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Is The Employment Relationship Keeping Up With Business?

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I recently had a conversation on the nature of the employment relationship with Denis Pennel and how labor markets are changing in nature towards even greater short-term or contract work. If you read my earlier piece, an Oxford Economics - SAP Successfactors study showed that 42% of companies are increasing their number of contingent workforce, seasonal employees or consultants. Yet there are still a number of factors that limit the freer flow of labor across the globalized economy.  We compared the states of employment relationships in Europe versus that in the USA, and still found both wanting.

Mr. Pennel is Managing Director of Ciett/EuroCiett, a global trade organization with members from the world’s largest staffing companies. Ciett works work with policy makers and influencers like the International Labour Organisation (ILO), the Organisation for Economic Co-operation and Development (OECD), the World Bank and others, focusing on what needs change to for the industry to grow. He is author of the French business book, Travailler pour soi: quel avenir pour le travail à l'heure de la révolution individualiste (Seuil, Sep 2013) – translated, “Work for yourself: The future of work in the hour of the individualist revolution”. He also writes a blog, La nouvelle réalité du travail(The new reality of work).

In the past, we had one-size-fits-all, permanent [long-term employment] from 9 to 5. This does not exist any longer. In the future we will have people with not just one job but several. People will have several sources of income. This may be constrained in some way, but it will happen,” says Mr. Pennel.

Back in 2011, I wrote about the Aspen Institute’s study on The Future of Work, and raised this issue that the nature of the employment relationship needs to shift. I proposed a model back then which I have brought up in a few presentations and discussions in conferences. The reasons have not changed.

Per Mr. Pennel, “Previously, you had to fit [yourself into] the job position. Today it is the other way around.  People want their job to look like themselves, and fulfill themselves with their job. They want the job to adapt to their own individuality. Millennials are much more aware that there will be no job waiting, and therefore have to create it."  It matches with some of findings of the Oxford Economics study mentioned earlier.

Self-discovering one’s own career path can be challenging and seem risky, but the new reality is that companies aren’t keeping up with the changes in how the work is done to really be able to formally define what careers really mean any more. While educational systems are being challenged, they still remain the primary way that organizations hire. At the same time, they are also very aware that most recent graduates require a good deal of retraining during the on-boarding process, and much of what they learn in a university is simply not applicable. Mid- and advanced career folks on the other know it is more than what you learn but the reputation and expertise you are known for.

I several several factors that are in deep flux at this time:

  • What people know and how they learn
  • How jobs & careers are changing
  • How companies are hiring (the employment relationship)
  • How to assign or get work (e.g., crowdsourcing)
  • How to collaborate or cooperate on work

Unfortunately, there also hobbles constraining organizations to existing models:

  • How we understand and cooperate with each others work cultures
  • How organizations compensate work completed
  • How organizations recognize & apply expertise
  • How organizations cope with changes
  • How governments & unions allow hiring

My talk at HR Tech Europe 2014 in Amsterdam outlined that the globalization of work and the rise of collaborative technology now forces each of us to better understand the culture of how we work. This isn’t a one notion framed as the single culture of our organizations, but the aggregate of several factors (national, organizational, passion, network, generational cultures) that define our individual work culture DNA.

To work fluidly in our changing organizations, we each need a stronger grasp on what we mean in what we say to each other. We should also understand how much digital collaboration technology distorts our how we hear what others mean. These are changes to the way we individually cope with our work, as well as how our organizations do the same.

Coping with such changes in itself is a difficult prospect because of the state of how we currently apply change management as limited or bounded programs rather than principles and platforms. Lee Bryant of UK consultancy, PostShift, explored this thought in his recent post, The Quantified Organisation: Can change become routine?, that is also well worth reading.

In speaking to Mr. Pennel, the role of governments or trade unions often add specific conditions to the employment relationship. For example, we have social security in the US and in many nations in Europe that are sizeable financial entities that perpetuate themselves. While the US also allows a number of independent retirement fund or pension instruments, this is not so, or simply not feasible, in other countries. They complicate being self-employed, being in startups or small companies because of the tax burden, or more correctly the stringent limitations of how they are managed.  The idea of a person with multiple sources of income can create a frustrating maze of complications.

Incidentally, Roger L. Martin, Academic Director of the Martin Prosperity Institute, and former Dean of the Rotman School of Business at the Univ. of Toronto, made a number of very relevant statements on the critical infrastructure that exists to support the enterprise, at the recent 2014 Global Peter Drucker Forum in Vienna, Austria:

We now have Infrastructure that is narrowly-based and short-term.”

“The vast majority of pensions are regulated monopolies. The rule is that regulated monopolies exist for themselves and not their customers.”

“What tends to be the philosophy behind public infrastructure? ‘We’re going to work hard to pass a bill that supports the infrastructure.’ The hope is that that will do what it is supposed to do. I think that whatever you do is not going to be right. It’s a prototype that has to be tweaked and adapted. Because narrow interests will pervert it.

“Government investment in infrastructure starts out in the quadrant we want it but becomes perverted. It’s because some group has a bigger stake. We should assume that every single piece of public infrastructure is going to be perverted. [Thus] we have to tweak this, on an ongoing basis.”

He is quite clear that these limitations are pervasive regardless of where you are, and the nature to create these inflexible notions eventually benefits small groups. Irving Wladawsky-Berger (MIT) and Steve Denning (author & Forbes contributor) also agree with Mr. Martin that this sort of perversions happen within private sector organizations just as much as in the public ones, particularly in executive talent and compensation.

The challenge to change the status quo is stacked up on both the public and the commercial fronts in different ways. The risk and volatility that emerges is still being experimented upon and may likely never reach a stabilization point of a single acceptable working model. Rather it is up to both fronts to start making these changes, if they would listen to reason, to prevent a state of recurring global crises every few years by perpetuating the same underlying infrastructure.

Rawn Shah is an independent analyst and consultant focusing on the intersection of collaboration, culture, technology and the future of work. He can be reached on LinkedIn, Facebook or Twitter.