11
The Future of the Gig Economy, Part 2: The Workplaces and the Workers
Futurestep, a talent division of Korn Ferry, one of the world’s largest and most respected executive search firms, goes on record each year with its list of the top talent trends on the horizon. Its number-one trend for 2017 is “The Rise of the Gig Economy, or ‘Me Inc’.”1 For some companies, the authors suggest, this will be a strategic shift, from “I need to hire someone” to “I need to get a project completed.” Being named as the top trend heralds a new awareness of the gig world. More companies will be adopting this work mode, some with great difficulty, and more workers will be opting in to the independent lifestyle. A recent Upwork study, Freelancing in America, looked at the psychographic elements of the trend, citing the fact that 60 percent of independent workers said freelancing has become more respected as a career choice,2 a perception that bodes well for continued growth. So what might that mean for both businesses and workers? Let’s explore the implications in the near term, and then go out on a limb for some long-term thoughts.
The Business Issues
The recent Randstad study, Workplace 2025, defined independent professional workers as agile workers (why they had to invent yet another term, I do not know) and found the corporate marketplace deploying these resources more than one and a half times more frequently than they had just four years before. That is a growth rate of about 155 percent.3
As the Gig Economy becomes even more prevalent in businesses of all sizes, the work environment itself will change. Contractors and freelancers will be working alongside regular employees on mission-critical projects. Long-term projects may well be done all or in part by non-employees who will not be there in the long term but are the best to get the job done now. Having the best workers to get the job done will become even more of an imperative, as the frictions associated with obtaining just the right expertise diminish in the evolving world of work. You need to have that right team, because if you don’t, your competitor will. At the same time, you need to recognize that the motivations of that independent worker could be very different from the employee he/she is sitting beside.
So to make this work effectively, companies will need to be prepared to onboard independent workers quickly and efficiently. This should include contractual obligations, fee payment processes, a technology orientation (to the extent the worker is participating in a custom technology environment of some sort), and some kind of overview of the company, department, and/or project.
All of these tasks can now be handled by a new segment of technology firms in the talent management space. For years, logistics companies have thrived by developing innovative products to manage a company’s supply chain. Now the supply chain that needs to be managed is the talent supply chain. Talent management platforms, such as WorkMarket, provide an end-to-end solution for all aspects of the enterprise talent supply chain. They source independent workers, maintain the associated contracts, and automate the contract provisions to ensure that requirements like a nine-month end date, cannot be overlooked. These systems also handle independent contractor compliance, performing an assessment of the worker and the work before the fact.
Some, including Shortlist, offer “agile talent sourcing” on the platform. If a client needs to find a very specific expertise set, such as a copywriter who can translate Tagalog and has experience in beauty and cosmetics, Shortlist will partner with other platforms to identify the resource. As such, it will become the directory of directories for talent. This capability will be an internal one for their clients, thereby building the ability for these companies to quickly react to changes in the talent marketplace.
Similarly, the real innovation in the talent supply chain, though, has come with the advent of talent communities. These enable companies to maintain their own captive talent marketplace. When a company finds a good consultant, chances are they would be happy to engage him or her for another project. The talent community structure enables firms to maintain a database of the various independent workers who have been previously engaged company-wide. Performance ratings and details about the type of project worked, prior project manager, and other qualitative data are typically available. Digital talent platform Upwork also offers these communities and refers to it as a “Private Talent Cloud.” These communities enable a more permanent connection with your preferred independent workers, workers who may be off to another client at any time.
The notion of a revolving door, in which key talent may walk out at any point in time, is one companies have wrestled with for years, but now it is becoming far more tangible. For many, especially those in the human resources (HR) field, this represents a very different approach to human capital. One of the most studied metrics in the HR world is turnover. Typically, a high rate of turnover is seen as a negative KPI, or key performance indicator. In the new workplace of gig workers and employees, turnover will become a very different metric. The KPI may be the return rate of your preferred consultants.
For in truth, people will come into an organization and develop an expertise. Many will remain, but others will become independent consultants offering their skills in the marketplace. In time, that same worker may return to your workplace as a free agent or an employee with even more sophisticated skills. This portfolio career path is not consistent with the old notions of turnover and it will be happening more and more frequently. In fact, certain technology companies are developing behavioral metrics to be able to identify when an employee is likely to leave the firm. The company uses this information to create an off-boarding process, that leaves the departing employee with a strong sense of connection to their former employer, a connection that could pay dividends in the future.
Companies need to take this a step further and recognize that part of the role of an employer is changing. Employers need to help train the next generation of independent workers, providing the management and leadership expertise that will enable them to create their own careers. Technology giant Cisco is already doing this by affording employees opportunities to work like a free agent on project teams composed of employees and contractors.4
Thirty-five years ago, Irish economist Charles Handy noted that the role of the corporation was one of being a career launcher. Raw talent comes in and the enterprise shapes it and develops it, to the point where she can go off on her own. In his book, The Age of Unreason, he likens the role to that of the British army: unskilled recruits come in, some remain, but most go off to other careers. Because there are only so many generals, everyone understands from the get-go that only the rare few will proceed up the ranks. Those who exit take with them some skills, a degree of polish, and a modicum of professional development that enables them to succeed in other organizations. His vision may be an even more accurate assessment of the role of the corporate world today than when he wrote that book more than 35 years ago. By training the next generation of independent workers, the enterprise sets itself up to become the beneficiary of their expanded expertise in the future.
However, developing a talent strategy to deploy alumni does have some complexity. There is the question of how a flexible career path will jive with retirement and benefits programs. For example, when Mary comes back as an employee after four years on her own, where she has developed a unique expertise that makes her hiring a coup, is she a new employee or not? Does her prior service count in terms of vesting schedules for stock options or eligibility periods for pension programs? Companies that want to thrive in the Gig Economy need to sort out these issues now in their talent acquisition strategies, before they become potential obstacles to the free flow of talent in the marketplace.
Because companies need a marketplace for talent to ensure they can procure the best resources. In that marketplace, they build their brand in hopes that the best resources will want to work for them. Given the war for talent right now, companies are very focused on this for their employees. They want to be the employer of choice. They want their employment brand to be the best it can be. But what about their consulting brand? Companies need to be thinking about not just being the employer of choice, but being the client of choice as well. The same talent management systems that enable greater efficiency for companies in managing all aspects of the workforce will make independent workers even more mobile. The best independent worker will be able to make his or her move to the company that is known to be the best place to work for consultants and contractors—that client of choice.
Becoming the client of choice will have certain non-negotiables. Regular and timely payment of fees will be critical. The Freelancer’s Union recently had a series of bus and subway advertisements with the slogan “Your 90 day pay cycle doesn’t match my 30 day rent cycle.” Companies need to become more attuned to the fact that their payables are now going to individuals, and stretching those could have adverse consequences.
More senior consultants who can be considered legitimate independent contractors (potential legal changes notwithstanding) will appreciate being able to conduct business on a 1099 basis. Given the number of risk-averse companies that stopped engaging legitimate independent 1099 consultants, many of these individuals who had invested in creating a defensible 1099 structure were not able to use it. They either walked away from the business or agreed to do it on a W2 basis. These high-end consultants would welcome the chance to be paid in the way they designed their businesses to operate.
Access to opportunities to expand skills is also key to becoming a preferred client. Training programs are great opportunities to build connections with independent workers, because many free agents do not have access to such programs. Some firms use the Everwise talent platform, for example, to provide mentors at other companies for employees. Extending such a service to valued contractors would build tremendous goodwill.
Most importantly, perhaps, companies will have to develop a “plug and play” mindset that recognizes the different goals of the free agent workers. One trend that must be supported, for example, is the dual worker. In many disciplines, data scientists and cyber security specialists, for example, workers will want to combine employment—which could be full time—with outside projects. Most of the cybersecurity experts on the digital talent platform StealthHire are employed somewhere, but who take the cyber gigs on the side to make extra money because they are the only people are qualified to do the work. Interestingly, I was just interviewed by a freelance journalist who professed not to know about the Gig Economy, so I explained that he was part of it, because he had a contract to do an article on the gig world. He, too, was one of these dual career professionals: As well as being a freelance journalist, he is an employee partner in a PR agency in Atlanta. The gig article will broaden his knowledge of a key new subject that will help him add value to his firm. Hopefully he will also recognize that he is indeed a member of the Gig Economy.
However, it would not be fair to suggest that the world is moving relentlessly toward this plug-and-play future powered by the digital talent world. There could certainly be some bumps along the road. Already, several very well-financed platforms have closed their doors. In fact, 2016 was a record year for failures of digital platform companies. Some of the high-profile shuttered companies include Sidecar, a ride hailing service that was quickly eclipsed by Uber and Lyft; Shuddle, a ride service for busy parents who needed to transport children to playdates and sports; and Spoonrocket, a gourmet food delivery service. Just those three represented more than $70 million in funding.5
There are many reasons players in the platform economy could fail, including6:
• Interaction failure. If there are no cars when you want an Uber, you might not try again.
• Engagement issues. Participants take part a few times but do not remain as suppliers or customers. Three of the eight platforms I joined have sent me requests to come back to the platform and reengage.
• Match quality. If you cannot find the resource you are looking for, why would you go back? Certain platforms are adding concierge services to help clients find resources, a strategy that I imagine is to counter this issue.
• Negative network affair. Participants who exhibit bad behavior could ruin the experience for everyone. The story of the Uber driver who allegedly assaulted a passenger certainly had some adverse effects on patronage.
But long term, we must acknowledge that the entire world will be connected. Stephen De Witt, the CEO of WorkMarket, believes this will lead to a time when the algorithmic models will be able to deliver just the right talent automatically. The traditional intermediaries will be put out of business. To imagine the future, you need to think of the futures you know, so he frequently uses Star Trek as an analogy. “If Captain Kirk is in need of new expertise to make the next voyage,” Stephen asked me, “do you think he is just going to list the job on LinkedIn?”7
That said, other pundits see the role of the intermediaries becoming even more central in organizations. The authors of Lead the Work, for example, see that the increased precision required to locate, onboard, and compensate mobile high-end talent will require very talented intermediaries. Because it is a staffing company, it is not surprising that the Randstad, in its Workforce 2025 report, also saw the increased primacy of the intermediary function in the workplace.
Clearly, companies are starting to organize for the new reality of a very eclectic workforce of free agents and employees. New job titles are springing up as a result. Chief people officer has already become a trendy term, but now there are also freelance development officers and free agent wranglers. (I love that last one.) One suggestion (of which I am not a fan) is “Workplace Engineering,” to “reflect the new focus and a new mandate to create an optimally designed eco system of workers and workplaces to achieve the organization’s mission.”8
The Future for Workers
For those considering the independent life, the future seems bright. According to the MBO Partners 2016 State of Independence study, that includes about 29 million Americans over the age of 21. Adding in the nearly 40 million who are already in the independent workforce suggests a significant number of participants in the Gig Economy of the future.
My advice for individuals and how they should design a successful career in the evolving world of work takes a life style approach.
For those staring their career, education is key. It used to be learning engineering, marketing, or finance was a great way to launch a career. Now entrepreneurship is key. If you are to be the “CEO of Me,” you need to know how to run your business. I apologize for my entrepreneur’s bias, but this is true for all people, even those who are launching a career in medicine, geophysics, or academia. To earn extra money as you pursue your career education, given the increasing prevalence of digital talent platforms, you could become an occasional independent. In my informal surveys of Uber drivers, one lament came from a teacher who drove on the side. He had only ever been a W2 employee, so had no sense of what it meant to be an independent worker. He wished that Uber had given him a one-page document on “how to make the most money with Uber,” so that he was more prepared to deduct his business expenses. No one should be in a position not to know how to navigate these career situations.
As an aside, I think our education system needs to catch up to this development. The Solo Project was an effort launched by the founders of Inc. magazine and Fast Company as well as the Knight Foundation to explore the solo worker movement and its attendant civic, societal, and policy implication. In their Solo City Report for 2016, they suggested that entrepreneurship education should start in fourth grade. If that isn’t possible, basic entrepreneurship should be taught in high school as well as college to all students. A barebones curriculum would include some accounting and tax basics, branding, communications, and basic sales training. More aggressive programs could include organizational and/or psychometric content to facilitate emotional intelligence, hiring frameworks, and fundraising basics. The Kaufman Center for Entrepreneurial Leadership offers several programs, including a campus initiative aimed at bringing such a curriculum to community colleges. The programs are there; we just need to distribute them more widely.
If you don’t have the opportunity to study entrepreneurship in school, you need to learn it on your own. As the 2016 Solo City Report said, we need to “teach students to create jobs, not find them,”9 a skill that is based on entrepreneurial thinking. Again, the Kaufman Center is a great place to start. In collaboration with the Khan Academy, it launched an entrepreneurship series that is regularly reaching 6 million students and includes lessons from accomplished entrepreneurs including Richard Branson. There are scores of other places on the web to learn more about the subject, so go learn it.
Another finding of the Solo City Project was the identification of the personal characteristics that help make an individual successful in the new world of work. The Gig Economy, with its entrepreneurial elements, flexibility, pace, and uncertainty, is not for everyone. The most important element, according to the report, is grit, the ability to accept setbacks, learn from your mistakes, and demonstrate resilience. Other key elements include a tolerance for ambiguity, collaboration skills, problem-solving abilities in both standard and creative realms, and a willingness to seek out help. Understandably, being savvy with networks and adroit with personal branding are also key elements. The complete list appears here:
For those early in a career, who may be in a first or second job, recognize the opportunities for career development that typically come only from employment. These are “soft skill” areas, such as managing people. As more of the workforce becomes independent, management skills will become less prevalent. Most of the Baby Boomer generation have been well trained in big companies, many of which no longer exist. Similarly, that training is less available than it had been. So when you have the opportunity to participate in training programs, especially leadership, communication, and/or conflict resolution, take advantage of those opportunities. Similarly, being trained in any of those soft skill areas that are characteristics of successful gig workers, such as collaboration or design thinking, would be of value as well.
For those just starting or those advancing independent careers, personal brand management is key. In addition to the ideas in Chapter 4, another thought is to build your brand as part of your life design strategy. “Designing Your Life,” a Stanford business school course which has now been repurposed as a book by professors and tech entrepreneurs Bill Burnett and Dave Evans, is a great way to think about your brand. Is the work you are configuring yourself to secure the work that will bring you satisfaction and happiness?
Experienced independents need to be attuned to the travails of your clients in this new world of work. Small companies may be struggling to keep pace, whereas large firms may have difficulty adjusting to the plug and play nature of their new workforce. You will become more connected to your clients if you facilitate their deeper dive into the independent workplace. Understand the role of the intermediaries who may be monitoring the preferred vendor lists or building the talent communities to know how to best maintain connections to your clients. If need be, guide your clients through the independent talent world to help them become more adept at deploying the free agent workforce. You can also be a guide for those individual clients who may want to join the ranks of the independent workforce, as, given the portfolio nature of careers, that could very well happen.
For the veteran independent workers, there is much to share. Some have suggested that experienced independents should develop a crowdsourced Yelp-type service for clients, providing the reviews that would lead to a “Client of Choice” designation (how it makes money is another question). If such an initiative does occur, participate. Your viewpoint as a successful player in the Gig Economy helps perfect the picture of what is happening in the marketplace.
Similarly, rookie independent workers could learn a great deal from veterans about client management, business development, difficult conversations when projects go awry, or a host of other topics specific to running an independent practice. M Squared provides some degree of training to rookie consultants in the way it manages its projects. Chris Neal, a principal with the firm, notes that because many Millennials move around a great bit in their career, they haven’t had the opportunity to have a mentor.11 The M Squared “Transformation Practice” uses very seasoned project leaders so that more junior independent consultants can learn how to approach projects and manage clients.
Other than that, the pickings appear to be slim. There are no mentor sites for independent consultants, although I have suggested to Everwise that they create one. LinkedIn has its independent consultant group, but I, for one, have not found the discussion terribly robust. In your own personal professional organizations and/or digital communities there may be venues for you to offer your counsel to the up-and-coming generation of independent workers. The data suggests there will be a great deal of them joining the ranks of the Gig Economy workforce. Be sure to teach them how they can thrive.
Chapter 11 Key Takeaways
• Companies need to recognize the different characteristics of the independent workers.
• Firms need to be ready for a portfolio employee, who may enter as an employee, depart, and return years later as a consultant.
• Custom talent communities designed to enable firms to easily re-deploy successful free agents will make firms more effective.
• Dual careers blending employment and gigs will become more prevalent.
• Key skills for individuals to thrive in the Gig Economy include grit, a tolerance for ambiguity, communication skills, problem-solving skills, and facility with business and finance.
• Individuals need to train themselves on entrepreneurship to thrive.
• Veteran independent workers should consider mentoring new independent workers as well as their clients in the tricks of the trade.