What you need to know about the blended workforce (part 1)
August 18, 2022
August 18, 2022
Jeff Novotny (Field Nation’s Director of Network Development) and Shawn Fields (Field Nation’s Senior Field Services Strategist) are veterans of the field service industry and have worked with some of the largest, most well-recognized service organizations in the country. In this conversation, they share their individual perspectives on the blended workforce model and clear up some common misconceptions.
Shawn, I’m excited about our conversation today. When we talk about blended work at a high level, I think it’s important to start with a larger conversation about the workforce, where work gets allocated, and how work gets done. I know we’re both fans of the blended workforce. Could you talk a little bit about that?
I think that the pandemic accelerated the adoption of a blended workforce simply because the dynamics of the working environment changed so rapidly. Some of those innovations were already in place and just got accelerated. Technology is empowering people to reconsider who does the work they need done.
Historically, companies felt like they always had to own the resource that did the work, but technologies enabled them to think about broadening the geographic specificity of where their workforce is located. So now organizations have the ability to get the best talent, no matter where it’s located. I think the ability to be able to do that––along with the cost advantages and the work optimization advantages for their existing W2 workforce––are just becoming too prevalent to ignore.
Yeah. I’m going to expand on that a little bit. I am a fan of the blended model because there’s no one size that fits all anymore. Market variability drives that point home. Depending on the market you’re in, seasons, geography, population density––all can impact labor. Additionally, companies’ fiscal calendars are all different and create variability as to when budgets become available. And then you add in things like contract expirations, renewals, and/or equipment evolutions. What are the new contract requirements and equipment refreshes going to be in the market?
All those variables create an ebb and flow in market demand. In some localities, W2 models work because the volume density is higher and more consistent. But even there, surge capabilities are still required to handle unforeseen or unexpected volume. Further, the W2 model gets more challenging in these denser markets as volume moves into more of a 24/7 coverage model. Then you get into leaner markets where you might have more remote requirements for a workforce. As technology allows workforces to expand and be more remote, companies can expand their geographical footprint, which creates a more variable and less consistent demand density for service providers. In those areas, a variable model is likely even more necessary.
I think it’s interesting how this transformation is taking place and how enterprise organizations are adopting it. McKinsey recently surveyed 1,000 different organizations and came back with some pretty startling statistics. They’re actually terming it an “industrial revolution in services.” And something I found particularly interesting is that, of the executives interviewed, 70% said they expect to see more temporary and contract workers making up their workforce going forward. That’s a huge number.
They also see four irreversible shifts in services, including digitization, contactless operation, and virtualization of workplaces, which we’ve all seen. But the one I’d like to focus on is the rise in the alternative sources of talent––different approaches like talent marketplaces and expanding into skill talent pools. Approaching talent differently can solve business problems, and these organizations realize that.
This begs the question: How do you compare one W2 resource with an entire 1099 network? Service leaders want to compare the cost of a W2 to the cost of a 1099 and make it apples to apples, but that comparison often falls apart because, when you tap into a 1099 network, you’re looking for a skillset instead of an individual. Jeff, in your opinion, how should service leaders be thinking about the comparison between a W2 resource and a 1099 network?
It’s tough to compare W2 resources to 1099 resources, and a big part of that is the fact that utilization is so often the north star metric for service companies. Utilization is actually not really the best way to measure success in a W2 model. The fact of the matter is there are no two companies that even measure utilization the same way. Is travel time utilized? Maybe in this company, maybe not in the other. Is SLA availability utilized? The best metric, as Shawn you often point out, is revenue per tech per day. This metric prevents losing sight of hidden costs and helps service companies find the right balance of W2 and 1099 labor.
And let’s be clear: We’re not sitting here trying to propose that there is no place for a W2. There absolutely is. The key is understanding the nature of the work that you need your resource to complete. Is it transactional? Does it have SLAs associated with it? Does it have service penalties associated with it? What is its duration? What’s the number of transactions? Where is it located? Look at the characteristics of that work and let the work determine the workforce that you deploy to get it done. If that work has got a lot of customer IP, a lot of OEM-specific vendor certifications, a lot of training required––that belongs in the hands of your W2s. But if it’s more commodity-level work, if it’s preventive maintenance, or if it’s project work with defined schedules, that kind of work is great for alternative workforces.
So there are a lot of advantages to being able to segment the work when it comes in, and then use that segmentation to decide where it goes, as opposed to the way most companies do it today. When the work comes in, the very first thing they do is ask, “Do I have W2 capacity?” If the answer is yes, regardless of the work, it goes to the W2s. And that’s the beginning of the challenge with utilization that you’re talking about, Jeff.
Jeff Novotny (Field Nation’s Director of Network Development) and Shawn Fields (Field Nation’s Senior Field Services Strategist) are veterans of the field service industry. In this conversation, they address the myth that on-demand labor is more expensive than a W2 workforce and offer advice to service leaders looking to protect their margins.Blog
Jeff Novotny (Field Nation’s Director of Network Development) and Shawn Fields (Field Nation’s Senior Field Services Strategist) are veterans of the field service industry. In this conversation, they compare viewpoints on the market conditions affecting field service and predict where the industry is going next.Blog
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