Flexible Workforce: The future, Challenges and Opportunities.
The nature of work has been constantly changing. Traditional employment, in other words, is probably no longer so traditional. But we don’t know that for a fact. Many factors play a role on the shift from the traditional workforce to flexible workforce. One of the biggest influences is the capabilities that technology makes possible today and globalization. “The reduction or removal of time and space as barriers to trade, and the resulting integration of spatially separate markets, has given rise to an intensification in market activity, as a progressively greater proportion of the total market for goods and services becomes subject to competitive pressure” (Dastmalchian, and Blyton, 2001).
Predictions are that “by 2020, more than 40% of the US workforce will be a so-called contingent worker, according to a study conducted by software company Intuit in 2010. That’s more than 60 million people” (Future of Work). This paper will investigate the future of work and the factors that are playing a role in changing the nature of work, as well as explore challenges and opportunities that come with this employment revolution. Is the system ready for the change?
A short History on the workforce
From about 1880 to 1980 “many companies were created from emergence of the ‘Industrial Revolution’ that brought armies of workers together, often under a single roof” (Taylor, 2013). These were the first stages where independent artisans started doing work they loved and moved away from machinery. “These very early companies introduced a new stability into work, a structure which differentiated specific jobs from one another, thus providing defined roles for workers and career paths” (2013).
The workforce fifty years ago had more of a one-o-one experience with the costumers. They were very likely to know their costumers personally and work with them face to face. Today most of the interaction with the costumers is done thru phone, email, chat and automatic systems. The personal touch is decreasing. “Modern business practices and the demands of a faster-moving and frequently relocating population have caused a decrease in the personal touch offered by many businesses” (Taylor, 2013).
The workspace itself has changed in different shapes and forms over the years. It was only fifty years ago when Herman Miller unveiled their office plan Called Action Office. This new kind of space was about movement and flexibility but it ended up being a new rigidity set in (Saval, 2014). Today in order to get rid of the rigidity organizations are applying open space concepts for their office spaces. Some other organizations allow flexible hours and working from home. Today you can rent office spaces for the day or by the hour.
Fifty years ago women stayed at home. Career women were very rare and an exception. “The notion of equality in opportunity or salary didn’t exist, and there were no right-protecting laws in place to force businesses to comply. This is one of the major differences of the modern workplace” (Saval, 2014).
U.S. is quickly becoming a nation where freelancers make the majority of the workforce. “In 2006, the last time the federal government counted, the number of independent and contingent workers—contractors, temps, and the self-employed—stood at 42.6 million, or about 30% of the workforce”(Dastmalchian, and Blyton, 2001). There is no data to show how many flexible workers are in the States in 2015. The new emerging “trend” practiced by organizations is hiring flexible workforce, such as: independent contractors, freelance workers, individual consultants. The impact that this trend has is massive even though it is “invisible, hiding under the traditional staffing model … [and]… it’s a fast growing sector of the economy” (Olen, 2013). As of 2013 the estimate number of freelance workers in the States was 53 million, or about 33% of the U.S. workforce “number that is expected to grow to 50% by 2020” (Olen, 2013).
Moreover there are many other articles that give an overview on the non-traditional workers. The data from an article to another does not always match perfectly because they do reference different studies. According to the lobbying group ‘It’s My Business’ there are 10.3 million independent contractors working in U.S. Another study says that 17.7 million is the number of independent workers, “defined as– ‘people who work at least 15 hours a week in non-traditional, non-permanent’ jobs”(2013). The challenge on identifying the number of contractors or the flexible workforce consists on the way that the flexible workforces identify themselves. In one of the polls “36% of independent workers consider themselves ‘self-employed’, compared with 13% who said they were ‘business owners’, and 4% who were identified as ‘freelancers”(2013).
The flexible workforce is do not have the supports that traditional workers take for granted: “they are not covered by most employment laws, and for most part, they have not joined together collectively to agitate for change” (Olen, 2013).
There are many factors that are playing a role for this employment change to happen such as: the capabilities that technology has to offer, immediate internet access, and the development of the culture that “we’re just not meant to work all day sitting in a cubicle”(2013).
In his article Olen references the article Freelance Workers Reshape Companies and Jobs by Paul Davidson which says that “Companies that are aiming to become more nimble and cut costs want to boost or cut staffing to meet fluctuating demand or deploy workers with specialized skills for short-term projects… The trend is subtly reshaping the workforce in which business traditionally employed workers through good times and bad” (Olen, 2013). The basic tradition consisted on employees being loyal to the company and the company gave the employees security. This new way of working is changing the relationships between employers and employees. I believe that part of that has to do with Generation Y employee’s needs and wants.
From the previous topical research paper I wrote I came to the conclusion that Generation Y does not care about job security. For that reason security it is no longer an important component on the decision making if the employee wants to stay with the company or not. This brings me to conclude that security it is no longer an important component the exchange that the employer and employee are no longer relevant.
Since the economic downturn the employment rate is going up slowly. On the other hand the temporary, contingent, and independent workers are growing at a fast pace. “Between 2009 and 2012, according the Bureau of Labor Statistics, the number of temporary employees rose by 29%. A survey of the 200 largest companies found that temporary workers represented, on average, 22% of their workforce, and that percentage is growing” (2001). This phenomenon is happening because individuals are discovering that they’re able to be productive outside of the corporate office and without a long-term employer.
The work model is constantly changing.
“According to U. S. Census Bureau’s Annual Report on Non-Employer Business; around 75% of total U.S. business (i.e., about 22.5 million businesses across the country) do not have any paid employees, which means that large number of people are working for themselves… This number is up 1.7%. These on-demand freelance businesses reported total revenues of about $990 billion, 4.1% increase. Hence, the independent freelance workers economy just keeps growing; it’s a massive movement hiding in plain sight…” (Olen, 2013)
According to Olen (2013) flexible workers make up close to 15% of the workforce. His research to back it up it is not there, but he says that by 2020 it’s expected to be nearly 20%. “Freelancers alone are expected to grow from about 7% to 16% of the workforce” (2013).
Olen comes to the conclusion that freelance labor is on the rise and will keep growing; this tells us “organizations are embracing work arrangements other than just staff employees”. Lastly “business will need new tools and process in order to manage the freelancer life-cycle… The workforce of the future must accommodate freelancers in order to compete– they will also need the technology, tools, and processes to manage it (2013).
The flexible workforce model will only continue to grow and their importance and impact in the economy will grow as well. There are many creative job titles that this “non-traditional” workforce calls their selves such as freelancers, contractors, gig-ers, consultants, doers, critical thinkers and many other names. “They are not a generational anomaly or a stage for the post-collegiate generation. They’re a new economic reality and a great force” (Olen, 2013). According to Tina Brown; flexible workers do not just go work from one project to another, they do have a work sensibility and business perspective (2013).
The traditional way of working it is not going anywhere just yet, “but more organizations are turning to other work arrangements, especially large enterprises that can capture significant business value from deploying a flexible, non-employee workforce” (Dastmalchian, and Blyton, 2001). The number of enterprises that turn to independent workers is becoming larger than ever.
As people innovate and technology progresses the way we perceive distances, time and locations changes. Human nature is very adaptable. New technologies such as the cloud and mobile technologies are “increasingly shifting work lives away from the corporate office altogether and toward an in-my-own-place, on-my-own-time work regime”(Intuit).
Nowadays we already see organizations use smartphones, tablets and other devices but in the near future all these devices will become the go-to computing devices worldwide. “The use of third places- public libraries, co-working facilities and rent-by-hours office suites- will continue to growth” (Intuit). Even though the traditional office spaces and home will still be in use. “Enhanced collaboration and video services will transform the new workplace as distributed virtual teams meet regularly using these new technologies” (Intuit).
Globalization has already changed the way new talents are found and hired. This will continue. “Information and communications technologies will better enable globally distributed work” (intuit). According to intuit the following trends will be more prominent in the next 2-4 years:
- Independent contractor population continuing to grow as millennials face tough job prospects, and often choose more flexibility in their work/life balance.
- Retirees staying engaged in the workforce as freelancers with special skills.
- Independent contractor usage will continue to grow as companies adapt to the changing workforce, and the benefits of a variable workers, e.g., efficiency in costs.
- Companies will view freelancers as the third prong of a workforce approach.
There are many benefits in hiring flexible workers. The main reason is availability. They are “available at a moment’s notice and many with special skills” (Taylor, 2013). This new model will affect the hiring process, career patch and will reshape the nature of organizations.
As the workforce is changing the optimist see this change as a revolution where pessimists “worry that everyone will be reduced to status of 19th-Century workers crowded on street corners waiting to be hired by contractors” (Neunen, 2013).
The current system has been designed to work with traditional employees. The more independent workers we have the more problems we will face. “Those who have full- or part-time work with established companies receive a regular paycheck, employer-sponsored benefits (if they’re lucky), and get a tidy IRS W-2 form at the end of the year for taxes. What people find when they leave the system is a confusing, byzantine, and slightly scary world of health insurance, taxes, pensions, and regulations” (Future of Work). New practices, rules and regulations need to be placed in place.
The main challenge consists on the laws that are in place. Even though we are working in the 21st century marketplace, we are still functioning with 20th century laws and customs (Dastmalchian, and Blyton, 2001). All the main structures both legal and financial make a general assumption that most of employees are salary (2001). All the other structures work from that assumption; such as: employer sponsored health care, unemployment insurance and pension system. How is the new workforce going to overcome that challenge?
The governments must rethink the way institutions work because they “were designed in an era when freelance workers were rarity” (Saval, 2014). “Talent is moving from a fixed cost to a variable cost, with companies staffing-up and down as needed” (2014). All these changes will affect the economy and society generally. New structures need to be developed.
Not only the government but also education needs to work on preparing students that will be self-reliant and relevant to the market (Olen, 2013). Independent workers are faced with clients that do not pay on time or at all. This workforce should be provided tools and strategies in knowing how to deal with different situations. They should also have a general knowledge of the business side of things and be prepared for all the challenges that they will be faced with.
In the past self-employed individuals were judged by people who thought these individuals could not get a real job. “Today, the opportunities for contingent, project-based work are exploding, as is the development of tools that allow people to work independently across industries like software, design, marketing, legal services, architecture, healthcare, and engineering” (Taylor, 2013).
Today self-employed individuals are seen with admiration. They are perceived as innovative with an entrepreneurial spirit and living a life without time constrains. They can make up their own schedule, work in spaces they enjoy to work at and they call the shots if they want to work on a project or not.
Independent work it is not for everyone. According to Taylor independent work “is not likely to be a good experience for people who value stability more than flexibility… whereas, it’s good for outsiders, insurgents, entrepreneurs… trying to create new companies” (2013).
In conclusion, whether we want to be part of the flexible workforce it is our decision but that is the direction where the world is going. The government needs to work on creating new laws and strategies to make the transition smoother. Educators need to prepare new students to work in a totally different market. Individuals themselves need to adapt to the changes. By 2020 we will be faced with many challenges but with so many more opportunities to make this change successful.
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