Tag Archives: independent consulting

Curt Flood and the Gig Economy

As a San Francisco Giant fan, I am sad to say that the baseball season is over for me.  (And of course, as a Giants fan, I must now root for the Cubs against the Dodgers, But I digress...) But none the less it is October, when the baseball season reaches its inevitable climax.  So as I work on my book about the gig economy, I thought it was fitting to do a shout out to Curt Flood, a man who changed baseball and the world of work in a major league way, pardon the pun.

Curtis Charles Flood played 15 years in major league baseball  from 1956-1971, playing for the Cincinnati Reds ( or Redlegs, as they were known at the time) the St. Louis Cardinals and the Washington Senators.  He had a solid career, with three all star

St. Louis Cardinals outfielder Curt Flood is shown, March 1968. (AP Photo)

St. Louis Cardinals outfielder Curt Flood is shown, March 1968. (AP Photo)

team appearances and seven  golden glove awards. He won two different hitting titles and still today is ranked third behind Willie Mays ( a Giant , of course) and Richie Ashburn for most games played in center field.  However, his impact is not what he did on the field., rather it was what he refused to do off the field, namely accept employment terms that no longer seemed appropriate to him.

Before 1969, players were bound by the reserve clause in baseball, which made players beholden to the first team with whom they signed.  The had no say about their  futures once the contracts were signed.  Team management could make the decision to trade or release a player without so much as a "how do you do" to the athlete.

When the team wanted to trade him after 12 years to Philadelphia, Flood refused, saying,"I do not regard myself as a piece of property to be bought or sold."

Floods case went all the way to the Supreme Court, and due to the fact that Justice Powell had to recuse himself because of his ties to the Busch family, the owners of the Cardinals, he did not win.  However his action and the attention it garnered paved the way for change and ultimately led to free agency in baseball.

So what does this have to do with the gig economy?

What Flood wanted was control over his professional life.  After all that time in the league, he felt he was owed that. Various studies have shown that when professionals decide to start consulting independently it is for that same motive -- control over their life. MBO Partners  2016 State of Independence in America Report says that over 60% of consultants cited control of their time as a key factor in going out on their own. Similarly, the McKinsey Global Institute's  recent report entitled Independent Work: Choice Necessity and the Gig Economy noted that the independent workforce is larger than previously thought and that most participants choose independent work for its flexibility and autonomy.

What Flood did, by challenging the reserve clause, was to create a new notion of how employment relationships can work, a mental model that could be extrapolated to other businesses. Many people may only think about the free agency in sports, but it has its analogues in all sorts of other professional fields now as well.   In fact, in the aforementioned McKinsey report, they cite different categories of gig workers, and the high end consultants who pursue the independent work option by choice are dubbed in the study as free agents.  So thank you Curtis Flood for making your stand so that you could get the gig you wanted.  The gig economy is in your debt.

 

The Gig Economy – A Class Act…or not…

gig economy

Since I am working on my book, Thriving in the Gig Economy, I have been paying particular attention to the various Uber  employment lawsuits.  Even though  I am focusing on the high end of the gig economy where independent consultants sell their services and intellectual capital, the commodity end of Uber drivers can't be ignored, since it seems to garner all of the headlines.

This week a rather important ruling occurred that seemed to receive very little attention, which is surprising, since it suggests Uber's independent contractor lawsuits may lose class action status.

Last week,  a Ninth Circuit panel effectively reversed a decision from 2015 . A year ago, a judge had said that that the arbitration agreement in Uber's contract with its drivers was unenforceable.  The contract was designed to say if you have any dispute with us, Uber, you need to resolve it through arbitration rather than through the courts.  In this particular case, three drivers had sued Uber for saying they violated the Fair Credit Reporting Act (FCRA) when the company ran background checks on their driving records.  The FCRA, as all recruiting managers know, is the law that requires candidates for employment authorize any  background checks.   The decision said that Uber's arbitration clauses were fair, valid and enforceable.

By asserting that the arbitration clauses are valid in this case will have implications in the attempts of some drivers to create a class action.  As an outside observer, I applaud this.  Since I have the gig economy on the brain  and am an avid Uber customer, I have taken to quizzing all of my drivers about there thoughts on the lawsuit.  I wish I had thought to jot down the results, since my sample size is now in statistically valid territory.  That said, my recollections of the results are these:

  • Only one of about 25 wanted to be an employee
  • 2-3 did not know about the lawsuit at all
  • The majority did it part time to fit their schedule , as one said to me last Sunday, "why watch a football game when I can earn some extra cash for 2 hours?"
  • Most had other jobs including teacher, masseuss, contractors, programmers, hairdressers etc.
  • A large minority also worked for the other driving services

My very unscientific conclusion then is that it is a very diverse driver pool.  A key attribute of a class action lawsuit is that the participants in the class are largely similar.  I don't know that this is the case.  It is time for the independent contractor laws to be brought into the current century in a time when the gig economy of indepndent workers of all sorts is growing.  Potentially these lawsuits facing Uber will help make that happen. .

The Name Game in the Gig Economy

Catalants and the Gig Economy

I love to be right.  A few months back I blogged about my amusing experience applying to join the Hourly Nerd  digital talent platform.  I asked the question, "$22 million in funding and they couldn't come up with a better name?"  This week they announced a new name -- "Catalant".

I have been involved as a client in several corporate naming exercises.  With only good thoughts for my old friends at Landor Associates, I just love the whole explanation about why a certain combination of letters will be a good new name.  Now that owning the URL is paramount, most existing English language words are taken, as are well-known Latin or foreign terms.  (My son who was a Classics major could be a source of some good ancient Greek phrases though...)

So Catalant is a combination of catalyst, talent and brilliant, or so they say.  The name change theoretically ushers in a new future for the well-funded digital talent platform  where they tout the new world where " companies can instantly access the precise talent they need  when they need it." The video is lovely, despite its obvious overstatement.

The world they describe is not that new.  I am fairly sure I had virtually that same verbiage in the marketing  materials of my company, M Squared,  25 years ago.  Similarly, other firms that have been around a while, like The Business Talent Group (BTG) and Cerius Executives are demonstrating how companies are using on demand expertise.  Maybe this model is new for Catalant, but it is not so new for the world.

In an article in BostInno, the founders mention that the original intention was to go after small businesses but now they see that big companies can use them as a source of flexible talent. Their algorithms are key to that value to large companies. Their platform can index all skills and find the right person.  That may be so. For me, it is all about trust.

My former company -  and BTG and Cerius for that matter -  provide  our big company clients more than algorithms; we provide trust and judgement.  If I told a client he really should talk to Harry for a sensitive, strategic project even though Harry may not seem on point, they did it because they trusted me and my understanding of the consultants, the gig and their environment. Perhaps algorithms may get there, but as someone in the Hourly Nerd, excuse me, Catalant network, I have yet to be matched with a project appropriate to my skills. As such, I am still a bit of a skeptic about the perfection of the algorithm.

And by the way, I learned from the Bostinno article, Hourly Nerd isn't going away entirely.  It will be the product offering to the small business marketplace So big companies get brilliant talent and little companies get nerds...go figure...

Adventures in the Gig Economy

Thriving in the Gig Economy and the Hourly Nerd

So I am working on a new book, "Thriving in the Gig Economy", a subject I happen to know a lot about from my experience at M Squared Consulting.  That said, though, there are many new players since the days when I ran M Squared.  As fodder for my book, I am walking the  talk and exploring new platforms and using gig economy resources along the way.

I have registered as an expert at a number of sites.  The most remarkable experience was with Hourly Nerd.  (Really, they thought that was a good name, but I digress.) The Hourly Nerd pitch is that the consultants or "nerds"  on their platform come from only select business schools.  To underscore this, they ask that all potential consultants sign up using their business school email.

Now there is the rub.  When I went to business school, email had not yet been invented.  I know I date myself, but that doesn't make me any less qualified as a consultant.  I must say, to Hourly Nerd's credit, they responded immediately  when I pointed out that I did not have a Haas Business School email since that would have been impossible in 1985,  and  since I knew that they were not intending to discriminate against older MBAs,  there had to be another way for me to apply.  Needless to say I was vetted rather quickly after that.

In my 3 weeks of  being in the nerd ranks, I have received 2 inquiries, neither of which was really appropriate for me.  Since I chair a not for profit humanitarian NGO, I received a request to do research for another non-profit in a totally different field.  Clearly they need to work out the difference between functional expertise and industry expertise in their algorithm.  The second was a bit more on point, looking at employee utilization in consulting firms.  However, since the consulting firm I ran was a hybrid firm, providing independent consultants, gig folks or nerds in their parlance ,  to projects my expertise was not quite on point.  As they say, three is a charm, so I wonder what might come next...

In the meantime, I am securing some programming talent in this gig economy as well as research time from some other platforms.  I am intrigued to experience the customer side...I will keep you posted.

 

Hollywood and the Future of Work

Stephen Kasriel the CEO of Upwork just wrote an article in Fast Company called "Why the Future of Work will Look a lot like Hollywood."   I agree wholeheartedly and in fact wrote a similar piece years ago on the movie model. I pointed out that It is no surprise, that  in the business analog, the first players  to become independent were the stars,  just like in the movie model. Back in 1988  ( before the internet...ouch!) it took me no time to build up a strong network of consultants numbering in the 1000s.  Independent expertise of the most credentialed sort  has been around for decades, well before the advent of what people typically think of as the gig economy,  i.e. the uber drivers or free-lance workers on the  Upwork platform. It's the stars, the highly accomplished independent consultants and interim managers,  who wanted to to take control of their careers and make choices about how they would use their talents.

 

But there are two salient  but potentially related differences  between the movie world and the high end of the gig economy.  The first is that no one seems to take issue with the movie model.  The fact that talents of all sorts, from cinematographers to actors to musicians, come together for a one year gig  to make a movie and then disband is not derided as a dangerous model. This gig economy is accepted for what it is - the best way to complete a large scale cinematic project. However the other key difference is the fact that  Hollywood is a land of unions. The  writers, composers, actors and directors are all in a union or guild.  Additionally, the agents who represent them are also union members.  Is it this labor affiliation that spares the movie model from criticism?

Just today, the AFL CIO declared that gig workers should be employees.  They implied but did not suggest outright that therefore they should be union employees.

I can't speak to the low level roles in the gig economy, but I can speak to those who represent the most skilled, the consultants who have gone independent by choice.  One once told me she never wanted to be an employee ever again.  I will extrapolate that she wouldn't want a union card either...

 

A Gig Economy Downside No one Mentions

I saw a blog post today from DCR Workforce announcing that there will finally be a "reckoning " of the gig economy.  http://blog.dcrworkforce.com/finally-official-reckoning-gig-economy Like most people who question the value of the gig economy, the author's concerns were about the  lack of a safety net for the workers.  There was also apparent relief that perhaps, in this reckoning, we would also "weed out cases where employees are being misclassified as independent contractors by businesses."  

I too think it would be valuable to have such an accounting  for what is becoming an ever-growing proportion of the labor force.   I too recognize that may of these workers are not doing gigs by choice but out of necessity.

That said,though, so many pundits and economists often overlook the fact that for so many the further maturation of this marketplace is not pernicious but empowering.  Many professionals have self selected into this gig economy labor force, because they can; they have the expertise that will command a market rate that will support their lifestyle.  And now, with the increasing sophistication of search algorithms, the ability to parlay that expertise to the market place is so much  more efficient.

It is not a free market, though, because legal obstacles especially in employment law around independent contractors and employees frustrate the free flow of talent. Yes, some players may inappropriately classify workers, but the flip side is true as well. Many companies are so worried about the employee independent contractor issue, that they refuse to engage anyone who is paid on a 1099, the tax form used to report non wage income.  It is not illegal to work on a 1099 basis, yet many consultants have been forced to change the way they do business to deal with this heightened risk profile. I should know, in 1992, I started a firm, Collabrus,  to employ consultants  for the duration of a consulting project, if  the nature of the work or a risk averse client required it. Similarly, many senior level consultants are forced to work through master vendor arrangements, where they become the employee of someone in order to complete a consulting project.

So the downside that many never seem to mention, for what is albeit the upper end of the gig economy labor pool,  are the marketplace inefficiencies  that institutionalize risk and increase costs to practitioners  who are forced to operate differently with  different clients.

So my question is this --  when the reckoning of the gig economy is done, will they also identify those workers who were misclassified as a temporary employee, when they could have operated as a 1099?  It seems only fair.

The Freelance Marketplace Platform Race

Now that I have embarked on my research for the next book on the high-end of the on demand expertise marketplace, I am having a lot of deja vu moments.  Certainly, there is the fact, that though I have been gone from my old firm for several years, things have not changed that much. Tremendous, credentialed  expertise of just about any type is available on demand. Companies continue to avail themselves of this resource in new ways, and new competitors continue to arrive touting different points of differentiation.

It is this last area where the deja vu comes in, because the new platform competitors appear to be cropping up everywhere.  My twitter feed is cluttered with entreaties from one firm to beta test a new platform that "won't suck." (I couldn't help but wonder if they shouldn't get a free

ipo-flops3-1

The Pets.com sock puppet

lance copy writer to come up with a better ask...) Quite frankly, I am reminded a bit of the frothy days of the internet when pets .com  became the 4th ( yes 4th) online pet supply store.  Despite the fact that dog food is not a high value shipping product, the firm had an amazing IPO valuing it at close to $100 million  in 2000 and was out of business 9 months later.

 

I am not suggesting that the online freelance marketplaces are headed for the same fate.  Indeed, I think technology is creating the platform to enable a market to be made in talent, in the true economic sense of the word market. I look forward to better understanding these business models to see how differentiated they really are.  Certainly, some are defined by the type of talent they seek to attract; the sites working with copy writer won't appeal to CFO's, but dancers will do... Interestingly, one in the UK, combines a totally automated service with consultant mixers, so freelancers can gather together.   I can't help but wonder if freelancers will subscribe to all that operate in their area of expertise, or if they will  choose just one.  If it were me, I'd definitely go for the one with the mixers...I am a sucker for cocktails...

 

 

The “Gig Economy” and the employment data problem

A recent news item little noticed apart from gig economy wonks like me was the fact that  the government is planning to get data on how many workers actually populate the "gig economy."  Labor Secretary, Thomas Perez, announced at the end of January that the department would team up with the Census Bureau and  restore the Contingent Worker's Supplement  as part of the May 2017 Current Population Survey.

It is being restored because in 2005, in the infinite wisdom of governmental agencies, the decision was made to discontinue data collection in this area. The Supplement had only been published 5 times and in fairness, it had its share of critics.  A major failing, was the fact that  it aggregated all contingent work arrangements, from  senior management consultants to security guards to cab drivers.  As such, drawing conclusions about income trends, potential wage and hour infractions or economic security was difficult.  Similarly, no attempt was made to try reconcile the differences between the self employed - a broad category which  consultants, architects and dry cleaners - and 1099 tax filers.

Now that the gig economy appears to be fundamentally redesigning work and income structures in the US economy, the Labor Department  wants to try to get a handle on the phenomenon in large part to better inform policy decisions. They do acknowledge that it will be difficult, since just the definition of what qualifies as contingent work is controversial. Additionally, one would hope that they will make strides to refine the data to be able to draw more meaningful conclusions.    That said, we should not get too excited, since this  there won't be data until early 2018 at best.

What is ironic to me, as someone who has been involved in the  high-end of the contingent work force for nearly 30 years,especially now in this political season is the constant emphasis on jobs creation as a metric of economic success.  When you consider 53 million people, according to The Solo Project, have chosen to define  themselves as  independent consultants , free agents or free lancers, the magnitude of the data problem becomes apparent.  These people do not want traditional jobs. What labor statistics are capturing this? Lets hope Perez can fix the data problems inherent in the Contingent Workforce Supplement, because the world of work is being redefined quickly and the government needs to catch up.

Expertise 15 years later

Expertise and the Independent Consultant

I recently reread my book, A New Brand of Expertise, published in 2001. It was a book about, as the tag line said, how ” free agents, independent consultants and interim managers are transforming the world of work.”

bookIt was an odd experience, after all of these years to read the words. Perhaps more prolific authors are used to it, but for me it was very strange. I was surprised at the passages I didn’t recall at all, (really, I wrote that?) including some rather remarkable anecdotes. I had to laugh at the few (and luckily there were only a few) references that didn’t hold up at all; for example, my advice to new consultants to build a personal brand offered Martha Stewart as the role model. Obviously this was written before her prison sentence. My opening chapter referenced the Donna Reed show, because her husband, ” the company man” was becoming an anachronism. My guess is there isn’t a millennial around who could relate to that TV reference. (Oops, I am dating myself, but I only saw the show in reruns as a very young child…)

What dismayed me was one aspect of the forecast I made 15 years ago about what would happen to this nascent independent marketplace in the years ahead. I had suggested that on the horizon there could be some simplification of the legal ambiguity that was a threat to the dynamic growth of an independent talent market. I offered hope that U.S. 344, the Independent Contractor Simplification Act, authored by then Senator Kit Bond of Missouri would pass. I was overly optimistic. Not only did it not pass, it never made it to the floor — It died in committee the following year.

And now, the independent contractor issue is in the limelight again as the “gig ” economy has been caught up in the ambiguous regulatory environment, as firms like Uber, Handy and Instacart try to maneuver in the anachronistic definition of employment today. . In the meantime, the free agent and interim management part of the gig economy has only continued to grow. Perhaps the sharing economy, led by the Uber driver lawsuit, will help bring much needed clarity to this issue. Isn’t it about time?

David Bowie Bonds and the Future of Work

David-BowieDavid Bowie was an innovator of so many things including  in 1997 the first securitization of music royalties which came to be known as David Bowie bonds.  In my book, A New Brand of Expertise  published 15 years ago, I posited that Bowie was the first to create a human capital bond, since he was in essence creating a security from the creative works of a brilliant mind — his own.  In my final chapter discussing the future of work, I asked this question: Why couldn’t there be similar bonds created in the human capital marketplace, synthetic instruments which could pool the revenue streams of thousands of the top independent consultants, protecting against down time, slow periods or any other cash flow disruption? A consultant bond, I argued, would place a value on knowledge much as companies value their intellectual property assets.

Now fast forward 15 years, the Bowie bonds, made David a cool $50 million but were not such a windfall for his investors given the industry economic disruption caused by the onset of music streaming.  For more on this see http://money.cnn.com/2016/01/11/media/bowie-bonds-royalties/.

Although the music royalty bond notion may have fallen from favor, the consultant bond has more legs than when I originally described it.  The weaknesses to my early argument, to be completely candid, was in the issuer.  I suggested that the consultants collectively would be the issuer.  Although I knew that was an unwieldy structure, it was thought provoking when discussing the future of work.  What is different now, though is the human cloud.

Whereas my firm, M Squared,  was one of the first to provide on demand expertise 28 years ago, now there are all sorts of intermediaries parsing work into everything from looking up addresses to  writing code to managing corporate operations.  These firms  source, place and pay their resources in the cloud, and many rank them there as well.  So my year 2000 notion of taking the top 500 consultants in an area was aspirational, but now there  could be ways to do it through the yelp like data being collected on consulting purveyors.  Human cloud companies could be the issuers.  Investors would be buying into the knowledge and talent market, with prices fluctuating with demand and supply.

I know it still sounds a bit far fetched.  But in the words of the inimitable Davide Bowie,

“Turn and face the strange, ch – ch- changes.”

 

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