excluding international candidates, working parents, people with disabilities, or people affected by the pandemic
- Limited talent pools due to rigid requirements that disqualify great candidates over arbitrary reasons like degrees and years of experience, instead of focusing pre-employment assessments on their competencies, personalities, and potential
- Low diversity caused by obstacles that prevent disadvantaged candidates from joining the workforce like lack of flexibility, fair-chance hiring practices, and skills-based assessments, resulting in a poor employer brand and a stale workplace dynamic
These workplace dynamics will continue in the same direction if left unchecked. The pressure is on employers to update their practices and meet the candidates halfway.
However, companies that try to work on these problems by opening their doors to a wider and more diverse talent pool eventually face a large obstacle:
The current workforce policies and structures largely fail to support these changes. They were only designed with internal employees in mind, which causes problems at every step.
Maybe half of your workforce goes remote, but you don’t know how to keep them in the loop and connected, so they feel isolated and their performance drops.
Or your marketing is disconnected from sales, so customers receive mixed messages and inconsistent service.
A workplace ecosystem incorporates all actors and elements as normal and equally important pieces of the puzzle from the start instead of treating them as miscellaneous or temporary issues.
Some companies are already embracing this change.
Mayo Clinic is a nonprofit medical and research center and a good example of a workforce ecosystem. They have doctors, scientists, nurses, and other internal innovators with more than 70,000 staff, but they also collaborate with entrepreneurs to advance healthcare breakthroughs.
Mayo Clinic focuses on what needs to be done and how to make the biggest impact instead of limiting themselves within the walls of the organization.
Let’s explore all the ways this approach differs from the conventional workplace setting.
How does a workplace ecosystem approach differ from a traditional employee-based view?
How you manage your workforce impacts seven key areas of your organization.
We’ll break each down point by point.
If you’d like it all summed up in one place, here’s a side-by-side comparison of the differences.
Traditional approach vs. workforce ecosystem comparison table
|Key areas||Traditional, employee-based approach||Workforce ecosystem|
|Workforce planning||Favors internal staff; Isn’t built for supporting external help; Uses traditional recruitment sources; Full-time and part-time in-house arrangements||Equally open to internal staff and external contributors; Hiring decisions are made based on goals and projects; Various recruitment sources; Flexible arrangements|
|Talent acquisition||Employee role-based hiring; HR manages talent acquisition; IT and procurement manage service providers; Legal manages contracts; Each department absorbs duties that don’t fit full-time requirements||Massive talent pools due to flexibility; HR works with other functions; Focus on work types, not roles; Internal and external talent marketplaces|
|Performance management||Standardized annual goals focusing on full-time employees; Individual metrics are based on role requirements; Retrospective reviews and little team focus||Continuous, regular feedback; On-going training; Metrics for individuals and teams align with goals and outcomes|
|Compensation and rewards||Salary informed by industry benchmarks; Annual adjustments; Benefits are based on minimum hour quotas for part- and full-time employees||Based on contribution, expertise, adaptability, and potential; Preferences are taken into account; Access to microbenefits for more equitable health and other benefits|
|Learning and development (L&D)||Revolves around specific role-based needs and compliance; Regulated by management and organizational requirements; Limited to internal workers||Regular training; Align skills with future organizational needs; Changing job descriptions and requirements|
|Career paths||Linear, hierarchical career path; Mentorship as needed; Structured; Few employees get promotions||Based on worker interest and capabilities; Multidirectional opportunities; Project-based work offers|
|Organization design||Structured around hierarchies and departments; Decision rights and reporting are defined for internal workforce only; Silos between internal and external workers||Considers all contributors including technology; Focuses on teams and networks; Decision rights and reporting are defined for all contributors|
These differences may seem surface-level at first, but they affect business strategy to the core. To fully understand how far apart these workforce organization and management systems are, don’t miss the longer explanations below.
1. Workforce planning
Conventional workforce planning revolves around current internal employees and potential in-house hires.
Candidates are scouted and hired via traditional recruitment sources, including job boards like LinkedIn or employment fairs.
Meanwhile, external contributors are seen as alternatives and bandaids. They’re largely excluded from workforce development.
This is partly because external options weren’t always available and partly because expanding into a mixed workforce requires a series of changes in the organizational and managerial framework to run properly.
Many companies and their stakeholders still deem it too much of a hassle to switch. But, long-term, incorporating flexible and mixed work arrangements is unavoidable.
It’s estimated that 85 million jobs will be displaced by 2025 due to jobs being divided between humans and machines, so it’s vital to have a structure in place that accounts for both human resources and non-human contributors alike.
Workforce ecosystems acknowledge internal staff as well as external contributors, like freelancers and machines, and strive to build strong partnerships with them.
They plan and acquire resources based on what helps them achieve their goals rather than the other way around – excluding external contributors and working off current internal resources alone.
Unconventional solutions are welcome here, be it integrating a new tool, bringing on contractors to help you with a project, or upskilling and updating current employees’ job descriptions.
2. Talent acquisition
The current employee-based approach faces limited talent pools. It excludes many candidates because the goal of talent acquisition is to fill internal positions.
This is how the hiring process looks:
- HR manages talent acquisition from traditional sources
- IT and procurement manage service providers
- Legal manages contracts
- Each department absorbs responsibilities that don’t warrant full-time hires
Employee-based hiring gives you fewer options, draws too many resources from your company, and often leaves your departments absorbing tasks beyond their scope.
Worse, there’s no guarantee of a good hire because this process doesn’t evaluate the candidates based on skills and personalities.
Workforce ecosystems aim to solve this problem with new approaches, such as skills-based hiring.
Workforce ecosystems have massive talent pools to draw from. The flexibility and inclusivity of their approach help them to find top-notch candidates to bring in as part of their workforce.
In reality, this type of hiring process unfolds more naturally than conventional hiring would ever allow:
- HR works with other functions
- Focus is on work types and needs, not positions
- Internal and external talent marketplaces
- Pre-employment tests are used to evaluate skills, personalities, and potential
Testing your candidates gives you a much better idea who you’re hiring and how well they can handle the role and its responsibilities.
It enables you to look past the shiny CVs and misleading interview skills so you can make a data-driven decision and hire the best person for the job each time.
3. Performance management
Performance management traditionally refers to standardized annual reviews focusing on full-time employees.
Individual metrics are based on role requirements, and there’s little team focus. The point is to maintain a steady ship in the company.
But this approach misses opportunities for growth because:
- It only aligns the individual with their role, not with the company’s skills needs, goals, and outcomes
- Too much time passes between reviews where things could have already been addressed and improved, leading to stagnation
- External actors are overlooked and don’t get opportunities to improve
The workforce ecosystem approach offers continuous, regular feedback that contributors can act on in real time.
A workforce ecosystem advocates ongoing training to ensure the retention of important information and the quick adoption of new best practices.
It also uses metrics for individuals and teams that align with goals and outcomes, and aren’t strictly role-based. For example, a workforce ecosystem might track the progress of a writer who’s learning how to do graphic design because they want to shift into that role even though that’s not essential to their current job.
Reskilling and opportunities for new responsibilities enable workforce ecosystems to eliminate resource waste because individuals aren’t pigeonholed, and their potential is used to its maximum.
4. Compensation and rewards
Traditionally, salaries are informed by industry benchmarks and annual adjustments.
Part- and full-time employees get benefits based on minimum hour quotas.
External contributors don’t get any rewards, creating an uncomfortable situation between them and internal staff.
The worst part? Efficiency can unfairly cut instead of increase workers’ pay because they take less time to complete their tasks.
Talk about a way to demotivate your best performers and halt your progress.
In a workplace ecosystem, all contributors are entitled to rewards.
Compensation is based on contribution, expertise, adaptability, and potential, giving everyone an equitable chance to get fairly paid for their work.
Good performance earns rewards because workforce ecosystems take the outcomes into account, not just the hours spent at work.
Finally, all workers have access to micro-benefits, so no portion of your workforce is left out or faced with financial issues despite working as hard as their peers.
5. Learning and development (L&D)
If you look at conventional learning and development, it’s basic and limited to compliance:
- Revolves around specific role-based needs, regulatory and security compliance at best
- Often generalized material that all workers have to go through regardless of their role
- Regulated by management and organizational requirements
- Typically done on a one-off basis
- Limited to internal, on-site workers
Many companies have things such as in-office presentations on the history of the company which they class as “learning,” but serve no real purpose for workforce development.
Workforce ecosystems approach L&D more holistically to ensure remote workers don’t miss out:
- Regular training aligns skills with future organizational needs, changing job descriptions and requirements
- LMS or other digital learning and microlearning solutions help integrate learning on the job and make it accessible to everyone
- Material is focused and relevant to the nature of work type or role, but opportunities to gain new skills and knowledge transcend the limits of a position
This approach is crucial for a future-proof workplace.
According to respondents in a global survey conducted by Glint, opportunities to learn and grow are one of the top markers of a great work culture. This plays directly into employee retention.
Other important contributors to a great work culture include change adaptation, appreciated employee initiative, and the organization’s continuous improvement on all fronts.
6. Career paths
Employee-based companies typically have a linear, hierarchical layout where few employees get to advance.
Employees can either move up (promotions), down (demotions), or stay put. Most employees don’t get to move much at all.
People who feel stuck at a dead end don’t hesitate to switch companies – hence the high voluntary turnover we’ve discussed earlier.
To create a workplace where people want to work, you have to provide ample opportunities for them to grow and take on new responsibilities, so they feel like their careers are headed somewhere.
The workforce ecosystem approach reimagines career paths to solve that problem:
- Career paths are based on worker preferences and capabilities
- Opportunities are multidirectional, and workers get to try out different hats
- Project-based work allows for hands-on and shorter-term experience
These changes contribute to a workplace where all employees get a say in how they want to progress, which unlocks their potential and enriches your internal talent pool, too.
Plus, you can spot and avoid skills gaps before they become gaping holes in your pockets.
7. Organization design
You can tell a company is designed with an internal focus even if it’s open to freelancers by looking at these indicators:
- It’s structured around hierarchies and departments
- External contributors are treated as exceptions since there isn’t much documentation on how to manage them
- Decision rights and reporting are defined for internal workforce only
- Silos between internal and external workers
Unfortunately, a lack of policies and rules to manage all workers leads to inconsistencies in the quality of work and conflicts.
The workforce ecosystem approach removes this wall between workers.
It considers and unifies all contributors and embraces the interdependence between all teams and networks.
Their policies incorporate the external workforce as much as the internal, so all participants have equal input into projects and decisions.
The ecosystem approach is all around better for the organization’s health because it doesn’t depend on a few people to run the business.
Empowering all workers to take the initiative and make data-driven decisions makes each contributor more personally involved in the outcomes, engaged in work, and motivated to do well, knowing they will be rewarded for it.
The expected challenges of implementing a workforce ecosystem
We’ve seen a lot of benefits of workplace ecosystems. But this approach has its own challenges you should know about.
We’ll give you some suggestions on how to overcome them.
(International) legal and regulatory issues and intellectual property
In employee-based workplace settings, regulations tend to be straightforward and apply to all employees. There’s also no doubt about who owns the deliverables – it’s the company.
But the matter becomes more complex when there are multiple organizations, freelancers, and startups working on deliverables together. Laws and regulations vary by location. So, who gets the claim?
You can prevent conflicts by creating policies and communicating your terms upfront.
This precaution ensures all contributors agree from the start and nobody is surprised or damaged by the arrangement down the road.
Brand and work quality consistency
Some things simply get cleared up on the go when you show an employee what to do in real-time, spot a mistake, or answer their question.
You need everyone to be in the loop to guarantee consistent results for clients.
But external contractors and remote employees don’t get that chance to learn spontaneously.
The core reasons why your work consistency might suffer in a workforce ecosystem are a lack of standard operating procedures and poor communication.
With proper documentation and a culture of overcommunication via individual and group chats, you can ensure that every employee follows the same rules and delivers satisfactory work.
Established habits, structures, and culture can be hard to put aside
If you’ve functioned as an internally-focused company hiring people who fit the same mold for decades, it’s going to be a bit tricky to wander off the beaten track.
But you can’t get new results from the same old behaviors.
Start implementing company-wide changes systematically, one area at a time. In the meantime, work on the culture:
- Ask employees for feedback and listen to their ideas and initiatives
- Be open to suggestions and show people you’re taking them seriously
- Look for remnants of outdated policies and rules that don’t make sense and change them
- Encourage learning together and offer plenty of development opportunities
- Celebrate positive behaviors with the team to model them as part of your culture
- Hire for culture adds (people who aren’t exactly like your current staff) to shake up stale dynamics
Develop your workforce ecosystem with skills-based hiring
We’re headed towards a future where any one way of working or thinking won’t be enough. You’ll need to integrate internal and external workers and tech to get a competitive advantage.
It’s worth rethinking your approach to managing such a diverse workforce – be it via the workforce ecosystem approach or another framework aimed at supporting your workforce to keep up.
Learn more about skills-based hiring to help you get there.
After all, hiring motivated and adaptable candidates contributes to a workforce that can adjust to these changes.
You won’t need CVs for that. Instead, try our Personality tests to find the candidates best suited to invigorating your inter-team dynamics and begin building your ecosystem.