One day soon, many of your best workers might not work for you—at least not full-time. The data is clear: more and more workers are opting out of traditional jobs.
Research conducted by Gallup in 2019 showed that 28 percent of the workforce (44 million Americans) reported being self-employed at some point during a given week. MBO Partners’ 2021 Annual State of Independence Report revealed that the trend toward going independent is only accelerating, with 38 percent annualized growth.
The MBO report found that 51 million Americans now identify as independent workers. And these aren’t your traditional senior-level consultants. The data reveals that Millennials (34 percent) and Gen Z (17 percent) outnumber the combined ranks of Baby Boomers (26 percent) and Generation X (23 percent) in the independent workforce. As more and more younger workers go independent, companies need to take note.
Indeed, estimates suggest half of the private workforce will be, or will have been, independent at some point in their career by 2025.
While the pace of change accelerated during the pandemic, the roots of the unbundling of work from employment traces back about 40 years. I’ll give you a quick history lesson. Plus, some key strategies on how your business can adapt and thrive in today’s modern business model.
The roots of our great unbundling
The social contract that underpinned American employment for over half a century was premised on one big idea: workers pledged loyalty to a business in return for a guaranteed pension for life when they retired.
But that social contract was fundamentally broken by three huge shifts. First, the 1980s, pension systems began eroding (from 60 percent down to 4 percent today), fueled by corporate bankruptcies in the steel and airline industries.
Second, more and more companies switched from defined benefits to defined contribution plans. Suddenly, loyalty was no longer essential—or rewarded. Blue- and white-collar workers alike could just port any existing retirement benefits to a new company.
By the mid-1990s, another upheaval was in the making. The advent of user-friendly web browsers flattened access to information; and, over time, the cost of starting up a business has become negligible.
Today the only capital investment needed for many workers is a laptop and (sometimes) a printer. From online education to online networks, most workers can get the skills they need and build friendships and business contacts without leaving their homes. This is the representation of two additional business trends: the rapidly accelerating rate of change and the ongoing deflationary nature of progress.
And now we see a third upheaval: the rapid acceleration of the adoption of remote work as a result of the COVID pandemic. Workers quickly de-tethered from the last tie to the corporation, the office, due to the mandate needed by the existing health care crisis.
We have the perfect storm: workers can no longer rely on employers for retirement; increasingly can re-skill and market themselves via the internet; and now, thanks to COVID, no longer need to be tethered to an office to do their jobs.
Call it the Great Resignation, or, as we at MBO Partners prefer it, the Great Realization, but the result is the same: the balance of power has officially shifted from employer to worker.
Here are three strategies for thriving with a hybrid workforce:
- Own your workforce strategy. You lead your business, and you and your executive team must increasingly own your workforce strategy too.
As more high-skilled people of all generations look for flexibility, it will be critical to identify strategies to attract and retain the best of the independent workforce. While the hours and terms of employment may have shifted, you still need the right people in the right roles. The more you can become the company of choice for independent workers, the more your business will have a competitive edge.
- Redefine your corporate culture. Corporate culture traditionally guides how managers and staff interact and sets the norms and expectations for the workforce. In ways both overt and more subtle, it sends cues to employees and prospects as to who will and won’t fit in. And it’s molded across team meetings and corporate-wide gatherings—almost exclusively comprising full-time employees.
It will be important to redefine your corporate culture to incorporate independent workers at all levels of your organization. The more you can welcome outsiders into the company family, the more likely you are to keep them choosing to work with you.
- Incentivize independents to stick around. Traditional benefits, such as health care and pensions, attract full-time employees but there are legal roadblocks to offering them to contractors. That said, you can attract high-performing independent workers by having policies that benefit them.
Make invoicing and getting paid easy for independent workers. Far too often, companies use one-size-fits-all vendor contracts with terms that are not friendly to independents, such as paying in 90 plus days.
The bottom line: The world of work is changing, and the shift will be seismic. The faster you can pivot and develop sound strategies to incorporate independent contractors into your fold, the more your business will benefit and thrive.