Good morning,
CFOs have become central in steering business strategy and value creation. But that task is about to get a lot more comprehensive in scale.
The workforce is changing into an ecosystem, consisting of full- and part-time employees, but also includes robots, chatbots, contractors, gig workers, professional service firms, app developers, and even customers. These internal and external elements all contribute to an organization’s value creation and strategic goals, according to the new book, Workforce Ecosystems: Reaching Strategic Goals with People, Partners, and Technologies.
Two of the authors explained their research on Thursday during MIT Sloan Management Review’s (SMR) virtual summit on the future of work. “When Amazon decided it wanted to have its own transportation system, it didn't hire people," said Elizabeth J. Altman, coauthor and an associate professor of management in the Manning School of Business at the University of Massachusetts Lowell. “It started subcontracting, often with mom and pops. These people add value to Amazon, but don't work for Amazon.”
She continued, “If you think about YouTube or TikTok, those content creators are contributing to the business in a very meaningful way, and enabling the business to go forward. For many platform businesses that rely on contributions from users, those users absolutely, in my mind, are part of the workforce ecosystem.” However, “the relationship between the company and their customers or contributors is a little more complex than it was when a company was just selling a product to customers,” Altman said.
The years of research culminating in a book included global surveys of more than 10,000 business leaders across industries, and more than 100 executive interviews, with 26% of the businesses surveyed earning more than $1 billion in revenue.
When external contributors are considered to be part of an organization's workforce, that’s “a nontrivial shift,” said David Kiron, a coauthor and editorial director of MIT SMR. “It's so nontrivial that three-quarters of managers agree that effectively managing these external folks is critical to their organization's success,” Kiron said. “It’s especially true for organizations like Cisco and Novartis, and some of these other organizations that have tens of thousands of external contributors getting the work done.”
However, based on their research, just 30% of business leaders agreed that their organization is sufficiently prepared to manage a workforce that relies on all of these external contributors. “Those leaders who are taking this issue seriously consider it to be a holy grail, or a potential strategic differentiator for them to figure this problem out,” Kiron said.
Regarding a workforce ecosystem framework, four vital themes emerged in their research: management practices, technology enablers, integration architectures, and leadership approaches. Senior leaders and business unit leaders have to manage these themes. And the departments—HR, procurement, finance, legal, and IT—closely collaborate in a cross-functional approach for the workforce, internally and externally. There can’t be departmental silos in this approach.
However, a workforce ecosystem comes with challenges like issues of ethics, compliance, and regulatory matters. “The third part of the book is about ethics and social responsibilities and corporate social responsibility,” Altman explained. “We're very aware that this structure leads to all kinds of questions. Like, who owns the intellectual property, for example. That is an ongoing discussion. There are different mechanisms for working with it. It's not that it hasn't been addressed at all, but I think these discussions continue to evolve as workforce ecosystems become more prevalent.”
In a workforce ecosystem, I asked the authors if company strategy and value creation ultimately fall under the purview of the CEO and CFO. “We have realized that these discussions move to the C-suite,” Altman said. “They are strategic conversations because they get to the heart of how organizations compete [in their] industry, how they develop new products and services and move into new markets. So yes, ultimately, we think this is a very cross-functional C-level discussion. But we also see it going down deep into an organization.”
A workforce redefined, for sure.
Enjoy your weekend. See you on Monday.
Sheryl Estrada
sheryl.estrada@fortune.com
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