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FREELANCE CEOs $100,000 Temps
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Last fall, Boston Red Sox slugger Mo Vaughn changed teams, signing a six-year, $80-million contract with the California Angels. Superstar free-agent athletes like Vaughn may simply be the most visible examples of a wider social phenomenon: a growing number of American companies have been giving fat fixed-term contracts to other workers with exceptional skills. According to Jeffrey Bradach, Ph.D. '92, associate professor of organizational behavior at Harvard Business School, the trend toward "outsourcing" employment suggests an emerging model for organizing work and building careers.
Bradach calls it the "flexibility model," after its main raison d'être. Unprecedented acceleration in market change has forced companies to tap job skills that do not already exist in-house when they cannot afford to take the time to train current employees--and when the skills needed today may be irrelevant to the next emerging challenge. Hence, hiring free agents on a project-by-project basis is a logical recourse.
So far, employers are contracting out only a small portion of high-level white-collar work, mainly in volatile industries like information technology and financial services. But Bradach imagines that in the future, upward of 40 percent of the nation's work may be "flexed." Through interviews with free agents, human-resources representatives, and white-collar staffing agencies, he has been investigating the far-reaching implications of such a change. Some of his preliminary findings appear in a Harvard Business School working paper, "Flexibility: The New Social Contract between Individuals and Firms?"
A free agent's key assets are an uncommon skill set and experience that fits a critical employer need. You are in good shape if you can steer a company through a successful reorganization as an interim CEO, or apply the newest accounting software, or market a new product to a target ethnic community. Partly as a result of corporate downsizing, staffing agencies can locate people who match extremely specific criteria. One agency, for example, recently filled a client's order for a metallurgy-industry executive with experience in managing corporate mergers.
Upscale "temps" seek not only money but also personal satisfaction. "There is a great deal of disillusionment with how organizations treat people," Bradach says. "Words and phrases that come up repeatedly are 'enervating,' 'energy depleting,' 'You can't be yourself.' In several interviews, people gave the example of having to lie to attend a child's soccer game--and how terrible they felt about it. Another theme that runs through many interviews is, 'I really am committed to doing good work, and organizations get in the way. As an independent contractor, I don't have to spend half my day in unproductive organizational politics.'" Bradach also notes that for workers in a few cutting-edge fields such as computer software, jumping from place to place is the only way to keep pace with advancing technologies.
"Hot" contract workers can earn much higher compensation in the free marketplace than they can as employees within companies; Bradach cites a colleague who quit a corporate job and was immediately offered more money to return half-time than she had been making full-time. "The company knew she had a valuable skill set, but internal equity considerations made it impossible to give her a raise or promote her as long as she was inside," he says. "You see such stories all the time." (Prominent among those equity considerations is an unwritten rule that no employee can make more than the boss.)
On the down side, Bradach notes that "independent contractors have huge problems getting things like mortgages, health insurance, disability insurance--a whole set of things--because everybody wants to know what your monthly income is. The world is built for employees. Everything is organized around standard streams of income."
Yet contract work is reforming the status quo. Staffing agencies and adult-education programs are increasingly taking on the role of training workers, something companies seem determined to shed; most firms expect contract workers to be "up to speed" right from the start. Other new organizations are seeking to remove structural deterrents to free agency. One, Working Today, is lobbying for health-insurance portability and fairer tax rules for free agents, who currently get no breaks.
The implications of the flexibility model extend far beyond the workplace. According to Bradach, "We used to say that commitment was synonymous with lifetime employment." With flexibility, the loyalty ideal evaporates in favor of commitment to the current project. (To the extent that workplace relationships influence personal lives, this changeover could reinforce an already growing trend toward divorce and remarriage.)
Worsening income disparity is another potential consequence of pricing all labor at its going market rate, without the buffering effects of corporate pay systems. "People with skills and bargaining power are going to command larger and larger pieces of the pie," Bradach says. "People who have only generic skills will become a fungible commodity. They are the ones who may be laid off and come back at a lower rather than higher rate, and without benefits." For these people, the face of the future may not be Mo Vaughn's $80-million smile, but the tense grimace of the worker in the overcrowded hiring hall.
~ David Anderson