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It’s been called gigonomics. As more and more people take “the package” and set up as consultants, they don’t have jobs anymore: they have gigs.
How does a company leader handle that? How do gig-meisters interact with staff and the company fabric? What happens to loyalty and how do leaders protect intellectual property when they’re dealing with so many fly-by-nighters?
These aren’t lower-end temps, either. There is a growing army of interim managers, executives, and even interim chief financial officers, taking on temporary gigs at leading companies.
Gigonomics was always par-for-the-course for certain industries. Musicians would be an obvious example. Now it’s reshaping the broader workforce. Bringing in a bunch of people focused on how much money they'll make per gig is changing companies and their cultures.
As the interim army becomes more dominant, leaders are rethinking their management styles. They are having to rework their systems to accommodate interim personality types, while maintaining morale.
It’s a massive risk. In his book, The Corrosion of Character, New York University professor of sociology Richard Sennett argues that the modern workplace, with its focus on temps, “corrodes trust, loyalty and mutual commitment”.
Much of this reflects the changing economy and generational shifts. The numbers speak for themselves.
There are one million contractors out there, accounting for about 8.7% of the workforce, according to the Australian Bureau of Statistics. About 73% are male. Most are in the construction industry (32%) and the professional and technical services sector (13%), covering such areas as law and accounting firms, book keeping and payroll services, architecture, engineering, design, computer services, consulting, research and advertising. About 76% say they are able to work on more than one active contract.
Headhunters say that army of the disconnected will grow. Paul Lyons, managing director of the Australian division of the Ambition Group, says it has to happen; it reflects changes in the economy. It is a sign of the growing influence of Gen Y growing older; the next generation entering the workforce is even further removed from the instincts of boomers seeking permanency.
“The majority at the moment would be people looking for permanent work,’’ Lyons says. “But if you asked me in 10 years’ time, I think as generations change, more and more people are becoming attuned to having to work on a contract basis because that’s the way the economy is changing and employers are changing. More employers want to have a greater percentage of variable costs.”
What proportion of the workforce will be made up of interims?
“I’d expect it to be a large minority if not a majority,’’ he says. “At the moment, it would be 20% but in 10 years’ time, it would be 40 or 50%. Perhaps they would be employed full-time, but full-time on rolling contracts. Or perhaps they might have five days a week of work in three locations.”
He says about 80% to 90% of his clients would use a contract workforce in one form or another.
“The benefits you would get would be are variable costs. Companies can manage their costs better if they have some sort of project or some of issue or problem they can buy it for a finite period of time.
“Also, we find that with some clients, particularly in the professional white-collar area, they can often buy in a better quality person than what they could if they went on a permanent basis.”
But it also creates problems.
“The disadvantages are that you hire people for a period of time and you just lose their intellectual property after a while. Because they are generally good people, [they leave and] the IP they take with them is lost completely,’’ he says.
“You also tend to find that temporaries are hired guns. They are not there for the purpose of the organisation’s mission statements so their effect on the culture can be neutral or negative because they are not adding to that.
“You would have permanent employees who are focused more on the purpose of the company and the culture and the mission statements, so their reason for being in an organisation is different from a hired gun whose rationale for being there is purely around money and that’s the main thing. That just means you have different cultures within the same culture.
“You can have a culture where a fifth of the workforce is different from the other 80%, so it just can break down the fabric of the company sometimes. There are different forces at work.”
He says companies need to develop strategies where managers are more in touch with the temporary staff, keeping them in the loop to ensure they are part of the company fabric. And they will need to develop systems to ensure they will not lose IP. Unfortunately, he says, not many companies are doing that, simply because it takes too much time.
“If you try to address the cultural side, you have got to somehow tap into their psyche and get them to buy into what you’re doing long term and you need to work fairly hard at that because they might feel it doesn’t apply to them. You have to try just as hard, even though the time they’re going to be around is much shorter,’’ he says.
“It’s about more sessions; it’s all the things you do with your permanent staff on the change program. Lots of one-to-ones, small groups, bigger presentations, lots of communications face to face and in online presentations.
“But the majority of companies wouldn’t bother because they would say these people are only here for the short term. Most companies wouldn’t bother and they would suffer from the fact that they have got a different culture in the contract workforce than what you do in the permanent workforce.”
Doug Roem has been working as a contract manager now since 2010. Before that, he had a variety of strategy, finance and general management roles in companies ranging from auto brakes manufacturer, Pacifica, to the Smorgon Group, to running a business for Hastings private equity fund.
Roem now moves from gig to gig, three to six months at a time. Respecting confidentiality, he won’t identify all the companies he has helped manage, but has worked in all sorts of sectors ranging from aviation, retail, manufacturing to renewable energy.
He thrives on it and while he is not ruling out a return to paid employment (“You can never say never”), he has no particular desire to return to corporate life.
“The variety has been very stimulating. I have worked in sectors I could never have imagined – like renewables, for example,” Roem says.
He says coming in completely “unattached” has its advantages.
“It’s both a blessing and a curse,’’ he says. “To the extent that you bring absolutely no baggage whatsoever, it means you are completely unfettered in establishing a position of what to do. By the same token, you don’t have relationships and you don’t necessarily have the history that may well educate your view on particular matter.
“If you have a business that is in trouble you can actually afford to get a couple of things wrong because it’s the eight things you get right rather than the two things you get wrong that will make the difference to a business that’s struggling.
“You would otherwise not necessarily be able to do that because of your attachment to people and because of your attachment to historical strategy.”
He concedes that handling that disconnect is not for everyone. “I think it depends on the individual. If you are an individual who is comfortable in yourself, then that’s not a problem. I haven’t found it being an obstacle to addressing whatever issue is required but I can understand that some people would feel they want to be part of the group and be embraced by the group.
“You’ve got to be an individual that is comfortable in your own skin to go and do this on an ongoing basis.”
How does he do financially compared to his paid jobs? “You make a good living,’’ he says. “You have to be prepared to charge and I’m not going to disclose what my rates are but I’m comfortable with charging people that. If they’re not prepared to pay, the you’ve got go look for another job,
“You’re never going to be incredibly wealthy out of it because there are no kickers, there’s no equity element, there’s none of that which a senior executive would get and there are periods when it’s fallow.
“But you have an expectation that you are going to work six to nine months in a year and not 12 months so you charge accordingly.”
Demographer Bernard Salt says the gig specialist is the way of the future for the workforce and business.
“I think we will see a continuation of this flexibility fluidity. It may well be that 40% of the workforce that will be permanent and 60% will be either part time or working as a contractor or a consultant or some variation thereof.
“It’s partly being required by business but it’s also suits the circumstances and the expectations and the fluidity that Gen X and certainly Gen Y demand these days,’’ he says.
“Gen Y don’t want to be tied down to a mortgage, they don’t want to be tied down to children, they don’t want to be tied down to a career and it fits their shtick, I reckon.”
He says people these days are much more accepting of this as part of 21st century working life. “The big, rigid structures of the 1950s, ’60s and ’70s just don’t fit the agile world of business in the 21st century. Essentially that agility requires an agility of labour; you might have a core labour market but then built around that would be a labour market that can rise and fall, that can flex into opportunities,’’ he says.
But, he says, management will have to change to accommodate it. They will need systems to ensure they don’t lose intellectual property and ensure there is connection between the temps and the other staff, not to mention the company fabric and culture.
“There’s a risk but it applies right across the board and it’s up to management to develop processes and protocols to retain, to capture, to transfer, to make sure key corporate information is not held singularly but rather is diffused across a number of people and that there are processes and programs in place to make sure that corporate knowledge is retained, refined and transferred to whoever it is.
“It means a different way of thinking and training. It means more mentoring programs or coaching programs, information-sharing programs, seminars, to provide the circumstances where corporate information is transferred and multiplied.
“Key information will be put in databases that can be accessed by anyone, that there are protocols and procedures where if you want to find out about that information, here is the process and procedure.
“Nothing is actually retained in one person’s head; it’s all somehow captured, stored, shared.”
What about the interims? How does someone accustomed to going from job to job work in with such stringent new rules?
The interims will just have to accept it if they want the gig, he says. “That’s part of the condition. If you want to work for us as a consultant or contractor, here’s the way we do business and if you can’t fit into that way, then you’re not really on board. We need people who are prepared to add and contribute and to leave that information behind.
“It’s a new way of thinking.
“If you look at the big picture over the longer term, we have been moving in this direction for 30 to 40 years and if it is to continue, business needs to respond with a methodology to capture, retain, disseminate, transfer, to the next round and the next round beyond that.”