The Future of Work: Adapt or Be Left Behind
Post by David Finger
A global pool of on-demand talent is now available at our fingertips creating opportunities for entrepreneurs and corporations alike. With with this new opportunity comes new managerial, technical, and social challenges. Organizations must figure out how to best utilize the global workforce, from hiring to management, or be overtaken by those who do.
Those who successfully conquer these challenges will outpace their competition on cost and innovation. Those who do not will be riddled with process inefficiencies and security risks.
THE RISE OF THE GIG ECONOMY
The rise of new technologies, the platform business model, and shifting social values have spawned a new era of work, appropriately coined “the future of work.” The future of work refers to a combination of artificial intelligence, workforce digital dexterity, and the gig economy.[i] The focus of this article is the latter.
The future of work is misleading. It sounds like some sci-fi hypothetical. However, it is a reality. Here, today.
“An estimated 57.3 million Americans are freelancing, and contributed approximately $1.4 trillion in freelance earnings to the U.S. economy in 2017.” [ii]
According to Toptal, 91% of firms already use outside talent [iii]. Utilizing external talent is nothing new. However, changes in technology and worker preferences brought the gig economy to the limelight. The rise of the internet and ultimately cloud computing and SaaS (software as a service) would create not just new jobs, but opportunities for global workers to access those jobs without actually physically being there.
“Just as cloud computing has freed businesses from long-term capital commitments to physical servers, the shift toward freelancers is freeing them from long-term employment contracts.” [iv]
Culturally, the desire for work-life balance and freedom made freelancing an attractive alternative to a traditional career. Maverick Research goes as far as to say that in the future “being [a] freelance will be seen as a more attractive option for workers than today’s “regular” employment model.” [v]
In the last decade, we have seen the explosion of platforms, such as Upwork, that facilitate the matching of freelancers with clients. These platforms create community feedback loops that enable the platform, along with the power of artificial intelligence, to make the talent finding (matching) process quick and easy. Today, about one in four people are engaged in the gig economy in some capacity. And if you’re thinking “wow that’s a lot of Uber drivers” the reality is the majority of “gigsters” offer professional services.
“Freelance [were] traditionally associated with startups and low-value-add jobs…However, growth in on-demand talent pools and platforms has led to some Fortune 500 companies adopting the gig economy model, which can also deliver for highly skilled, well-compensated workers.” [vi]
Source: gigeconomydata.org
Looking forward, the increased cost of living due to the larger urban population and the creation of megacities, will make hiring local more expensive, and therefore likely contribute to a continued increase in demand for a distributed workforce. Simultaneously, continued globalization and access to the Internet-for-all will provide the much-needed supply of workers.
CHALLENGES UTILIZING THE GIG ECONOMY
“Work is the nexus of technology and people. Facilitating and managing this nexus is one of the biggest challenges facing CIOs as they grapple with the future of work.” [vii]
(1) Project Management and Human Resource Management
Imagine trying to coordinate industry analysis, customer insights, employee knowledge, and now a dynamic workforce that is always changing. One of the hardest components of managing an external workforce is just that, management. For one, “the speed and flexibility of the model perpetuate a project mindset instead of a product mindset, which will inevitably lead to a lack of accountability. Business processes will need to be enhanced to streamline the inclusion of on-demand projects that call for on-demand talent” [viii]. With process change, management must change: “New modes of organizing work will be needed when the independent worker model dominates the labor market” [ix]. One solution is for the digital business to shift talent management responsibilities to managers and employees instead of recruitment [x]. Responsibilities of the manager will then include talent acquisition, learning and development, and performance management of the internal and external workforce. Moreover, these three responsibilities will need to become more dynamic, rather than the current static job posting, recruiting cycle, and hiring process. As someone who has been on both the hiring and hired side of freelancing, I can personally attest to the required mindset shift needed by corporations to adopt new hiring and management practices. How many of you could go hire a freelancer today for the project you are working on without jumping through hurdles of undefined approvals?
How many of you could go hire a freelancer today without jumping through undefined hurdles of approval?
Managing the external workforce experience is just as important as the internal one. The platform that gives the client access to the best global talent works both ways. If a freelancer has a bad experience with one client, they have many more to choose from. According to one Gartner article, “The competition for talent has driven an organizational emphasis on improving the candidate experience. As a result, mobile-optimized career sites and job applications have become “must have[s]” instead of “nice to have” [xi]. This logic can be extended to not just hiring but on-boarding and project management processes. How do you transfer knowledge quickly to temporary workers who are continuously being on-boarded? Currently, on-boarding for contractors is “haphazard and fragmented, leading to increased risk of security and compliance issues” [xii] Another Gartner article reads, “The use of enhanced on-boarding will become essential to engage and motivate a flexible and virtual workforce and to deliver them the appropriate level of content, in a compliant but caring manner” [xiii]. Poor onboarding can result in lack of engagement and hence poor productivity. Upwork minimizes this potential pain by requiring the client to post clear project requirements for all project postings, but there is still large room for improvements.
(2) Software for new managerial and hiring processes
With all of these new responsibilities thrust upon the manager and new challenges facing HR “Organizations no longer can treat technology and people investments as two separate activities.”[xiv] Managers need new tools to support the acquisition and management of talent in a globally distributed workforce.[xv] Legacy HCM (human capital management) systems and VMS (vendor management systems) are adapting and new FMS (freelancer management systems) are emerging to meet these needs”[xvi]. Gartner defines FMS as “a newer class of enterprise solution in an emerging market used for sourcing independent contractors and freelancers” [xvii].
However, “Most HCM technologies are not ready to support emerging operating principles”[xviii]. ADP, a payroll company, acquired World Market, an FMS, in early 2018 for exactly this reason.
Source: https://www.workmarket.com/
Today, FMS is fragmented by different freelancer skills and “organizations may find themselves having to engage with multiple FMS” [xix]. This leaves an opportunity for providers to create an integrated solution: “By 2020, 40% of large (> 5,000 employees) multinational organizations will use a unified HCM strategy for employees, agency workers, contingent workers, and freelancers” [xx].
“Most HCM technologies are not ready to support emerging operating principles.”
Gartner research suggests to “invest in technology that helps identify the skill sets, competencies, preferences and abilities of workers in your organization…Do the same for your candidate pools and alumni. This data will be a competitive differentiator and a way to more effectively invest in the right talent [xxi]. One of the emerging technology providers in the space is Catalant. Catalant provides a SaaS platform for organizations to prioritize initiatives paired with a way to manage internal and external talent to work on those initiatives.
Source: Catalant
Catalant is not alone. Microsoft, Accenture, PwC, McKinsey, to name a few, are all investing in the future of work through collaboration systems or talent marketplaces. Accenture, for example, has formed an alliance with Applause, a crowdsourcing quality assurance testing platform.
How to optimize processes, implement technology, and manage initiatives will differ by organization, project type, and workforce. In some cases, it will take a high-touch manager equipped with powerful software. Or you could try the Topcoder method of empowering and rewarding community members to “co-pilot” (act as a project manager) combined with breaking down large projects into small skill-based tasks that are more easily crowdsourced. In some scenarios, the manager could be entirely replaced by a smart algorithm that employees [receive] orders from based on skill and availability [xxii]. Business leaders, hiring managers, product managers, all must work together and decide what software and processes changes make sense for their business.
How to optimize processes, implement technology, and manage initiatives will differ by organization, project type, and workforce.
Concluding Thoughts
The future of work is shifting the tectonic plates of how we traditionally think of organizational management and our individual careers. As Anna Johnston, a writer for the London Business School, put it “How do independent workers, revolutionary platforms, employed staff, and professional services firms all fit together? It’s not yet clear, but one thing’s for sure: they don’t rule each other out” [xxiii].
The end result will likely be similar to what I mentioned in my last post about platforms and pipelines: a hybrid model. In this case, it is a hybrid of gig workers, full-time employees, and software and machines to link and support the two. For example, Eden McCallum, a consulting firm, utilizes a staff of in-house consultants combined with a marketplace of on-demand freelance consultants.
The biggest hurdle for corporations to succeed in the future of work will likely be operational and cultural. Catalant is trying to ease this shift by offering agile workforce change management, but it will be up to corporate executives to truly drive the change internally. Until then, the gig economy will not reach its full potential and neither will your business.
How has the future of work impacted your job?
David Fingers is an MBA candidate at Babson College. He wrote this article as part of the graduate course Thought Leadership in Technology. You can learn more about the course here.
Sources: [i] [ii] [vi] [viii] https://www.gartner.com/document/3869830
[iii] https://bs-uploads.toptal.io/blackfish-uploads/gated_content_article_page/content/attachment_file/attachment/2097/Toptal_-_State_of_the_Workforce-27ddc78ae2a23500ca4b353d153c235e.pdf
[iv]http://cdn2.hubspot.net/hubfs/215412/CrowdSource-FMS-Industry-Analysis.pdf
[v] [ix] [xxi] [xxii] https://www.gartner.com/document/3457617
[vii] [xiv] https://www.gartner.com/document/code/354454
[x] [xv] https://www.gartner.com/document/code/349133
[xi] https://www.gartner.com/document/3893765
[xii] [xvi] [xvii] [xix] https://www.gartner.com/document/3505049
[xiii] https://www.gartner.com/document/3901263
[xviii] https://www.gartner.com/document/code/327305
[xx] https://www.gartner.com/document/code/344039
[xxiii] https://edenmccallum.com/professional-services-gig-economy-means-white-collar-freelancer/