In 1990, Charles Handy predicted in his book “The Age of Unreason” that by the year 2000 there would be less than fifty percent in full time employment. November 2011, Gallup released data that indicated less than forty-five percent were in full time employment. Estimates for the year 2020 indicate a trend of less than forty percent in full time employment with the remaining sixty percent of the population either: unemployed (too young, too old, or incapable of working), underemployed, (working more than one job) or self-employed. Seemingly in agreement is a December 2011 article by Ryan Kim which argues that by 2020, independent workers will be the majority.
This is not great news for those who are looking for full time employment. Research indicates that currently there are roughly 16 million freelancers, consultants and other independent workers and by the year 2020, that number will exceed 65 million comprising of more than half of all employees in the marketplace. For those remaining in traditional full time employment, they must learn to work with consultants; do more with fewer resources; and change the way they view their work. Employees who are traditionally territorial in nature will have the most difficulty in this new reality. Looking for work will require individuals to develop marketing skills needed to compete in a new arena. By nature of the competitive field, consultants and freelancers will become more educated and creating market advantage. Cottage industries will develop linking consultants and freelancers to organizations and staffing agencies will increase market share as they develop divisions catering to consultants and freelancers.
Organizations must prepare for the eventuality of a changing landscape in the engagement of human capital. With an event horizon of less than 8, much needs to be done to understand the implications of these changes. Leaders must begin to create new perspectives on these emerging issues and ask questions to prepare for the changes that are sure to come. Organizations will likely trend toward employees and consultants bidding on project work rather than receiving assignments. Research exposes a general consensus of anticipated acceleration in changes, leaving little stability and great increase in demands, conflicts and stressors on the workforce. Employees likely will feel instability in their job security. They may feel replaceable by consultants or freelancers. Organizations are less likely to be compelled to keep full time employees as payroll taxes increase and government imposed healthcare emerges.
Organizations must learn to develop solutions to meet the demands of a fluid future. Leaders must begin to think about the implications of these changes. What will the office of the year 2020 look like? With the expansion of open systems and networks, organizations will likely be forced into flatter more open organizational structures. Overhead costs of company benefits and office space will shrink. Virtual offices and telecommuting will be the norm as consultants are no longer bound by geography. It will be common for consultants and freelancers to be spread out around the globe. Organizations will compensate based on new measurements such as keystrokes, projects completed and time logged into company systems creating solutions for the organization. Consulting and freelancing will not be left to the rank and file. Organizations will begin to develop fractional leadership in which executives are also consultants within the organization. Flatter, more open organizations and telecommuting creates new challenges for organizations. Concerns over trade secrets and overall company security will increase. Organizations will require all employees to sign confidentiality clauses. Government laws will also need to catch up with the changes in the employment. Leaders should ask questions such as: will companies be required to offer contract labor health insurance and 401k retirement plans; will companies be required to offer workers compensation; and what rules and regulations will be developed to avoid discrimination in hiring consultants? As the new realities of employment emerge, organizations will become mindful of the implications of making these changes. Because organizations are no longer bound by localized geography in hiring employees, other implications will emerge such as payroll taxes. Will hiring consultants located in other countries create a form of tax evasion and will government change the laws to secure tax revenues?
While we don’t yet know what to expect economically, politically or geopolitically, we do know change is happening before our very eyes. How we prepare for and maintain our competitive edge will mean everything. With these changes on the horizon, there comes a great need for leaders and organizations to be ready for the future. Preparing for the future removes certain levels of uncertainty. Organizational leaders must understand the potential implications of moving to a predominant consultant and freelancer driven economy. Preparing for the eventualities will help organizations gain a better competitive advantage.
Organizational leaders must prepare. Trends already indicate that these changes are on their way. We are eight years from a very important event horizon. The way organizations engage human capital is on a rapid course that will forever change the landscape of the organizations of the future. Now is the time to consider a very simple question. A question all leaders should be asking every day. What if…While the question is very important to all aspects of how an organization develops future opportunities, it is how we answer this question that matters the most. The trend is well on its way to a freelancing economy. How we prepare for it and how we deal with it remains to be determined. Competitive advantage is rooted in how we approach the question of what if.
Philip A Foster, MA is Founder/President of Maximum Change Inc. Elevating leaders and their organizations to the next level since 2005. Master Certified Coach, Philip A Foster, MA and his associates facilitate effective positive change by helping organizations, leaders and individuals in high demand — design and implement strategies that maximize focus and deliver results. Specializing in Organization and Strategic Leadership.