Companies struggle to find qualified workers in the mature phase of any business cycle. Yet as we enter a new decade in 2020, they have more than a hyper-low unemployment rate to grapple with.
Businesses face a gaping qualitative chasm between the jobs businesses need to fill and the interest of workers in filling them. As a result, employees have more leverage than ever to insist that jobs cater to their lives, locations, and demands to be creatively challenged.
Accordingly, IDC predicts that by 2021, 60 percent of Global 2000 companies will have adopted a future workspace model — flexible, intelligent, collaborative, virtual, and physical work environments.
Stay with us now as BriefingsDirect explores how businesses must adapt to this new talent landscape and find the innovative means to bring future work and workers together. Our flexible work solutions panel consists of Stephane Kasriel, the former Chief Executive Officer and a member of the board at Upwork, and Tim Minahan, Executive Vice President of Strategy and Chief Marketing Officer at Citrix. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.
Here are some excerpts:
Gardner: If flexible work is the next big thing, that means we have been working for the past decade or two in an inflexible manner. What’s wrong with the cubicle-laced office building and the big parking lot next to the freeway model?
Minahan: Dana, the problem dates back a little further. We fundamentally haven’t changed the world of work since Henry Ford. That was the model where we built big work hubs, big office buildings, call centers, manufacturing facilities — and then did our best to hire as much talent around that.
This model just isn’t working anymore against the backdrop of a global talent shortage, which is fast approaching more than 85 million medium- to high-skilled workers. We are in dire need of more modern skill sets that aren’t always located near the work hubs. And to your earlier point, employees are now in the driver’s seat. They want to work in an environment that gives them flexible work and allows them to do their very best work wherever and whenever they want to get it done.
Gardner: Stephane, when it comes to flexible work, are remote work and freelance work the same? How wide is this spectrum of options when it comes to flexible work?
Kasriel: Almost by definition, most freelance work is done remotely. At this stage, freelancing is growing faster than traditional work, about three times faster, in fact. About 35 percent of US workers are doing some amount of freelancing. And the vast majority of it is skilled work, which is typically done remotely.
Increasingly what we see is that freelancers become full-time freelancers; meaning it’s their primary source of income. Usually, as a result of that, they tend to move. And when they move it is out of big cities like San Francisco and New York. They tend to move to smaller cities where the cost of living is more affordable. And so that’s true for the freelance workforce, if you will, and that’s pulling the rest of the workforce with it.
What we see increasingly is that companies are struggling to find talent in the top cities where the jobs have been created. Because they already use freelancers anyway, they are also allowing their full-time employees to relocate to other parts of the country, as well as to hire people away from their headquarters, people who essentially work from home as full-time employees, remotely.
Gardner: Tim, it sounds like Upwork and its focus on freelance might be a harbinger of what’s required to be a full-fledged, flexible work support organization. How do you view freelancing? Is this the tip of the arrow for where we are headed?
Minahan: Against the backdrop of a global talent shortage and outdated model of hub-and-spoke-based work models, the more innovative companies — the ones securing the best talent — go to where the talent is, whether using contingent or full-time workers.
They are also shifting from the idea of having a full-time employee staff to having pools of talent. These are groups that have the skills and capabilities to address a specific business challenge. They will staff up on a given project.
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So, work is becoming much more dynamic. The leading organizations are tapping into that expertise and talent on an as-needed basis, providing them an environment to collaborate around that project, and then dissolving those teams or moving that talent on to other projects once the mission is accomplished.
Gardner: So, it’s about agility and innovation, being able to adapt to whatever happens. That sounds a lot like what digital business transformation is about. Do you see flexible work as supporting the whole digital transformation drive, too?
Minahan: Yes, I certainly do. In fact, what’s interesting is the first move to digital transformation was a shift to transforming customer experience, of creating new ways and new digital channels to engage with customers. It meant looking at existing product lines and digitizing them.
And along the way, companies realized two things. Number one, they needed different skills than they had internally. So the idea of the contingent worker or freelance worker who has that specific expertise becomes increasingly vital.
They also realized they had been asking employees to drive this digital transformation while anchoring them to archaic or legacy technology and a lot of bureaucracy that often comes with traditional work models.
And so there is now an increased focus at the executive C-suite level on driving employee experience and giving employees the right tools, the right work environment, and the flexible work models they need to ensure that they not only secure the best talent, but they can arm them to do their very best work.
There is now an increased focus at the C-suite level on driving employee experience and giving employees the right tools, work environment, and flexible work models they need to ensure they can do their very best work.
Gardner: Stephane, for the freelance workforce, how have they been at adapting to the technologies required to do what corporations need for digital transformation? How does the technology factor into how a freelancer works and how a company can best take advantage of them?
Kasriel: Fundamentally, a talent strategy is a critical part of digital transformation. If you think about digital transformation, it is the what, and the talent strategy is the how. And increasingly, as Tim was saying, as businesses need to move faster, they realize that they don’t have all the skills internally that they need to do digital transformation.
They have to tap into a pool of workers outside of the corporation. And doing this in the traditional way, using staffing firms or trying to find local people that can come in part-time, is extremely inefficient, incredibly slow, and incompatible with the level of agility that companies need to have.
So just as there was a digital transformation of the business firm, there is now also a digital transformation of the talent strategy for the firm. Essentially work is moving from an offline model to an online model. The technology helps with security, collaboration, and matching supply and demand for labor online in real-time, particularly for niche skills in short-duration projects.
Increasingly companies are reassembling themselves away from the traditional Taylorism model of silos, org charts, and people doing the same work every single day. They are changing to much more self-assembled, cross-functional, agile, and team-based work. In that environment, the teams are empowered to figure out what it is that they need to do and what type of talent they need in order to achieve it. That’s when they pull in freelancers through platforms such as Upwork to add skills they don’t have internally — because nobody has those internally.
And on the freelancer side, freelancers are entrepreneurs. They are usually very good at understanding what skills are in demand and acquiring those skills. They tend to train themselves much more frequently than traditional full-time employees because there is a very logical return on investment (ROI) for them to do so.
If I learned the latest Java framework in a few weeks, for example, I can then bill at a much higher rate than I would otherwise could if I didn’t have those skills.
Gardner: Stephane, how does Upwork help solve this problem? What is your value-add?
Upwork secures hiring, builds trust
Kasriel: We essentially provide three pieces of value-add. One is a very large database of freelancers on one side and a very large database of clients and jobs on the other side. With that scale comes the ability to have high liquidity. The median time to fill a job on Upwork right now is less than 24 hours, compared to multiple weeks in the offline world. That’s one big piece of it.
The second is around an end-to-end workflow and processes to make it easy for large companies to engage with independent contractors, freelancers, and consultants. Companies want to make sure that these workers don’t get misclassified, that they only have access to IT systems they are supposed to, that they have signed the right level of agreements with the company, and that they have been background checked or whatever other processes that the company needs.
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The third big piece is around trust and safety. Fundamentally, freelancers want to know that they are going to be working with reputable clients and that they are going to get paid. Conversely, companies are engaging with freelancers for things that might be highly strategic, have intellectual property associated with them, and so they want to make sure that the work is going to be done properly and that the freelancer is not going to be selling information from the company, as an example.
So, the three pieces around matching, collaboration and security software, and trust and safety are the things that large companies are using Upwork for to meet the needs of their hiring managers.
Fundamentally, we want to be invisible. We want the platform to look simple so that people can get things done by having freelancers — and not have to think about all of the complexities of being compliant with the various roles that large companies have as it relates to engaging with people in general, but with independent contractors in particular.
Mind the gap in talent, skills
Minahan: At Citrix, we are committed to helping companies drive higher levels of employee experience using technology to create environments that allow much more flexible work models and empower employees to get their very best work done. So we are always examining the direction of overall work models in the market. So we partnered to better understand how to solve this massive talent crisis.
Consider that there is a gap of close to 90 million medium- to high-skilled workers around the globe, all of these unfilled jobs. There are a couple of ways to solve this. The best way is to expand the talent pool. So, as Stephane said, that can be through tapping into freelance marketplaces, such as Upwork, to find a curated path to the top talent, those who have the finest skills to help drive digital transformation.
But we can couple that with digital workspaces that allow flexible work models by giving the talent access to the tools and information they need to be productive and to collaborate. They can do that in a secure environment that leaves the company confident their information and systems remain secure.
The key findings of the study are that we have an untapped market. Some 69 percent of people who currently are unemployed or economically inactive indicate that they would start working if given more flexible work models and the technology to enable them to work remotely.
The key findings of the Center for Business and Economic Research study are that we have an untapped market. Some 69 percent of people who currently are unemployed or economically inactive indicate that they would start working if given more flexible work models and the technology to enable them to work remotely.
Think about the massive shifts in the demographics of the workplace. We talk about millennials coming into the workforce, and new work models, and all of that’s interesting and important. But we have a massive other group of workers at the other end of the spectrum — the baby boomers — who have massive amounts of talent and knowledge and who are beginning to retire.
What if we could re-employ them on their own terms? Maybe a few days a week or a few hours a day, to contribute some of their expertise that is much needed to fill some of the skills gaps that companies have?
We are in a unique position right now and have an incredible opportunity to embrace these new work models, these new freelance marketplaces, and the technology to solve the talent gap.
Kasriel: We run a study every year called Freelancing in America; we have been running it for six years now. One of the highlights of the study is that 46 percent, so almost half of freelancers, say that they cannot take a traditional full-time job. And that’s usually primarily driven by health issues, by care duties, or by the fact that they live in a part of the US where there are no jobs for their skills. They tend to be more skilled and educated on average than non-freelancers, and they tend to be completely undercounted in the Bureau of Labor Statistic data every month.
So when we talk about no unemployment in the country, and when we talk about the skills gap, there is this other pool of talent that tends to be very resilient, really hardworking, and highly skilled — but who cannot commit to a traditional full-time job that requires them to be on-site.
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So, yes, there is a skills gap overall. If you look at the micro numbers, that is true. But at the macro level, at the business firm level, it’s much more of a gap of flexibility — and a gap of imagination — than anything else. Firms are competing for the same talent in the same way and then wondering why they are struggling to attract new fresh talent and improve their diversity.
I tell them to go online and look at the talent available there. You will find a world of work, of people that are extremely eager to work for you. In fact, they are probably going to be much more loyal to your company than anybody else because you are by far the best employer that they could work with.
Gardner: To be clear, this is not North America or the US only. I have seen similar studies and statistics coming out of Europe and Japan. They differ from market to market, but it’s all about trying to solve the mismatch between employers and available potential talent.
Tim, people have been working remotely for quite a while now. Why is this not an option, but a necessity, when it comes to flexible and remote work?
Minahan: It’s the market dynamics we have been talking about. Companies struggle to find the talent they need at scale in the locations where they traditionally have major office hubs. Out of necessity, to advance their business and access the skills they need, they must embrace more flexible work models. They need to be looking for talent in nontraditional ways, such as making freelance workers part of their regular talent strategies, and not an adjunct for when someone is out on sick leave.
And it’s really accelerating quite dramatically. We talk a lot about that talent crunch, but in addition, it’s also a skills gap. As Stephane was saying, so many of these freelance workers have the much-in-demand skills that people need.
When you think about the innovators in the industry, folks like Amazon who recently said, “Hey, we can’t find all of the talent we need with the skills that we need so we are going to retrain and spend close to $1 billion to retain a third of our workforce.”
They are expanding their talent pool. That’s what innovative companies are beginning to do. They are saying: “Okay, we have these constraints. What can we do, how can we work differently, how can we embrace technology differently, and how can we look at the workforce differently in order to expand our talent pool?”
Gardner: If you seek out the best technology to make that flexible workforce innovative, collaborative, and secure, are there other economic paybacks? If you do it right, can out also put money to the bottom line? What is the economic impact?
More remote workers, more revenue
Minahan: From the study that we did around remote workers and tapping into the untapped talent pool, the research found that this could equate to more than $2 trillion in added value per year — or a 10 percent boost to the US GDP. It’s because otherwise businesses are not able to deliver services because they don’t have the talent.
On a micro level, at an individual business level, when workers are engaged in these more flexible work models they are more stress-free. They are far more productive. They have more time for doing meaningful work. As a result, companies that embrace these work models are seeing far higher revenue growth, sometimes upward of 2.5 times. There are revenue growths, far higher profitability, and far greater worker retention than their peers.
Kasriel: It’s also important to remember that the average American worker spends more time commuting to work than on vacation in a given year. Imagine if all of that time could be reused to be productive at work, spend another couple of hours every day doing work for the company, or doing other things in their lives so they could consume more goods and services, which would drive economic growth.
Right now the amount of waste coming from companies requiring that their workers commute to work is probably the biggest amount of waste that companies are creating in the economy. It also causes income inequality, congestion, and pollution.
Right now the amount of waste coming from companies requiring that their workers commute to work is probably the biggest amount of waste that companies are creating in the economy. By the way, it also causes income inequality, congestion, and pollution. So there are countless negative externalities that nobody is even taking into account. Yet the waste of time by forcing workers to commute to work is increasing every year when it doesn’t need to be.
Some 20 years ago, when people were talking about remote work, it felt challenging from a cultural standpoint. We were all used to working face-to-face. It was challenging from a technological standpoint. We didn’t have broadband, secure application environments such as Citrix, and video conferencing. The tools were not in the cloud. A lot of things made it challenging to work remotely — but now that cultural barrier is not nearly as big.
We are all more or less digital natives; we all use these tools. Frankly, even when you are two floors away in the same building, how many times you take the elevator to go down to meet somebody face-to-face versus chat with them or do a video conference with them?
At this stage, whether you are two floors away or 200 miles away makes almost no difference whatsoever. Where it does make a difference is forcing people to have to come to work every single day when it adds a huge amount of constraint in their lives and it’s fundamentally not productive for the economy.
Minahan: Building on what Stephane said, the study we did found that in addition to unlocking that untapped pool of talent, those folks who do currently have full-time jobs, 95 percent of them said they would work from home at least twice a week if given the opportunity. To Stephane’s point, you just look at that group alone and the time they would save from commuting multiplies to 105 hours of newly free time per year, time they didn’t have to spend commuting and doing unproductive things. Most of them said that they would put more hours into work because they didn’t have to deal with all the hassle of getting there.
Flexible work provides creativity
Gardner: What about the quality of the work? It seems to me that creative work happens in its own ways, even in a state of leisure. I have to tell you some of the best creative thoughts I have occur when I’m in the shower. I don’t know why. So maybe creativity isn’t locked into a 9-to-5 definition.
Is there something in what we’re talking about that caters to the way the human brain works? As we get into the age of robotic process automation (RPA) should we look more to the way that people are intrinsically creative and free that?
Kasriel: Yes, the World Economic Forum has called attention to such changes in our evolution, the idea that progressively machines are going to be taking over the parts of our jobs that they can do better than we can. This frees us to be the best of ourselves, to be humans. The repetitive, non-cognitive work being done in a lot of offices is progressively going to be automated through RPA and artificial intelligence (AI). That allows us to spend more time on the creative work. The nature of creative work is such that you can’t order it on-demand, you can’t say, “Be creative in the next five minutes.”
It comes when it comes. It’s the inspiration that comes. So putting in artificial boundaries of saying, “You will be creative from 9-to-5, and you will only do this in the office environment,” is unlikely to be successful. Frankly, if you look at workplace management, you see companies increasingly trying to design work environments that are mix between areas of the office where you can be very productive — by just doing the things that you need to do — and places where you can be creative and thinking.
And that’s just a band-aid solution. The real solution is to let people work from anywhere and let them figure out the time at which they are the most creative and productive. Hold people accountable for an outcome, as opposed to holding them accountable for the number of fixed-time hours they are giving to the firm. It is, after all, very weakly correlated to the amount of output, of what they actually generate for the company.
Minahan: I fully agree. If you look at the overall productivity and the GDP, productivity advanced consistently with each new massive innovation right up until recently. The advent of mobile devices, mobile apps, and all of the distractions from communications and chat channels that we have at work have reached a crescendo.
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On any given day, a typical employee spends nearly 65 percent of their time on such busy work. That means responding to Slack messages, being distracted by the application alerts about some tasks that may not be pertinent for your job and spending another 20 percent of time just searching for information. These all leave employees with less than two hours a day, by some estimates, on the meaningful and rewarding work that they were hired to do.
If we can free them up from those distractions and give them an environment to work where and how they want, one of the chief benefits is the capability to drive greater innovation and creativity than they can in an interruptive office environment.
Gardner: We have been talking in general terms. Do we have any concrete examples, use cases perhaps, that illustrate what we have been driving at? Why is it good for business and also for workers?
Blended workforce wins
Kasriel: If you look at tech companies created in the last 15 to 20 years, increasingly you see them as what people call remote first, where they try to hire people outside of their main headquarters first and only put people in the office if they happen to live nearby. And that leads to a blended workforce, a mix between full-time employees and free-lancers.
The companies most visible started in open-source software development. So if you look at Mozilla, the non-profit behind Firefox, or if you look at the Wikipedia foundation, the non-profit building Wikipedia, if you look at Automattic, the for-profit open source company that builds WordPress, or if you look at GitLab. I mean, if you look at Upwork, we ourselves are mostly distributed, 2,000 people working in 800 different cities. InVision would be another example.
So, very well-known tech companies that build products used by hundreds of millions of people. WordPress alone empowers a subset of the Internet. These companies tend to have well over 100,000 workers between full-time employees and freelancers. They either have no office or most of their people are not working in an office.
Microsoft started using Upwork a few years ago. At this stage, they have thousands of different freelancers working on thousands of different projects. They are doing it becuase it’s the right thing to do.
The companies that are a little bit more challenging are the ones that have grown in a world where everybody was a full-time employee. Everybody was on-site. But progressively they have made a shift to more flexible work models.
Probably the company that I’ve seen to be the most publicly vocal about this is Microsoft. Microsoft started using Upwork a few years ago. At this stage, they have thousands of different freelancers working on thousands of different projects. Partly they do it because they struggle to find great talent in Redmond, Wash., just like everybody else. There is a finite talent pool. But partly they are doing it because it’s the right thing to do.
Increasingly we hear companies say, “We can do well, and we can do a good at the same time.” That means helping people who may be disabled, people that may have care duties, young parents with children at home, people that are retiring but are not fully willing to completely step out of the workforce, or people that just happened to live in smaller cities in the U.S. where increasingly, even if you have the skills, they are not local jobs.
And they have spoken about this in both terms, which is: It’s the right thing for their shareholders, the right thing for their business, but it’s also helping society be more fair and distributed in a way that benefits workers outside of the big tech hubs of San Francisco, Seattle, Boston, New York, and Austin.
Gardner: Tim, any examples that demonstrate why a future workspace model helps encourage this flexible work and why it’s good for both the employees and employers?
May the workforce be with you
Minahan: Stephane did a great job covering the more modern companies built from the ground up on flexible work models. He brought up an interesting point. It’s much more challenging for traditional or established companies to transition to these models. One that stands out and is relevant is eBay.
eBay, as we all know, is one of the largest digital marketplaces in the world. Like many others, they built call centers in major cities and hired a whole bunch of folks to answer and provide support calls to buyers and sellers as they were conducting commerce in the marketplace. However, their competition was setting up call centers right down the street, so they were in constant churning — hiring, training, losing them, and needing to rehire. Finally they said, “This can’t go on. We have to figure out a different model.”
They embraced technology and consequently a more flexible work model. They went where the talent is: The stay-at-home parent in Montana, the retiree in Florida, the gig worker in New York or Boston. They armed them with a digital workspace that gave them the information, tools, and knowledge base they needed to answer questions from customers but in far more flexible work models. They could work three hours a day or maybe one day a week. eBay was able to Uberfy the workforce.
They started a year-and-a-half ago and are now they are close to having 4,000 of these call center workers as a remote workforce, and it’s all transparent to the rest of us. They are delivering a higher-level service to the customers by going to where the talent is and it’s completely transparent. We are unaware that they are not sitting in a call center somewhere. They are actually sitting in a remote office in all corners of the country.
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