Does an Open Workforce Challenge Control of Cost and Performance?

Organizations around the world are rapidly reshaping their workforces with a complex mix of internal teams and external talent, outpacing their ability in many cases to effectively manage costs, performance and decision-making, according to new research from the American Institute of CPAs (AICPA) and Chartered Institute of Management Accountants (CIMA).

Organizations are increasingly relying on consultants, contractors, freelancers and outsourced providers as they seek greater operational flexibility and agility in developing new ideas, according to a survey of more than 1,100 senior executives conducted by Longitude Research on behalf of the AICPA and CIMA. This shift to the “open workforce” is expected to accelerate in the next five years, with more than a third of those surveyed expecting at least half their workforce to be made up of such external talent by 2020.

Many organizations are encountering significant challenges as they adapt. Only about 2 in 5 executives surveyed said that their organizations have high levels of oversight on the cost, performance and productivity of the external resources they use. They face risks of data breaches and disclosure of competitive information and struggle to maintain consistent quality decision-making at all levels. It’s also particularly difficult to strike the right balance between control and empowerment. Nearly two-thirds, 62 percent, said they are struggling to get the mix right or feel that they have it wrong.

CIMA and the AICPA released the findings in a new report, “New Ways of Working: Managing the Open Workforce,” today at the World Congress of Accountants in Rome. The organizations are Imperial sponsor under the banner of their joint Chartered Global Management Accountant designation.

“The converging forces of globalization, digitization and market flux have given rise to a powerful new force – the open workforce,” said Charles Tilley, FCMA, CGMA, Chief Executive of CIMA. This trend holds the potential for new levels of agility, creativity and cost savings, but most organizations aren’t yet equipped with the controls and practices necessary to maximize opportunities and offset risks. Management accountants must play a critical role in creating the frameworks and discipline required to unite today’s disparate organizations and their more fluid workforces.”

The global survey, which spanned 35 countries, showed strong interest in deeper engagement with the finance team. Nearly 9 in 10 executives said that a closer partnership with finance in the decision-making process would help them better manage their organizations in the coming years. The same majority also want a better process to pull insight from financial and non-financial information and a way to model value creation to make the benefits and risks of opportunities clearer.

While all organizations are struggling to find the right balance, executives who said their organiations are outperforming their peers also showed higher propensity for leveraging the open workforce. Among other factors, high performing organizations are better at balancing control and autonomy and are more likely to have the tools, strategies and frameworks in place to manage these complex structures.

“Adapting to the open workforce will be a defining challenge for business leaders over the coming decade,” said Barry Melancon, CPA, CGMA, President and CEO of the AICPA. Finance teams must take a leadership role to make sure agility does not erode accountability. They must equip organizations with the tools, structures and insight to balance the benefits against the risks and keep organizations on a path to long-term sustainability.”