As more people take redundancies and work as individual traders under the new phenomenon known as gigonomics, companies will be forced to rethink their management styles. By Leon Gettler
It’s a trend that’s transforming business and the workplace, creating new challenges for managers. More people are now taking redundancy and are working as individual traders. They don’t have jobs anymore, they have gigs. It’s a phenomenon that’s been described as “gigonomics.
How do managers handle that? How do they ensure these people interact with staff and company fabric? How do managers protect intellectual propertywhen they’re dealing with so many fly-by-night employees?
One thing is for sure: bringing in a bunch of people focused on how much money they’ll make on each gig will change companies and their cultures. These aren’t lower- end temps either. Witness the number of interim managers, even interim CFOs, taking on gigs for up to six months at a company.
As the interim army become more dominant, companies will have torethink their management styles. They will have to rework their systems to accommodate interim personality types, while maintaining morale.
The numbers tell the story of how the workforce is changing. According to the Australian Bureau of Statistics, there are one million contractors out there, about 8.7 per cent of the workforce. About 73 per cent are male.
Most are in the construction industry (32 per cent) and the professional and technical services sector (13 per cent), covering such areas as law and accounting firms, bookkeeping and payroll services, architecture, engineering, design, computer services, consulting, research and advertising. About 76 per cent say they are able to work on more than one active contract.
Organisations around Australia are driving this too. Last year, Queensland’s Public Service Commissioner, Brett Heywood, moved to abolish restrictions in industrial agreements that prevent the use of contractors to provide government services. These changes were designed to override all employment security provisions and restrictions on the use of contractors to replace salaried employees.
The same thing has happened in Victoria. The Victorian Government has dramatically lifted its spending on temporary workers and contractors in the public sector to nearly $1 billion, while laying off 4000 staff. The $980 million it expects to spend from 2011 to 2014 compares with the government’s outsourcing contract for 2006-2008 which was worth about $200 million.
Many businesses now feel that highly skilled jobs can be outsourced in a more cost-effective way. And if a project is completed or work dries up, it is often easier to end a contract than sack workers.
Paul Lyons, managing director of the Australian division of the Ambition Group, says the trend reflects a changing economy, the growing influence of Gen Y as it gets older and a new generation entering the workforce even further removed from the instincts of boomers seeking permanency.
But the big driver, he says, is economic forces putting pressure on companies to keep a lid on costs.
“I would say 80 to 90 per cent of our clients would certainly use contract workforce in some shape or form,” Lyons says.
“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 and employers are changing. More employers want to have a greater percentage of variable costs.
It allows them to control their variable costs better by confining the payment to a single engagement, Lyons says.
“Also, we find that some clients, particularly in the professional white collar area, can often buy in a better quality person than what they could if they went on a permanent basis. It’s just the way things work for some of the smaller companies.
Does Lyons see more taking to gigonomics? He believes they could soon represent half the workforce.
“I’d expect it to be a large minority, if not a majority. At the moment, it would be 20 per cent but in 10 years, it would be 40 or 50 per cent. Perhaps they would be employed full-time but they would be employed full-time on rolling contracts or perhaps they might have five days a week of work in three locations.
But Lyons says this presents major issues for managers. “It’s a greater variety of people you have to manage and therefore that does require greater skills over a homogenous workforce, he says.
“I suppose it’s no different from having a diverse workforce in any other way in terms of gender or race.
“You have different strings to pull with a contract workforce than you do with a permanent workforce.
“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.
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 and fluidity, he says.
“It may well be that 40 per cent of the work force will be permanent and 60 per cent 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 also suits the circumstances and the expectations and the fluidity that Gen X and certainly Gen Y demand these days.
“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 schtick, 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, he says.
“Essentially, that requires an agility of labour so 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.”
And management will have to change to accommodate it. Salt says managers 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, capture and transfer. To make sure key corporate information is not held singularly, but is rather 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.