How to harness the strategic power of a workforce ecosystem

A workforce ecosystem is an integrated structure of internal employees and external contributors working together; they add value to an organization while pursuing individual and collective goals, and they’re essential for tapping into the power of today’s interconnected collaborators.

Workforce ecosystems need managers to ensure everyone is functioning together, but according to a new book co-authored by MIT Sloan Management Review Editorial Director David Kiron, and MIT Initiative on the Digital Economy digital fellow Elizabeth J. Altman, SM ’92, the key to a successful ecosystem isn’t management — it’s orchestration.

“Management” often implies or directly refers to control, the co-authors write.

Orchestration, on the other hand, “conveys the idea that individual actors have agency or autonomy beyond the strictures imposed by HR and management fiat,” according to Kiron, Altman, Jeff Schwartz, and Robin Jones.

The co-authors are also the primary researchers behind a multiyear project that surveyed executives and leaders in business, nonprofits, military branches, and more.

In this excerpt from their new book, “Workforce Ecosystems: Reaching Strategic Goals With People, Partners, and Technologies,” the authors outline the essential elements of a workforce ecosystem’s orchestration framework.

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Workforce ecosystem orchestration is not just an HR responsibility. Senior leaders and business unit leaders also make decisions related to managing a workforce ecosystem, as do leaders in HR, procurement, IT, finance, legal, and other groups. From our research, we have identified four themes that are helpful and arguably essential to consider as one strives to orchestrate a workforce ecosystem: leadership approaches, integration architectures, technology enablers, and management practices.

Considering the sets of players working to orchestrate workforce ecosystems and these recurring themes, we developed a workforce ecosystem orchestration framework.

The framework graphically illustrates how organizational functions come together in a workforce ecosystem and, building on our identified themes, addresses key activities and systems essential to workforce ecosystem orchestration. Around the outside of the graphic are the critical players, including senior leadership, business unit leaders, and functional areas. We organize these along three axes. We place senior leaders and business unit leaders on the vertical axis through the middle of the figure because these are primary orchestrators who generally need to take a holistic and integrated view of the ecosystem.

We place HR and procurement opposite each other on the top horizontal axis through the figure because these functions often have managerial responsibilities associated with gaining access to as well as managing essential contributors to the ecosystem.

We place IT across from finance and legal on the second horizontal axis through the figure to represent functions that serve crucial roles to enable the ecosystem to exist and operate effectively.

The four concentric hexagons correspond to the themes that emerged from our research encompassing cross-functional activities and systems vital to orchestrating workforce ecosystems.

The outermost hexagon in the figure represents leadership approaches. Orchestrating workforce ecosystems requires significant shifts in leadership behaviors and mindsets. For instance, since many participants in workforce ecosystems are external to the company — such as gig workers, subcontractors, and app developers — managers cannot exert the same types of direct control that they can with their own employees.

As additional examples, in a workforce ecosystem, community-building within and beyond organizational boundaries and influencing without authority become critical elements of a leader’s toolbox. Furthermore, diversity, equity, and inclusion principles and practices are examples of organizational elements that may need to be extended to apply to external contributors. Leaders across all levels and functions have to reevaluate what it means for them to lead in a workforce ecosystem structure.

The next hexagon in the figure represents integration architectures related to orchestrating workforce ecosystems. Within an organization, functional areas and business units need to work together differently in workforce ecosystems. We hear time and again from executives who see redundancies, gaps, and conflicts in how their organizations engage both employees and external workers. In some cases, different parts of organizations manage different types of ecosystem relationships. A business development group, for example, might be responsible for strategic partnerships, whereas another group might own developer relations; without an integrated approach, this could lead to internal tensions and confused messaging to third parties.

Integration architectures span not only HR and procurement (for accessing external talent) but also other areas, including IT (for data access, for instance), legal (for contracting), and finance (for allocations, invoicing, and payments). Finally, leaders must decide how they should coordinate relationships with external contributors — such as choosing how rigorously they want to control third-party outcomes (say, deciding to what extent they will provide strict or not-so-strict compliance testing for software apps).

The [next] concentric hexagon, technology enablers, represents the information systems and data that enable the management of all types of contributors. In most organizations, workforce-related technologies and data are fragmented; different systems in different silos apply to different workforce contributors. One system might track contract labor within one functional area (such as IT), while another might manage a developer ecosystem that creates apps that augment a product’s functionality. Yet another system might track third-party distribution subcontractors. Orchestrating workforce ecosystems includes managing and connecting the technologies that serve both the organization and its different types of contributors.

In the center of the figure illustrating our orchestration framework is a hexagon that symbolizes management practices. Workforce ecosystems require fundamental shifts in how organizations approach some of their key practices. For example, many management practices are tied to the so-called employee life cycle model: acquiring, developing, and retaining full-time employees. In a workforce ecosystem, new management practices are often required to attract the best talent available, wherever it is, and engage individuals and organizations via various types of relationships (such as finding individual contributors through digital labor platforms, or by opening interfaces and enabling software developers to create apps to offer in app stores).

Excerpted from “Workforce Ecosystems: Reaching Strategic Goals With People, Partners, and Technologies,” by Elizabeth J. Altman, David Kiron, Jeff Schwartz, and Robin Jones. © 2023 Massachusetts Institute of Technology. Reprinted by permission of The MIT Press. All rights reserved.