The Next Wave: Fractionalized Employees
The Future Does Not Fit in the Containers of the Past. Edition 207.
image by aryel79 using Mid-Journey
This is the fifth in a six part series of why a “company of one mindset” will be critical for career success.
The first four posts covered:
This post makes the case that companies will embrace and encourage a Company of One Mindset because it will be critical for the future of organizational redesign.
Before explaining why this might be so there are two other questions arise which are:
a) Will companies exist?
b) Will jobs exist?
Will Companies Exist?
Companies of various sizes will continue to exist both as key drivers of economic growth and the creators of jobs.
The late Ronald Coase of the University of Chicago wrote the firm exists because external friction is greater than internal friction which means whether it is from standing behind a Brand promise, to building and bundling expertise to re-allocating capital it is easier to do it as a firm versus a swarm of individuals.
Over the past two decades much of the external friction has been reduced due to the rise of the Internet and the coming of marketplaces for talent, access to buyers and sellers of anything from computing to finance as a service.
While these changes have significantly reduced external friction it is difficult for any significant product or service from packaged foods to entertainment to pharmaceuticals to chip making to be completely virtual.
However the architecture of companies and how they attract, retain and leverage talent will continue to morph dramatically in the next few years as both capital and labor, management and worker, and employer and talent work to find a mutually profitable win-win scenario.
Keys to this will be
a) focusing on work done versus jobs to be filled.
b) embracing flexibility and rapid re-tooling versus fixed processes and existing knowledge.
Will jobs exist?
Jobs as defined by full-time jobs in companies with well defined career ladders are likely to decline significantly as companies begin to prioritize work done, up to date skills needed and flexibility in transformative times.
Next year there will be fewer full time jobs than part time jobs.
And AI might reduce the need for full-time employees as will the need to quickly ramp up and ramp down resources to changing market circumstances.
Smart companies are now considering a new type of role for the future of jobs that combine the cultural strengths and experience of full-time employees with the flexibility of dialing up or down resources and ability to access different expertise of the outsourced worker.
If the worker thinks with a Company of One mindset the company will think with a Fractionalized Employee mindset.
The Fractionalized Employee.
Today most companies combine three types of work forces.
1) A full-time employee,
2) A full time or part time contracted employee from another firm (e.g., Wipro or Cap Gemini)
3) Free-lancers (directly or via an intermediate firm)
Full-time employees are usually the backbone of any company and its culture with contracted and free-lancers being mixed in to expand expertise and manage oscillating workloads in a cost-effective manner.
We may now want to think of a fourth type of worker to reflect the forces of technology, shifting demographics and new mindsets: The Fractionalized Employee.
The Fractionalized Employee.
Imagine if one could get both the continuity and loyalty of a long-term employee with the flexibility of cost management of a part time employee and the expertise of a free-lancer and do so in a way that both grows employees and retains them in the long run.
This is the Fractionalized Employee.
Every employee in the company is given a choice to work 100%, 75% or 50% ( or some other percentages of their time.)
They get to select this at the beginning of every year or can adjust to a different level when a life event occurs (health, birth of a child, need to take care of a parent, a passion that needs to be attended to or other life issues).
No longer does an employee have to choose between staying or going or being torn trying to do two things at one time. If they wish to try out a different type of non-competitive job (starting a gaming company –assuming they are not working at a gaming company--or being an artist or writing a book) it behooves their employer from letting them do so because retaining half or three quarters of a talented person is better than zero. As importantly these external skills or vocations will make the employee better rounded and probably more productive. And there will be cost savings from both reduced compensation but also eliminating the friction and cost of severance, re-hiring, and training.
Companies can dial down many peoples jobs by 20 percent for a while versus eliminating jobs completely and losing both talent but negatively impacting culture.
The more an employee thinks with a “Company of One Mindset” the more they are aligned and in-demand and can retain their job in changing times as a “Fractionalized Employee”
And as more folks begin to think with a “Company of One Mindset” wishing to spend some of their time learning, caring for loved ones or pursuing a hobby or passion that might become a career the “Fractionalized employee” probably attract a lot of talent who may want to work a significant amount but not all the time.
Including the more seasoned who might only want to work half their time. As countries grapple with aging and declining populations this is one way to address this issue.
As importantly with a base revenue stream and health care they can decide how to use the percent of time they have bought back or own including building new skills or working as a free-lancer or expert with many new communities of talent. For many people free-lance work alone does not work either because of lack of health care, unstable income, or lack of connection to a community (though there are many new models of communities working to offset these issues).
The Fractionalized Employee model will allow companies to retain talent, grow talent, mix, and match talent in ways that are truly win-win.
The company gets access to cost effective talent and a program to differentiate and attract talent. It has a stronger culture than one with lots of people who do not leave or lots of continuous dependence on free-lancers.
Talent gets to retain income streams and benefits and continuity and community or work while balancing life challenges or other passions and interests.
The compliment to a company of one mindset by talent is a fractionalized employee approach by companies and their synergy will turbo-charge the next generation firms.
Rishad Tobaccowala leverages forty years of global experience across dozens of industries to help leaders and companies thrive in transformative times.
This is an interesting concept but I can’t see it happening - mainly for the fact of how much impact pro rata has on salary. The pay cut you take even moving from a 5 to a 4 day week is not going to be workable for many individuals - even if they have a passion project they’re hoping to pursue on the side. Don’t forget that a group has already tried this - parents (predominantly Mums)
The concept of a fractionalized employee is interesting & practical for some job functions more than others. For example, for a software product team with an aggressive roadmap, it would be very challenging to have senior software engineers or product leaders not available all the time. In fact, in many projects, I have witnessed key contributors working at 150% capacity at prolonged times, which obviously is not sustainable and leads to burnouts.