Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
Why would a lecturer at Massachusetts’ prestigious Babson College tell her MBA students, “Stop looking for a job?”
But Diane Mulcahy literally wrote the book on an emerging phenomenon known as the gig economy.
Mulcahy describes why “consulting and contractor arrangements, part-time jobs, temporary assignments, freelancing, self-employment, side gigs, and on-demand work” are a fantastic emerging career path for top-tier talent.
For many old-schoolers, this sounds like a euphemism for the unemployment line. However, for a growing number of talented business professionals — millennials and Gen X-ers alike — the gig economy has become the career path of choice. So instead of preparing students for executive roles, Mulcahy implores them to “look for plentiful work, not increasingly scarce jobs.”
According to a McKinsey Global Institute study, “Up to 162 million people in Europe and the United States — or 20 to 30 percent of the working age population — engage in some form of independent work.” One big reason is that job security isn’t what it used to be. Author Taylor Pearson uses a “turkey” as a metaphor for today’s job security in his book, “The End of Jobs.”
“From the day a Thanksgiving turkey is born, everything about its life indicates that things are only going to get better. It’s hatched in a safe, sterile environment. It’s cared for and fed daily. . . [Then,] on the fourth Wednesday of November, it realizes — it’s not so good to be a turkey.”
Companies today have gotten in a regular cadence of right-sizing. Full-time employees that, for years, had a misguided sense of job security, are finding themselves dusting off their resumes in ever-increasing numbers. Like the Thanksgiving turkey, all was good for those folks until the day that it wasn’t.
More importantly, however, a main driver of the phenomenon is that gig economy work is just downright enjoyable. The McKinsey Global Institute found that professionals choosing to exploit the gig economy report higher levels of job satisfaction than workers in traditional jobs. Freelancers find they can satisfy their cravings for variety and flexible schedules while generating incomes comparable to traditional full-time jobs.
And this is great news for growing entrepreneurial companies, because hiring full-time employees is both time-consuming and expensive — especially for early stage companies that need specialized talent, but can’t afford it on a full-time basis.
“Full-time employees are the most expensive and least flexible source of labor, qualities that make them unattractive to corporate America and Silicon Valley startups alike,” wrote Mulcahy in an October 2016 Harvard Business Review article. “Hiring an employee costs significantly more (by 30 to 40 percent) than an equivalent independent worker. In addition, both the public and private capital markets have a strong track record of rewarding companies with higher valuations when they either limit or reduce the number of employees.”
Investors in high-growth, early-stage companies, ascribe most of the value of a company to management’s ability to execute on their business plans.
And execution requires talent. So, in the same way companies have leaned-down their balance sheets using just-in-time inventory, they are now reducing their operating expenses with just-in-time talent to make sure they have access to the been-there-done-that expertise that can supercharge a company’s ability to execute on its business plan.
“Companies follow the talent,” according to Jody Greenstone Miller and Matt Miller in a Harvard Business Review article titled “The Rise of the Supertemp.” “The prevalence of lean management teams, the post-recession drive to cap costs, and the accelerating pace of change combine to make temporary solutions compelling.”
Moreover, growing companies in today’s business climate face hyper-competition more than ever before, and talent has become increasingly specialized. As the Millers point out, “In a global business climate that’s perpetually ambiguous — and that puts a premium on companies’ ability to test ideas and change course on a dime — knowing how best to engage this lower-risk, flexible, and faster talent model can be a source of competitive advantage.”
They also contend that companies simply cannot compete in today’s business climate by relying on old-school methods for sourcing the best and brightest. The companies that are leading the pack are utilizing “supertemps” more and more to obtain high-quality, senior-level talent on-demand. The icing on the cake is that these freelancers really love what they do.
Historically, companies looked to contract labor to fill lower-level clerical roles. And technology companies have long used freelance developers to augment their own staff developers. But companies have more access to executive-level talent on a freelance basis online through companies like TopTal and HourlyNerd. And many local firms are emerging that provide teams of top-tier freelance talent to deploy to companies needing senior-level expertise.
Doug Campbell is the founder and CEO of Twin Cities-based Airborne Athletics, a growing manufacturer of high-performance training aids like the Dr. Dish basketball trainer and the AirCAT volleyball trainer. He is using the gig economy to great advantage.
“Our products are best-in-class, and our branding and marketing needs to convey that. But we keep our team lean to allow us to focus our precious capital on research and development and on our products. We chose to bring in a chief marketing officer on a contract basis simply because we needed top-caliber branding and marketing talent, but we can’t yet justify full-time executive compensation for that role. Basically, I get to have my cake and eat it too.”
Contact: Rick Nordvold, co-founder and partner at GO Intellectual Capital, which provides accounting, finance and other services to growing companies: 952.400.1442; ri***********@********go.com; www.growwithgo.com.
