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The Changing Nature of Work and Organizations
Free Agents
Team Members:
Brandon Bartley
Dana Baumann
Gary Hoke
Ryan Lynch
Tim Nichols
Kaete Piccirilli
Dr. LAS
BUS590Y
December 10, 2007
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Introduction
Before the Industrial Revolution, people managed their own careers--with 85% of the population working in agriculture.The Industrial Revolution moved the majority of the population to become employees of production (Baruch, 2006).John Ruskin wrote in 1871, “In order that people may be happy in their work, these three things are needed: they must be fit for it; they must not do too much of it; and they must have a sense of success in it” (Cooper,1999, p.572). In the past, there was a multitude of economical, legal and institutional barriers preventing individuals from breaking away from larger companies and employing themselves. Initial motivational research and theory lead many to believe money was the primary, if not sole, source of an employee’s motivation. If this theory is correct, then all actors and professional athletes should be among the happiest people on earth because they are the highest paid workers relative to most workers in the workforce. Later research found that it took more than money to make people happy. It took things such as job security, recognition, status, and job satisfaction to predict job performance. Additional research showed that non-job performance reasons such as co-workers, benefits and work conditions led people to greater happiness in their jobs (Latham & Ernst, 2006).
What if the individual’s purpose in life was to be happy rather than just making money? Today, a traditional employee receives a salary, medical benefits, paid vacations, holidays, sick leave and job security. All of this in exchange for the employee’s unwavering dedication to his employer. What happens if an individual is not sure what he wants to do for the rest of his life or, regarding an older individual, maybe he doesn’t accept the notion of retirement? This is where opportunities for free agency enter the workplace. According to Webster’s Dictionary, “a free agent is a professional athlete who is free to negotiate a contract with another team.” (Webster, 2007) Free agency is a new term in the business world for a non-standard work arrangement. It is best characterized by an attitude of self-confidence and independence manifested through chosen employments of a temporal nature. This changing attitude conveys little permanent loyalty to an organization; rather, free agency integrates the provision of services for compensation without embracing corporate culture.
How does free agency apply to corporate businesses today? A free agent takes the form of a consultant, a self-employed individual, a contract employee, temporary employee, permatemp, an entrepreneur, an independent contractor, a freelancer, an independent consultant, a contingent worker, or an elancer (Florzak, 2002).The increase in free agency has boomed over the past 30 years. Advancements in technology, specifically focused on the proliferation of the internet and internet-based applications, have played a large role in growth. In 1981, the temporary staffing agency industry had revenues less than $1 billion. By 1990, total revenues climbed to $20 billion. As of 2002, temporary staffing is a nearly $80 billion dollar industry (Pink, 2006). In addition, according to EPIC/MRA, by 2010, 41% of the workforce will be working on a contract basis. Already a prevalent business model in the Silicon Valley, groups of workers will come together to tackle a project and then disband when complete. For example, when Nokia Corp. entered the US markets, it did with only five employees. Nokia farmed out sales, marketing, logistics and technical support to free agents (Conlin, 2000).
Free Agents’ View
Factors leading to the rise of Free Agents
Changes in work arrangements began when both organizations and workers started to search for greater flexibility in employment. Adapting to a global economy with greater inherent uncertainty, firms sought to be more flexible with work arrangements and customer demands. In addition, growing numbers of competent, successful women entered the work place with a heightened interest in greater flexibility in free agency (Kalleberg, 2000). Many prefer the free agent lifestyle because they are not constrained by organization politics, have more chances to learn, have more control over their time, and typically make more money. Most free agents are making 30% to 200% more than their staff counterparts (Conlin, 2000).
Economists argue with journalists that despite outsourcing, jobs in the United States will not disappear; instead, new opportunities for higher education positions will emerge. According to the Bureau of Labor Statistics, 34% of adult workers in the U.S. now have a bachelor’s degree or better, up from 29% 10 years ago (Mandel, 2007). The rapidly growing capabilities in information technology create more opportunities for remote or “virtual” employment, dislocated collaboration, and dispersed project management—each of these characteristics assists in the employment of free agents.
College graduates can use contract work to move around an industry in order to find the best position for their interests and abilities. Recent college graduates have turned to placement agencies to find work and try different positions in order to find suitable employment. AfterCollege, Inc. is a college Web-based employment network posts jobs on their website for entry-level positions. AfterCollege, Inc. works with individual academic departments to help students connect with employers. Young college graduates sometimes seek experience and affirmation of their professional interests through temporary jobs in their target industry (Atkinson, 2007).
According to a Harvard Study, in the $175 billion home remodeling industry, 70% of the labor force within the home remodeling industry is self-employed (Pink, 2006). With the recent housing boom, there has been an influx of non-standard work arrangements that allow individuals to pursue opportunities that are flexible to their lifestyle choices. There seems to be a trend in the housing industry that contract companies will supply business services to large-scale companies. A move in this direction allows individuals to go out and start their own organizations (Kalleberg, 2000).
Baby Boomers appear as free agents in increasingly noteworthy numbers.The labor force growth is expectedto fall from 1.1 percent a year in the 1990s to 0.36 percent a year in the period 2010 to 2020 (Penner, Perun & Steuerle, 2003). Some professions will be more impacted than others will. Since labor growth rate projections are declining, organizations will have to mitigate against potential falls in productivity. One strategy is to have Baby Boomers work longer. Providing phased retirement, flexible work schedules, short hours or longer vacations are ways to entice retirees to return to an organization. Of all the older workers who retired from 1992 to 2000, 13% said they would work longer if the employer had offered some sort of flexible work arrangement. The number of those over the age of 55 will grow. The largest untapped source of potential labor in the economy is healthy retirees, therefore the availability of phased retirement is more prevalent. Many individuals are opting for working part time after retirement. Many have pensions and healthcare through Medicare; these benefits create an atmosphere conducive to free agency. Interestingly, Penner, et al state, there are more retirees readily available in the government sector, and many private employers make individual arrangements to retain employees with specialized skills and expertise.
Evolving technologies have provided individuals with the freedom and flexibility to work from almost anywhere. Over the past three decades, significant improvements to global communications and networking infrastructures have occurred. These improvements were the underlying foundation for the evolution of personal computers, wireless devices, broadband access, internet-based applications and video/audio conferencing technologies that free agents heavily utilize today. According to the U.S. Census Bureau, the proportion of households with a PC grew from 8% in 1984 to 62% in 2003 (Armour, 2006). Changes in technology have also fueled a growing global economy. Technology has allowed strategic organizations to create flexible work environments, which includes virtual teams, in response to the growing competition in the global marketplace (Townsend, 1998). Organizations and individuals who have embraced these technologies have experienced a competitive advantage over those hesitant to adopt them.
Free agency gives individuals a means to decide their own career path instead of having a company decide it for them. This also gives the individual freedom to respond to new changes that emerge from a turbulent business environment. Both organizations and individuals change their expectations, in turn generating new forms of employment or contracts (Baruch, 2006). In conclusion, the advancements in personal computing technology, the growth of communications infrastructure, the decrease of the workforce due to the retirement of the Baby Boomers, and the desire to work independently are all factors leading to the rise of free agents.
Free Agents Moving Forward
The nature of work and organizations is constantly changing. As the workplace evolves, more flexibility and opportunities are provided to organizations and individuals. In order to better understand free agency, defining some of the factors that lead to the rise of free agents and how it plays into the changing nature of work and organizations allows the discussion to turn to where free agency will go in the future. The expectation is that free agency will continue to grow as the economy continues to develop into a global market. With this change in that nature of employment, an industry that caters to free agents’ needs will develop. In addition, state and federal government will start to change or pass new legislation that will help to foster the growth of free agency. Technology will play a critical role in this evolution. Many workers will begin looking at their jobs to see how they might fit into the free agent role. As organizations look at everyday processes to determine, which jobs might be more cost effective if contracted, free agents will align their skill sets to match those needs. There are many developing variables allowing free agency to become more prevalent in today’s work and organizations.
Through technological advancements, free agents are able to purchase the resources needed to simplify the transition from the traditional working environment to free agency. This technology already exists to allow full-time employees to work from home a few days a week or exclusively. Citrix Systems recently surveyed 600 U.S. workers and found that 23% work remotely on a regular basis and of those who did not, 62% wished they could (Finkelstein, 2007).
The availability of health benefits are also aiding in the increasing number of free agents. Sara Horowitz, founder of Working Today, a New York-based nonprofit that provides portable health insurance and other benefits to independent workers, is helping provide these benefits. Sara Horowitz states that free agents’ “greatest concern is health care” (Horowitz, 2004, p. 1). By providing health care to contract workers Horowitz is essentially making it more attractive for workers to leave the traditional work environment and join the free agent work environment. Horowitzgoes on to say that, organizations will need to look at this model and see that the future of their businesses will benefit by working with health care aspects of the free agents and contract workers. An organization that accommodates free agents’ health care needs is more likely to secure the best free agents in the market. With this in mind, workers have more motivation to become free agents.
Another aspect of health care to consider is dual income households. In the past, only one member was the “bread winner,”and the household relied on that individual’s benefits and income. Entering the free agent market for households with a single income poses a greater challenge than for households with dual incomes. With a dual income household, where the husband wants to join the free agent work force, he can rely on his wife’s health benefits to support them. The free agency concept is winning notoriety among the labor force where individuals want to improve their work/life balance.
Numerous agencies are also providing services that do the head hunting for free agent workers. Companies, such as Manpower, have bountiful networks for hiring firms looking for free agents. Previously, to become a free agent an individual would spend months lining up clients and researching markets in order to secure a constant flow of work once a free agent broke from the traditional work environment. Manpower has approximately 4.4 million associates with over 400,000 clients looking for temporary worker, contract, and permanent employees (Manpower.com, 2007). With that kind of network, an individual looking to break into the free agent market has numerous opportunities secured for them by a third party.
Free agency will continue to gain popularity. Individuals will have the flexibility to manage their own schedules, breaking from the traditional workday schedule. Free agents will have the ability to meet their work/life balance needs to the fullest by working when it is the most convenient for them and their employers. Free agents work toward a set of goals or objectives, a key factor to providing this balance. This is the freedom that this change is making available to the work force.
Cary Cooper says,“The future of work seems to be in small to medium sized businesses or self-employed portfolio careers or outsourced workers in virtual organizations,”(1999, p.2). Aligning their skills and services with the small to medium business markets will allow free agents to prosper. With this in mind, individuals must think about their own career path and asks the following questions:
Do I want to become a free agent?
Is my current skill set suitable for free agency?
Can the job be done remotely or from a corporate office?
Should I stay in my current line of work or pursue something more enjoyable?
Free agency takes vision and motivation, and the expectation would be that high performance, high achieving individuals are more likely to pursue this career option. Free agency can provide a means to accelerate an individual’s development in a current career path or field. Alternatively, it can provide an individual the means to switch gears altogether in order to and pursue other career options. Free agency will grow as more organizations look to take advantage of the efficiencies associated with free agents. In turn, free agents will leverage the changes technology, health care coverage,and the changes to the nature of work itself to their advantage to realize their personal goals.
Free Agent’s Concerns
As with any new venture, there are some drawbacks. Whereas traditional workers have the technical support of their company’s IT department, free agents operate in a more vulnerable, independent fashion. Cooper states“…many people will have to overcome their intrinsic fears about using new office technologies in the home or at varied locations,”(1999, p. 2).The responsibility lies on the free agent to manage his or her own business affairs. Legal, financial and technology matters are the burden of the free agent. Additional time must be spent as the free agent is now her own company and she will have to spend more time training to learn the new technologies and equipment in order to stay competitive. As the nature of work and organizations continues to change, organizations or free agents will recognize these skill gaps and move into the market place to accommodate such needs. Eventually free agents will contract with fellow free agents to fill needs they cannot supply themselves. An example, mentioned previously,is Working Today, a New York-based nonprofit that provides portable health insurance and other benefits to independent workers.
Cooper also brings up the point concerning social issues. He says, “it will also make work more socially isolating, reducing social interaction,” (1999,p. 3). Because of this, he suggests forming social networks withsimilar home-based workers to help fill that social void. This could also give free agents the chance to bounce ideas and concerns off others who might have answersfor which they have been looking for. Another way to avoid this social isolation is to use technologies like instant messaging, discussion groups, blogs, social networking websites and video conferencing to communicate with others in both a synchronous and asynchronous manner.
One additional concern for becoming a free agent because of the changing nature of work and organizations, is to learn to separate personal time and space from work time and space. Cooper comments on this matter by saying “a structured work schedule is useful so that the workload does not spill into valued family time – an exit time is essential in home-working to ensure that work is not regarded by other family members as an intrusion into family life.” (1999, p.3). Since free agents can work from home, having a schedule will help separate the hours of the day so free agents can devote as much time as needed to personal and professional matters.