Engagement and Culture

We introduced this book by asking whether you should think of Topcoder as a company with 700 or so regular full-time employees, or as a company that delivers 700,000 workers through its platform. Is being rated a “best place to work” by the 700 really a good indicator of Topcoder's success in engaging the workers that really matter? In fact, the leaders of organizations that provide talent platforms like Topcoder, Upwork and Tongal pay close attention to engaging their free-agent workers. If you watch videos of the Topcoder Open, you will see a very engaged group of coders who gather in one place to spend hours watching the best coders in the world solve tough riddles. The attendees literally watch code being written and speculate about who will win. The Tongies are an annual award ceremony, much like the Academy Awards, but featuring the best work by the free agents delivered through the Tongal platform. Awards include the best 140-character idea and the best “wildcard” ideas that were at first rejected by the client, but where the free agent decided to invest their own time in creating a demonstration video, and managed to win the job after all. In the speeches by the winning Tongalers, they frequently thank Tongal for “giving me a way to pursue my career.” Many employers would dearly love to have their own regular full-time employees be this engaged!

Does a free-agent platform have a culture? In Rob Salvatore's speech at the Tongie awards in 2015, he reminisced about the early days when the platform had only 200 members and was scrambling around to explain to potential clients like McDonald's, Unilever, and Netflix how the model actually worked. He marveled that today projects that were created through the platform attracted millions of dollars in corporate advertising dollars and were showcased at the Sundance Film Festival. He summarized by declaring, “We used to say that Tongal was going to be the future of how creative work gets done, but today all of you are the future!” That message, and the values, norms, and beliefs that it embodies, certainly resonated with Tongal's 48 employees in the room, but it resonated even more powerfully with the thousands of assembled free agents whose lives are being changed by the opportunity that Tongal creates.

Even if you don't lead a talent platform, in a world beyond employment, engagement and culture matter, and it's not only engaging your regular full-time employees. Leading the work means creating engagement with your culture among a workforce that exists well beyond your boundaries. When you use a platform like Tongal, Topcoder, or Upwork? In a world beyond employment, it makes sense to choose a talent platform because its leaders are good at creating engagement among their free-agent workers. Even more directly, you will want to engage workers on the platform with your specific organization, by creating a great reputation among them that your projects are interesting and change the world, and that you are a good partner to work with. How would HR measure that? Can you do an engagement survey of the free agents that work on your projects? It may already be done for you. Freelancers Union has a website that compiles “reviews” of clients and summarizes them into a five-star rating (https://www.freelancersunion.org/client-scorecard/).

Rocio Bonet, Peter Cappelli, and Monica Hamori summarized the research on engagement when it comes to “labor market intermediaries” such as talent platforms, temporary agencies, and so forth.¹ The research suggests that worker attitudes and engagement reflect both the intermediary and the client for the work. Commitment and loyalty toward an employment agency are driven by traditional elements such as career support, communication, quality of facilities, and interpersonal supportiveness, and the average commitment score of workers to their intermediary is “not far below” the averages typically found for traditional regular full-time employee. Interestingly, free-agent workers were also more committed to their client when they felt that their intermediary supported them. They also found that workers who felt their client company treated them fairly showed positive behaviors toward the agency that placed them and vice versa. The bottom line is that how well your talent platform or worker provider engages workers may well affect how engaged those workers are with you.

When Disney marketers work with Siemens engineers to market a hearing aid, or when Mitsubishi engineers work with Boeing engineers to craft an innovation in a commercial airliner, culture now spans both organizations. Engagement with the project may be more important than engagement with either organization alone. The mixing of two cultures from two different organizations may be far more pivotal than the culture of either organization. If you measure engagement and culture only among the workers from one organization, you may miss the most important factor in success.

If HR defines engagement only as applying to employees, then the ratings of Freelancers Union, the reputation among free agents on the platform, the attitudes of contract workers, and the passion of employees you borrow from other organizations simply don't factor into decisions. If HR defines engagement in terms of leading the work, those ratings become a vital element of organizational success and leader decisions.

Leadership

Leadership refers to setting a vision and values, inspiring followers, and communicating strategy and mission. When you lose the traditional basis of being “the employer” much of leadership changes. Leading without power, and through intermediaries will become more frequent. Are you the leader that the outsourcers' talent wants to work for? Are an organization's leaders respected enough that free-agent volunteers will go the extra mile? If your HR systems define leadership only as it applies to regular full-time employees, you may miss significant opportunities and challenges that are revealed when you realize that leadership means leading the work.

What does leading the work mean when there are no employees? Recall the story of Mark Harrison, the CEO of AH Global, whose entire workforce consists of free agents he engages remotely. Harrison crafted a leadership approach that kept his workers engaged and aligned. He formulated an approach to rewards that allowed him to “pay people in the currency they value.” When the dials of the Lead the Work framework are turned all the way to the right, not only is leadership still vital, but it becomes even more nuanced.

What about leaders in more traditional organizations? Is iconic leadership important to a free-agent community? Consider the power of the names Bill and Melinda Gates or Robert Redford. At the 2015 Tongie awards ceremony for Tongal freelancers, some of the winning projects were completed for the Bill and Melinda Gates Foundation and were featured at the Sundance Film Festival. The Tongal producers that won the award were thrilled to have contributed to the mission and vision of their heroes like Bill and Melinda Gates and Robert Redford. It's certain that the leadership of clients factors into the work and engagement of talented free agents on the Tongal platform. As work shifts toward platforms, collaborations, and alliances, it may be as important for HR to build leaders that are well known and respected outside their organizations, as it is to build leaders that are well respected by the regular full-time employees inside the organization.

This means rethinking leadership in at least three ways:

1. “Leaders” may emerge from any spot in a much larger network than the traditional organization. The best leader of a project or technical team may be an experienced project manager at Tongal, Upwork, or the consulting firm that is working with you.
2. Leaders inside organizations must articulate a vision, create a culture, and generate passion and motivation among a workforce that spans the boundary. Leaders with strong public reputations (perhaps through ratings by those in other organizations that have worked with them) become even more valuable, when they may be the attraction points that get freelancers, consultants, or alliance members to collaborate.
3. Leadership development, as a special case of the talent life cycle, now must encompass sources, development opportunities, destinations, and depart-return possibilities that vastly expand the way you can create leaders for the future. Leadership now may include creating a culture and vision that easily incorporates contraction and expansion. It means being adept at explaining the nontraditional outcomes that have been outlined above, generally getting organization members to see the logic and fairness of constant stretching and contraction, and the differentiation that must come with it to make it work.

Diversity and Inclusion

Diversity refers to an environment that is inclusive of differences, encourages disparate perspectives, and allows interactions among those with different demographic, lifestyle, professional, and cultural backgrounds. Diversity is typically conceived of as a sort of ratio, with the numerator being the number of different categories represented and the denominator being the total number of employees, such as the percentage of female employees among all employees, or the percentage of different age groups among all the employees on an innovation team. The numerator and denominator of the diversity equation are typically calculated based on traditional employees. In a world beyond employment, the workforce is more likely to include workers that may never interact with the organization's regular employees, or it may involve traditional employees working side-by-side with workers that have no employment relationship.

In either case, the very definition of diversity and its purpose must be reconsidered. Should organizations increase diversity by tapping nonemployment relationships with workers that are different from its regular employees? On the one hand, the emergence of global platforms that allow organizations to engage with workers worldwide might be seen as a boon to diversity and inclusion, because work will routinely be accomplished by workers with varied ethnic and regional backgrounds and who may bring vastly different perspectives to the work. On the other hand, should it “count” as diversity if an organization taps a platform for workers from many different countries or workers of many different ethnic or demographic characteristics? Technically, the work is being done by a very diverse group. Yet, if these different types of workers never interact, is the “workplace” actually more diverse?

It is no longer sufficient to define diversity merely as demographic variety, when the work can encompass global variety with the click of a mouse or a visit to the website of a talent platform. Diversity of interaction may best be accomplished by partnering with an organization whose employees are different from yours. Imagine the diversity of views that arose when Siemens engineers interacted with Disney marketers to create the marketing campaign for Siemens' children's hearing aid. IBM routinely sends teams of its young leaders to work in developing countries, in collaboration with local governments and nongovernmental organizations. It is called IBM's “Corporate Service Corps.” Projects can involve helping communities create a system of Internet access, or analyze the spread of deadly diseases. Certainly these teams are often demographically diverse, but the real payoff is the diversity of experiences they receive through encounters with the local population.

For HR leaders and their constituents, a world beyond employment requires going beyond defining diversity demographically, and clarifying the strategic definition and purpose of diversity.

Performance

Leading the work obviously means defining worker performance well beyond the traditional performance ratings of only your regular full-time employees. Earlier sections have illustrated how talent platforms are redefining performance management for their free agents, in a way that allows worker performance to be immediately and publicly available. For HR leaders and their colleagues, that kind of performance assessment makes the traditional yearly performance appraisal interview seem archaic. Can it be long before regular full-time employees expect a performance system that is as transparent? Are you willing to rely on the performance assessments of talent platforms and providers, or should you separately assess the performance of those they provide? When you form alliances or collaborations with partners to borrow and lend workers, are you willing to rely on your partner's performance assessment process when you evaluate the workers you loaned them? Should you be conducting performance assessments for your partner's employees?

While these are complex questions, our earlier sections and chapters have provided examples and guidance about when you dial up and dial down the dimensions of performance assessment and rewards. There will always be a place for traditional performance assessment of regular full-time employees, but the emerging world beyond employment is increasingly unearthing new ways to measure and report performance that HR leaders must account for as they develop performance assessment systems.

So, let us turn to a significant broader social issue: whether the world beyond employment will be one of exploitation and winner-take-all performance or one where the vast majority of workers at the middle performance levels can find good work and equitable rewards. Is the world beyond employment destined to produce a labor force of a few winners that receive a disproportionate share of the spoils, while the great majority of workers are relegated to wishing for a world in which there were “good jobs” that guaranteed good rewards to workers, even if they were not among the elite or best?

A common premise among writers, such as Maynard Webb in Reboot Work and Lynda Gratton in The Shift, about the world beyond employment is that workers must prepare for a future in which only the fittest will survive and prosper. The idea is that organizations will want the best work possible and now can locate the workers that provide stellar results. Those workers will enjoy high earnings, lots of engagements, and increasing attention from organizations and individuals looking for that sort of work. Some foresee an attractive new world in which workers find or build their strengths, and once they build them they can enjoy a life where they can work only when and where they wish, on projects that are most engaging and for rewards that are tailored to them.³ The reward for workers accepting the uncertainty that comes with being the CEO of Me is a level of flexibility, freedom, and influence over their work arrangements.

These same writers often note that such a world will no longer allow mediocre workers to hide within traditional employment systems that tolerated or overlooked mediocrity, or that rewarded tenure and loyalty beyond performance and contribution. This has prompted others to suggest that the world beyond employment will see performance and reward systems that commoditize work and workers, resulting in lower costs for those who receive the work, but also lower rewards and exploitive short-term engagements for the workers themselves. This has prompted some to call for laws requiring that nonemployed workers receive similar protections as traditional employees.

There may be a middle ground. In reality, not everyone requires the best performer and not every worker desires to be the best at everything they do. Even in traditional organizations, not every role requires the very best performer. It depends on the relationship between performance and value, which we discussed in Chapter 9 as “return on improved performance” (ROIP). For some roles the ROIP relationship is linear, in that every increment of better performance provides an equal increment of improved value. In such roles, workers that perform better add more value, but in roles where the slope of the line is very low, it may cost more to achieve higher performance than it is worth. In roles where the line is very steeply sloped, it is more likely that going for the best is optimal.

For other roles, the ROIP relationship is highly sloped or “pivotal” as performance goes from low to meeting standards, but then levels off. For example, in most organizations roles such as accounting and legal compliance do not require the very best accountants or attorneys in the labor market, because those organizations do not have accounting or legal outcomes as their product or service. Thus, having accounting and legal systems and outcomes that are at standard is optimal, and it does not pay to try to achieve anything beyond the necessary standard.

For still other roles, the ROIP relationship may be rather flat from low to moderate and then increase exponentially as performance goes from moderate to high. This is often the case in creative endeavors, such as R&D or entertainment, where the costs of mistakes is often not high, but the real payoff comes only with breakthrough performance. In these situations, it is more clearly optimum to engage workers that are truly the best available and at the top of the performance distribution. In such situations, it makes sense to reward such workers aggressively and handsomely.

Of all of these scenarios, only the last one suggests a winner-take-all world in which only the very best workers benefit handsomely and all others are relegated to low rewards and exploitive uncertainty. With many other ROIP relationships, there is ample room for workers that either choose or are not capable of becoming the best performers. In other words, a world beyond employment that more accurately and aggressively tracks performance and capability may have ample room for workers in the middle of the pack. Indeed, the advent of sophisticated platforms that match worker quality with work demands may make the life of the middle-performing worker better. Such systems would routinely and transparently create a match between the return on performance for those receiving the work, and the level of performance of those providing the work, even when that match happens at the middle of the performance distribution. Yes, moderate performers would receive fewer rewards than elite performers, but they might be no less in demand at the right price. For work where “at standard” is good enough, platforms would allow those that want to work at a middle level to find their niche. Indeed, for some types of work there may be more demand for such workers in the middle of the performance distribution than for those at the elite end.

As important as this is to leaders within organizations, it is perhaps an even greater call to action when it comes to the broader talent ecosystem. If the new world of work devolves into winner-take-all at one extreme and commoditization of labor at the other, it cannot be sustained. The HR profession is in a prime position to help shape the debate in a way that is more sustainable, and to help leaders in companies, governments and investor groups better understand both the risks and potential of a world beyond employment.

The New HR Professional: Leader, Architect, Engineer, and Orchestrator of a Boundaryless Global Workplace

Clearly, what we know today as the department of human resources will evolve significantly as the mandate evolves to lead the work in a world that includes employment, but extends well beyond employment. The new name for this profession has not yet emerged, but we believe it will encompass future capabilities resembling those of great leaders, architects, engineers, and orchestrators, who play on the stage of a boundaryless global workforce.

HR leadership will mean extending HR's current mandate by reaching beyond the functional and organizational boundary. It will be necessary for HR leaders to influence social values, legislation, and political debate in new ways. The HR profession can be the repository of evidence-based perspectives on thorny questions about how to maximize the benefits and minimize the costs of the new world beyond employment. Today, the debate is largely focused on jobs and employment. HR can shape a new discussion framed in terms of leading the work.

HR as architect means creating new frameworks to build upon. John Boudreau noted in Retooling HR that this new architecture will often take the form of retooled mental models that leaders, workers, investors, legislators, and other constituents use to understand the work and workplace.⁴ Today, inadequate mental models about HR are often widely shared (e.g., turnover is always bad and should be reduced, performance follows a normal curve, and all human capital risk should be reduced). Perhaps the most pervasive traditional mental model is that employment is how work gets done. Where might these new mental models for talent and human capital come from? As the previous section described, there is evidence that leading HR organizations may develop such models by retooling HR and talent questions with the models that leaders already understand and trust. As we have seen, a mental model of employee turnover can be retooled to a model of sequential engagement over the course of a career. The mental model of the employment deal can be retooled to a model of differentiated rewards that draw on principles of consumer product optimization and customization.

HR as engineer must become facile with social networks enabled by technology, big data, and analytics. It will mean creating sense from the avalanche of data in boundaryless information systems. It will mean interconnecting data sources as diverse as internal HR information systems; external social platforms like LinkedIn and Facebook; organization systems such as operations, marketing and finance; and decades of scientific research that is retrieved in milliseconds. It will mean harnessing technologies as diverse as virtual meeting spaces, personal access points, artificial intelligence, and games.

Ian Ziskin, a former chief HR officer, suggests that future HR leaders will be more like orchestra conductors.⁵ The conductor need not be proficient on every instrument but must locate and assemble single-instrument virtuosos into an ensemble. This is how to accelerate HR leadership in a world that requires rapid adaptation through multiple disciplines. The future HR leader will often not be the expert but will be adept at locating and assembling the capability to address complex and fast-changing strategic human capital issues. HR leaders and the HR profession must become comfortable with a permeable professional boundary—a professional boundary that welcomes expertise from other disciplines. Traditional HR disciplines such as industrial and organizational psychology and labor economics are valuable, but HR organizations must reach out beyond these traditional areas. Google employs analysts in its People Analytics organization with disciplinary backgrounds including operations, politics, and marketing. Human capital planning and strategy is increasingly supported by those with deep training in competitive strategy and scenario planning, whether they exist within the HR function or in a separate strategy group.

At its heart, HR will remain a profession with a soul.⁶ Issues such as sustainable employment and balancing personalization and consistency are deeply humanistic. They require the art of HR, to be sure. Yet, they will not be accomplished by an HR profession that functions like a mysterious wizard, who can work magic with talent that no one else can understand. Future HR leaders must codify and share their frameworks so that those outside the profession can usefully engage. The future needs the HR profession (whatever it will be called), so HR professionals and their constituents must create a necessary step-change to meet the challenges. If progress remains slow and complacent, HR's reach may soon so exceed its grasp that it can't catch up. If HR progress accelerates through rigor, humanism, and collaboration, the HR profession will rightfully maintain and extend its stature into a world beyond employment.