The changing building blocks of the modern company and implications for labour.
There
is a strong ironic link to university student protests and their cause against
outsourcing of certain tasks on campus. Those very students who so vehemently
protested against outsourcing are most likely going to enter an environment
where they too may be “outsourced”, joining the so-called “precariat class”. In
that world they can either see themselves as victims or masters.
The
transition from sheltered and largely legally protected employment to an
independent supplier is not easy. After leaving a fulfilling and secure career
in broadcasting and then founding the company transformation consultancy
Schuitema Associates with two others, I quickly discovered the fine dividing
line between being self-employed and unemployed. This was even more onerous
when one, in the early years at least, was the main source of income and sole financial
risk taker for others.
But
what really sustained us then, and what constantly fuelled determination and
hope for the future, was that we knew we were doing something that could make a
difference to others lives. It is that force, so often absent in the day-to-day
life of the average worker, that really defines the difference between a job
and work.
Ultimately
there may be fewer jobs, but there will always be work. It is the ability to
focus on the latter, rather than the former, that will be the hallmark of a
successful productive life. Indeed, one could argue that it always has been.
But it has become severely muted as employees, over time, have become
conditioned into the belief that a successful career follows a simple path of
rungs on a corporate ladder.
Inexorable
forces are radically scrambling the parameters of organisational theory. Modern
trends may not change the principles at stake, but will certainly change
conventional company structures. And by the looks of it, they could spell a
change of organised labour’s role as we know it, while the latter tries to cling
to outdated theories that are rapidly becoming irrelevant. We can see evidence
of this tension not only in public debate, but in megatrends of technology and
mechanisation; declining labour participation rates; new company structures;
inequality and the explosion of financial services.
A
recent insight into how the modern company is reinventing itself was given in this article in
the Economist.
They use services such as Uber, AirBnb, and cloud computing as examples of
where “across industries, disrupters are reinventing how the business works.”
The
appeal of the “insurgents’ model”, the Economist says, is partly a result of
the growing dissatisfaction with the public company. “After a century of utter
dominance, the public company is showing signs of wear. One reason is that
managers tend to put their own interests first. The shareholder-value
revolution of the 1980s was supposed to solve this by incentivising managers to
think like owners, but it backfired.”
The
article argues further that in insurgent companies there is a much tighter link
between ownership and responsibility, and founders, staff and backers exert
control directly. “It is still early days but, if this innovation spreads, it
could transform the way companies work.”
The
insurgent model implies a flattening of hierarchical structures, a much slimmer
and streamlined organisation, greater participation by employees, incentivising
them with ownership stakes and performance related rewards. Keeping the
organisation tight means buying in services as and when needed, in turn relying
far more on outsourced services.
In
short, these forces imply using traditional labour to a much greater extent as
outside suppliers in the creation of wealth, rather than partners in it. That’s
a rather oversimplified mental graphic based on the conventional understanding
of wealth creation and completely ignores all the behavioural nuances that are
forged in that model. But I’m using it to illustrate that in theory at least, a
shift of labour from partner to supplier should not impede wealth creation
itself which is ultimately measured in Gross Domestic product. What it does
mean is that the combined value-added is more fragmented. There are many pros
and cons to that, but most are the effect they have on behaviour which is a
subject on its own.
Given
the increasing shift away from large corporate and company structures as we
know them, the increased use of outsourcing and with it the much maligned
labour broker, seems inexorable. Insisting that companies cannot outsource when
it makes business and sound supply chain management sense to do so will be
highly counter-productive. It will clearly impede the “insurgent” model, new
start-ups, and SME’s – all of which are the way of the future. Large companies
and corporate structures encourage large and powerful labour organisations.
They find far less sustenance in lean, streamlined operations where there is a
high degree of employee operational involvement or even ownership.
The
key strength of these new organisations is their very high level of
flexibility. If organised labour facilitated the same degree of flexibility in
conventional organisations, they will ensure their continued relevance in a
rapidly changing world.
While
still mostly subtle and gradual, outsourced activities, despite their
multi-facetted nature, should be approached as a new sector, worthy of its own
institutional constructs, legislative protection, umbrella organisations, and
developmental support that can even explore its role in import replacement and
establishing new training platforms. In particular, concerns about the
treatment of labour in these services have to be addressed. Large companies
using outsourced services can adopt a highly supportive and developmental role
towards these suppliers.
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