Leadership and Development , Re-framing Work
June 17 | Blogs
Why companies are “outsourcing stability” in a down market
Estimated read time 6 min

While some industries are struggling to find workers, others are cutting costs, laying off employees, and implementing hiring freezes. Our current economic crisis has disrupted normal business operations, making internal stability much harder to achieve. 

If you’re grappling with an uncertain future or limited cash runway, consider outsourcing your stability by embracing alternative employment options like contingent workers, freelancers, and talent sharing.

Volatile markets and internal sacrifices  

The first two quarters of 2022 brought serious crises and uncertainty to the economy. Normal operating models are now no longer adequate and many organizations are facing real, existential threats.

For years, decision makers chose their operating plans based on information that was generally stable, meaning that it didn’t change drastically over a six month period. They could effectively predict their recurring customer revenue and understood the competitive landscape. In reality, this information was mostly made up of assumptions.

Today, many companies are trying to mitigate their risks so they can deliver on their promises to investors and stakeholders. The best way to start is by addressing internal risks like headcount management and outdated technology. 

If your company uses old software and business processes, you may unknowingly make important decisions about how to use your capital based on poor quality data. Improper tools will lead to uninformed decisions, like a hiring spree followed by a layoff months later. Upgrading your outdated technology stack should be a priority.

The old operating model

In the past, managers often had an “optimism bias.” They could more readily predict results in the future, so they felt positive about hitting revenue targets on time and rarely wanted to change course. Leaders approached problems by throwing money and bodies at it; if headcount was uncapped, bring in more people. 

Decisions were also made on an annual planning cycle when executives agreed on their go-to-market strategy, operating plans, and budgets for the next year. These decisions were effectively set in stone, with few adjustments or alterations needed.

Capital was used to scale as a way to secure stability in the market, often through a growth-at-all-costs strategy. Executives assumed that the cash would be readily available. Since the focus was on long term goals, executives could also delay making decisions until they felt comfortable with their analysis and action plan. 

Companies in hyper growth mode, who had no problem throwing money at their expansion, had the luxury of pursuing their long term strategy. This cash safety net is now gone and companies are frantic to extend the runway on the capital they have left.

We need a new operating model

Large fundraising rounds aren’t possible for most businesses in the near future. Because of this, they’ll need an operating plan that focuses on flexibility and continuous learning so leaders can act quickly and cohesively across the entire organization. 

Instead of relying on assumptions, companies need to regularly review, revise, and even change the course of their operating model when presented with new information. Delayed decision making is one of the biggest internal risks. 

Because when you delay, you’re actually making a decision to do nothing about your challenges. You may find that you’ve run out of cash and runway before you even lift off. It’s time for a completely different way to run a business.

Less employees, better technology 

Every week, companies announce large layoffs. The employees hit the worst are usually non-mission critical roles in marketing, recruiting, and sales. Now, they have less staff but the same workload. If your company is in a similar position, make sure the processes and technology needed to keep your lights on can compensate for this discrepancy. 

Don’t just fix the problems with a system process though, improve the process 10x. Choose best in breed products that will allow you to quickly adapt and integrate seamlessly into your technology stack. Fewer employees means that your technology tools need to automate manual tasks like lead routing, customer support, and revenue operations.

Supporting a better employee experience

Businesses that boomed during the pandemic are slowing down, losing employees, and paying higher labor costs to replace them. Typically, companies hire one person who can handle a laundry list of tasks. For example, a marketing manager might be responsible for email marketing, content creation, graphic design, and more. 

Unfortunately, this knowledge hasn’t saved employees during layoffs, some just months after being hired. Employers are also struggling to provide the career growth and stability that their workers expect from full time employment.

Choose flexible employment options

To fill this gap and for more flexibility, employers should consider bringing on specialists for any short or medium term projects. These people often have multiple income streams and aren’t relying solely on one employer job to survive. Options include:

  • Contingency workers – At the beginning of the pandemic, lots of companies cut their contractor budgets. Today, organizations are using more contingent workers to maintain a flexible workforce post-pandemic. In fact, 32% of organizations are replacing full time employees with contingent workers to save costs. 
  • Delegate – At Delegate, we’ve hired and built a community of experts with deep expertise in business processes and technology systems. So instead of hiring a full time employee, you can hire Delegate to make better use of your cash reserves–and your time.
  • Freelancers – Self-employed workers usually have multiple clients, so if you need to pull the plug on a project or significantly reduce output, they have the freedom to find other work. Since they don’t need to be onboarded or trained, freelancers can quickly fill any gaps when you’re ready to get started on a project again.

How to distribute stability across companies 

At the start of the pandemic, everyone was entirely focused on moving in-office workers to remote work. Now that disagreements about the effectiveness of remote work are in the past, we’re looking at a mostly remote or hybrid work future.

Today, we’re focused on testing out a new employment model called talent sharing. Talent sharing helps employers avoid major staffing changes like furloughs and layoffs. When companies need to cut costs and slash headcount, they can “share” their workers with other, short staffed companies in their space. 

Not only does talent sharing make sure that valued employees are paid and have stable employment, it also helps them expand their work experience and learn new skills within their industry. This model also helps employers cut costs so they can bring back their workers sooner. 

Lastly, an unexpected benefit of talent sharing is that companies can indirectly collaborate with other businesses to tackle operational challenges. A talent sharing business model has the potential to change the way companies operate. The logistics may be difficult at first, but it could offer more flexibility to adapt to changing market conditions, for both employers and employees. 

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