The Evolution of the Employee

A while back, a friend of mine posted this graphic on Facebook. It’s a well-presented picture of the changing landscape for 21^st Century participants in the economy. 

The next to bottom rung of this ladder resonated most with me.  For much of the last 15 years, I have earned compensation by virtue of results I have achieved.  No salary – just commissions or splits of revenue or profit.  So, rather than being paid for my time, I was subjected to the forces of the market without an employer as an intermediary.   

Sometimes it’s more than a little nerve wracking.  I spent five years as an intermediary representing private businesses for sale.  In a good year, I would get five or six paychecks. In a not-so-good year, three.  It’s hard to plan your future when you’re not sure what you’ll be making this year or next. 

On balance I like the flexibility of being an independent contractor.  But, I am a professional earning a good living.  At the other end of the pay scale, there are legitimate concerns.  Our social insurance system has been built around traditional employment.  In the sharing economy, workers are typically independent contractors.  For some, that’s not an appealing arrangement.

The online forum for Uber drivers (UberPeople.net) captured this sentiment from a driver using the pseudonym Honkadonk, "Uber's whole game … is to make everything some weird frayed-line, grey area where nothing is their responsibility. It's ride share but Uber is "everyone's private driver". We're IC but we have rules, answer to bosses, and can be fired. We're illegal cabs but it's okay because we're not cabs. We earn $35/hr except we f---ing don’t.”

Well, he’s right of course and Uber isn’t the only example.  It is the basic nature of corporations to shift liability to third parties.  That’s why we need regulation.

But, how much regulation?  Smartphone apps and the Internet reduce the ‘friction cost’ of doing business.  It’s to everyone’s advantage to benefit from the efficiency that’s created.  The challenge is finding the right regulatory balance so as not to stifle innovation and the disruption that is native to the free enterprise system.

Plaintiffs’ lawyers and politicians continue to try to reinforce the fraying social contracts of the last century.  An article written for the website Hill.com predicts that the National Labor Relations Board will soon tighten rules for independent contractors so that even franchise owners – the millionaires who own McDonalds franchises, for example – would be considered employees. 

We would be better served if we endeavored to place this new reality at the center of our values.  After all, market forces are unstoppable.  It’s not the consumers or the Uber drivers really being hurt by this new paradigm, it’s the entrenched interests of taxi companies, unions and regulators who have the most to fear.

We should be asking this question: how can we decouple the employee safety net of unemployment insurance, workers’ compensation and social security from the framework of full-time employment?  Like it or not, Obamacare has already done so for health insurance coverage. 

The Wall Street Journal’s Lauren Weber has suggested a new status – the‘dependent contractor’ to which we might extend some of the same benefits. 

For their part, Uber contracted with a Princeton economist to analyze the relative pay of Uber and taxi drivers in key markets.  The results show an Uber driver makes an average of $6 per hour more than the average taxi/chauffeur/limo driver.  Here is the chart they have published:

The Huffington Post followed up with an analysis of their own suggesting that the fallacy of Uber’s study is that it doesn’t consider that Uber drivers bear the cost of operating their own vehicles. 

Fair enough.  However, the line of thought that suggests that the sharing economy is sucking jobs from traditional 9-to-5 employment is off-base. 

In a survey of its drivers, 78% reported being satisfied working for the company.  The survey also revealed that many drivers (32%) consider their Uber gig as a fall back while they are looking for a better job.

Would we rather have them depending upon unemployment compensation?

Whatever it is that draws workers to this kind of work and consumers to this kind of service should be embraced not resisted.   The only question…

WHO WILL LEAD?

So, Is It Lonely at the Top or Not?

It isn’t often that a cliché becomes a trending topic on social media.  So, when the old saw “It’s Lonely at the Top” popped up at or near the top of the list, my curiosity was piqued. 

Among the articles I discovered was one on the Wall Street Journal blog titled “FiveReasons Why It’s Lonely at the Top”.  The article was based upon an academic paper written by the authors of the blog post.  One of the authors was Adam Galinsky, a professor the Kellogg School of Business at NorthwesternUniversity, a business school consistently placed in the top 10 in the U.S.

Another – this one in the New York Times -- was titled “Not Lonely at the Top”.  It’s not unusual that the Times and the Journal take a different view of the same issue.  However, in this case, what struck me is that among the authors was none other than – you guessed it – Adam Galinsky. 

What gives?

Well, the first article is based on one’s psychological responses to being in power.  The authors contend that “power perverts, contorts and undermines a number of psychological processes that normally nurture close connections and form the foundation of healthy relationships”.

Among the reasons are that power alters our perception of other people’s generosity (are they being generous or just currying favor?) and, therefore, reduces our ability to develop trusting relationships. 

The alternative view explores how those in power feel rather than their reality.

“Being alone is not the same as feeling alone,” say Galinsky et al. “You can have thousands of friends and feel lonely, or have only a single friend and feel connected. The separation from others — in stature, rank or responsibility — that power confers does not translate into loneliness. In fact, power has the opposite effect on its possessors, alleviating the need to belong and making them feel less alone.”

My own view has been developed less scientifically.  It is experiential (I’ve been a CEO).  It is observational (I work with CEO’s). And, it’s unscientific (it’s just my opinion, after all).

At its core, loneliness at the top is a function of the singular responsibilities that can be performed only by a CEO.  In one of his final works before his death, management guru Peter Drucker outlines them.  Among them are to define the company’s focus on the “Outside”.  If you are running a bank, speculates Drucker, you can focus on many different ways to deploy and leverage your capital – consumer credit, commercial loans, investments, etc. 

Another is to allocate resources to the company’s strategic initiatives.  It does no good for the CEO of an auto manufacturer to conclude that the best differentiator is upgraded infotainment systems if the company’s expertise is building the most powerful engines.  The internal operations must be prepared to deliver on the marketing promise. 

Granted, a CEO can surround himself with professionals – his management team, outside advisors – who can help him make better decisions.  However, the sense of loneliness springs from the fact that there is only one decision maker.

The feeling becomes more acute if the business is small and the CEO is the owner.  Mistakes can be costly and a big mistake can affect your ability to make your mortgage payment or put your kids through college.  No one else in the business feels that kind of pressure.

A good solution for many CEO’s is a peer group.  In a dissertation covering the learning experiences of CEO’s in the healthcare industry, Thomas Chapman concluded “Findings show that CEOs perceive high value in being with other CEOs for one-on-one, informal group interaction, and for having access to a congregation of CEOs in a unique group setting.”

He goes on further to conclude, “elite occupational group members seek other elites for their occupational learning, and exclusive learning groups offer CEOs a safe, confidential set of circumstances and environment that facilitate their learning.”

My experience suggests that learning opportunities are only part of the equation.   The obstacles to moving forward on important initiatives are more often the blind spots that all people develop.  Typically, they center on the need for control or a bias against acceptance of certain critical information.  A peer group can often spot these human frailties quickly and gain commitment to move beyond one’s comfort zone.

Drucker’s commentary is a worthy read for anyone in the study or practice of management and leadership.  But, knowing what to do and doing it are two different things.

WHO WILL LEAD?