The Pixelated Workforce: A Job For Almost Everyone
We just finished a significant research study on the Alternative Workforce, and it was a real eye-opener. Not only do almost 40% of Americans now have part-time or contingent jobs, but almost 2/3 of young people also have side-hustles, doing work on the side. This means the “alternative workforce” isn’t really alternative anymore, it’s now a part of everyday life.
So rather than talking about the “alternative workforce” going forward, I’d suggest we describe it as “pixelated.” There are many different ways to work, and each of us chooses our own set of options, based on our skills, location, age, and lifestyle.
(If you don’t believe me think about this: my friends at ADP told me that since the year 2000 the total number of W-2’s – full-time paychecks – has gone down by almost 4%, while the number of 1099s – part-time work checks – has gone up by 34%. According to the latest study by Upwork and a similar study by MBO partners, 42% of people under the age of 35 are now freelancers.)
How Did We Get Here?
This world of “alternative work” kind of crept up on us. As I discussed a few weeks ago in the article Career Management Goes Mission Critical, the entire relationship between employer and employee has changed. In fact, this “untethering” of the relationship may be the most significant thing happening in our lives, because it impacts our work, career, happiness, and retirement.
I believe this happened in three stages, as I show below:
Phase 1: Traditional Employment
In the 1900s up to the 1980s, businesses were relatively stable, so they hired people for life. As I describe in my upcoming book, more than 2/3 of Americans worked in lifetime careers in the 1940s and 1950s and this wonderful environment created a vibrant middle class.
As I like to put it, our career was our employer: we joined a company, latched on, and stayed for life (if we could). Over that period companies gave us some development, some new opportunities, and typically a small raise every year.
Phase 2: The Transparent Job Market
In the early 2000s, all this started to fall apart. Driven by the internet and the 2000 recession (we called it the “dot-bomb” for those who remember), an explosive new change took place. The internet enabled employers to post their jobs online, so those of us who wanted to change jobs were suddenly empowered to shop around.
Remember that prior to this the only way to find a job was to read through the want-ads in the paper, call a company, and mail your resume on paper. It was a real project and it took months to apply. If you didn’t know someone in the company you were interested in it was an almost impossible process, so I never even looked for another job until a headhunter talked me into interviewing. Headhunters (recruiters) were a big part of the market, but it was still not easy to look around.
Starting with Monster.com, CareerBuilder, Craigslist, and other companies, this all started to change. Vendors created “job boards” where companies could post jobs and job-seekers could apply online. There was still no guarantee we’d get a call back (the number of applicants per job went way up), but the power of employment shifted from employer to employee, forcing employers to think seriously about their employment brand, Glassdoor ratings, and how they marketed themselves to candidates.
In fact, I believe the employee engagement industry, which was kind of a sleepy I/O psychology domain in the 1970s and 80s, exploded because of this change. Once employees can browse around and look for jobs at the click of a mouse, you better make your company a good place to work!
I call this the phase of the “transparent job market” – where suddenly everyone had access to information and we more or less democratized the nature of hiring.
This process evolved for almost two decades, until we had another recession (2008) and a lot of people found themselves with no jobs to find. What did they do? They went out and found part-time work. And just as Monster and Careerbuilder disrupted the classified ads, companies like Upwork, Github, and Kaggle disrupted the process of finding full-time jobs.
Since people were now able (and willing) to work part-time and collaborate over the internet, vendors could job networks, freelance networking sites, and dozens and dozens of vertical job boards where people could bid for work, post work, and look for projects to keep them busy. (Today there are hundreds of specialty work websites – you can find software engineers, data analysts, financial professionals, salespeople you name it, with specialized providers for every type of work).
(Uber and Lyft, by the way, are just a great well-honed example of this, where a company built a scalable business model around this model of part-time work based on people who work on their own time.)
Phase 3: The Pixelated Workforce
Today, as we found from this research, the workplace has gone even further. The word “pixelated” means “you can see the pixels” – and this is exactly what the workforce is now like. Every individual in every different type of work is a mini “workforce,” each with it’s own way of doing business.
If you want a designer to work on your website, you have the option of hiring a full-time person, engaging a design firm, hiring a designer part-time, or bidding it out to a team of designers you find online. The actual workers you hire may be in your office, across the country, or across the world. You as an employer get to decide how you want to manage this project, and there are pros and cons to each.
And this same “pixelation” is happening in every part of our companies. We have pixelated sales teams (many companies hire third-party companies to handle sales inquiries or customer service), pixelated R&D (many pharmaceutical companies outsource R&D and drug testing), pixelated marketing (I don’t have to tell you how many marketing consultants and service firms there are), and on and on. And all this has been a good thing: people who are experts at a craft can now ignore the politics of “climbing the corporate ladder” and just do the work they love.
The latest study by MBO Partners really drives this home. They believe independent workers generated $1.3 trillion of revenue in the US last year and 48% of US adults are working independently or have worked independently during their careers. 81% of them are now doing this voluntarily, 40% have college degrees, and 76% are highly satisfied with their choice of work arrangement. (Job satisfaction among independents is now higher than that of full-time workers!).
And to make it even more interesting, more than half of them think it’s less risky than working full time and the only real issue they state is the difficulty of paying for healthcare. And only 28% of independent workers believe retirement is a challenge.
The Existential Shift in Employment and Careers
This new trend is bigger than you may think. It impacts hiring, employment, careers, and the whole nature of organizations.
Consider the picture below. In phases one and two of this world, we had careers matched to companies – and we needed companies to take care of our future.
Today more and more of us have careers that are quite independent and somewhat “unlinked” to our employers, so we’re managing it on our own. And thanks to social networks like LinkedIn, GitHub, Upwork and others, we can now “manage” and “promote” our career and experience by ourselves.
Employers Have Not Caught Up
For workers, this has been somewhat amazing. The “monopoly power” of employers has more or less gone away (except in small cities of course), and we as workers have more flexibility than ever.
For employers, however, it has been a pretty difficult change. As we found in the research I did with HRPS this year, only 16% of organizations have any type of strategic workforce strategy to harness the pixelated workforce, and those that do are almost four times as likely to describe themselves as market leaders or leaders in innovation and growth. This is a key new competency not yet understood by most companies.
You can read more about it in the research, but let me leave you with a few best-practices from our study.
- HR and senior leadership has to be more involved in this issue. Too many companies still delegate the “contingent” workforce to the purchasing department, where expertise in talent sourcing, management and measurement of talent, and ongoing development is weak.
- Think about the model you want to use for full-time, part-time, and contingent work. Some outsource non-strategic tasks; others outsource the most critical high skilled jobs. It often depends on your location, employment brand, and long term strategy.
- Re-look at all your various HR policies (from hiring to training to diversity and inclusion) and think about how you can apply them to your “pixelated workforce.”
- Invest in contingent workforce systems that help you better manage non-full time people. Most HCM systems don’t manage contingent work very well, so companies tend to buy vendor management systems to do this. A new breed of tools (Workmarket from ADP, Gloat, and others) is starting to make this easier.
- Educate your hiring managers with a guide on “when to hire externally,” “when to source internally,” and “when to use alternative workers.” They won’t be experts on this but you have the opportunity to establish a standard which helps do this in a strategic way.
- Put together a plan to embrace, extend, and communicate your employment brand to the pixelated workforce. This 40%+ of the workforce may be a far bigger part of your company than you thought – take care of them and they will take care of you.