Recessions are good times for adjustments and innovation. Since 2008, there has been sector-wide disruption in areas such as finance, law, and consulting. One emergent trend that seems to be here to stay is that of opting for flexibility, fewer full-time headcount and keeping cash on the balance sheet. This has given rise to increasing numbers of part-time employees at all levels in the labor force, from tech talent to seasoned CFOs. Similarly, top professional talent is demonstrating an increased interest in having flexibility and agility. More and more, talented businesspeople are seeking to combine personal pursuits (travel, family, and social engagement) with the ability to monetize their much sought-after skills as part-time freelancers. This has given rise to what is being called the “fractional worker.”
Fred Wilson of Union Square Ventures recently told a group of entrepreneurs at Wharton that he likes investing in technology that’s focused on the labor market, specifically marketplaces. He said that the recession has fundamentally shifted the way we work, and that data proves it. While the US economy is climbing back uphill, jobs numbers have stagnated. The reason? People are engaging in part-time work that isn’t captured in conventional jobs data. The rise of fractional employment means unemployment numbers are consistently overstated.
Working remotely used to be unfamiliar, inefficient and costly. However, seismic shifts in technology and HR management have allowed companies to save on costs and employees to work from home or even farther afield. Even large corporations are now sharing files on Dropbox, making Skype calls and implementing flexible work programs (the backlash against Marissa Mayer shows everyone loves working in pajamas on Friday).
Companies face increasing volatility and have successfully adapted supply chains, manufacturing processes and financing to match. At last, human capital management seems to be catching up. 6% of the US workforce was categorized as freelance in 1990, now its 20%-30%, according to Accenture. The freelance market is huge, and growing. According to the Economist, $300 billion is spent annually on part-time workers. While only $1 billion of this is done virtually, Staffing Industry Analysts expects this to grow to $5 billion by 2015. Even public policy is lending a helping hand. The Affordable Care Act makes it easier to work as a freelancer and still get great coverage.
The range of freelance services is also expanding rapidly. Elance, an early talent marketplace, has focused on low-end providers of technology and creative talent. Yet the biggest growth trends are in areas of financial planning and analysis, accounting, and legal strategy, where only behemoth white-shoe firms have dominated until now.
We founded Skillbridge at Wharton because we tried to do freelance work and realized how high the search costs are asindependent professionals going it alone. Yet the top professionals we speak with consistently place great importance on more diverse personal and professional experiences. These extremely skilled individuals are increasingly transitioning jobs, starting families, and looking for ways to give back to their communities. Many of the Wharton grads we interviewed told stories of successful careers in finance and strategy derailed by taking a couple of years off in order to start a family. The loss to individuals and the economy of this type of talent is wasteful and unnecessary.
We’re hopeful that companies and highly talented professionals increasingly see eye to eye, to lower costs while providing the flexibility needed for careers to truly flourish. Onward and upward with the fractional worker!
This post was originally published in the Wharton Blog Network and is republished with permission from the author. It does not necessarily reflect the opinions of the AlleyWatch editorial staff.
Image credit: CC by Ben Hardly