We are in the midst of a paradigm shift in the way in which we define work and the workforce. We are all familiar with the classic employment model: companies hire full-time, long-term employees who work a 40-hour week in a 9-to-5 environment. However, the past several decades have seen a move away from lifetime careers by individuals at single companies, towards a shorter-term commitment on the part of both the individuals and the institutions.
The classic employment model is on the verge of turning inside out, and we are already seeing the ramifications of a new model – the open talent economy. In an open talent economy, companies blend full-time employees with short-term contractors, project-based freelancers, and ad hoc free agents to become more efficient and flexible, and less dependent on the constraints of classic employment.
Working with a-connect during 2015, the Wharton School, led by Peter Cappelli, the George W. Taylor Professor of Management and Director of Wharton’s Center for Human Resources, set out to explore the world of the Independent Professional (IP) – those highly skilled, self-employed individuals working as business professionals. Based on a survey of a-connect’s global IP network (which counts 1,900 members to date), as well as individual interviews with IPs and clients, the research team has identified some key insights into the world of the IP.
Why professionals choose the IP path
The study found that a desire for greater control, increased flexibility and more interesting work were the most important factors for professionals choosing a career as an IP. A minority indicated that they became an IP for reasons such as working fewer hours, for tax or benefit advantages, or because they had no other option at the time.
The indication that professionals become independent by choice and not by default was confirmed in some of the client interviews. Clients stated that a freelance status is a marker of quality, because IPs could not survive in the independent workforce if their work was of poor quality. However, the perception that IPs became independent because they could not “cut it” in a large consultancy firm was still present – a perception that is likely to continue until the IP role becomes more established. Luckily, clients do change their perceptions once they work with an IP and see the value of their expertise and flexibility.
When a-connect was founded in 2002, the idea of leveraging the independent workforce on consulting projects was quite new. Today, the number of companies building on this very same idea is significant. As this trend increases over time, so too will market understanding. The current buzz around the gig economy, the free agent nation, talent on-demand and the freelance economy – to just name a few – will do its part. Even though these discussions are mainly still fueled by phenomena like Uber and Gigwalk, the statistics show a significant growth in the high-skilled, white-collar labor market.
IPs vs traditional consultancy firms
The concept of independent workers is not new. On the shop floor of a factory 100 years ago, the majority of workers were independent contractors – back then, 50% of the US workforce were engaged as contractors.
But the type of work is changing, from physical work in a factory to highly skilled experts taking over complex project situations in large, global corporations. On any critical business project, IPs now provide a significant alternative to traditional large consultancy firms. As the consumers of consultancy services often have a consultancy background themselves, in the client interviews, companies were able to clearly differentiate between when they would use an IP and when they would go with a more traditional consultancy arrangement. They are using traditional consultancies when they need the recognition and legitimacy of a big brand and when they need a standard product that can be specified at the outset, whereas they are looking at IPs when they need someone to work with them and their team in house – someone who can ensure that implementation happens.
The study confirmed that IPs are more likely to be involved in decision making and implementation within the client firm compared to traditional consultants. Their flexibility and ability to integrate were the key differentiators between IPs and traditional consultants.
So the key question for IPs becomes: what are the mechanisms to insert yourself successfully into a client team, rather than taking the problem or project outside of the organization and then throwing the solution back at the organization and its people? It is about working jointly with the organization and helping them build capabilities internally to create a lasting impact. (Read more on how to successfully integrate IPs into a project team here.)
Key sources of influence for IPs
One of the challenges IPs face while working with client teams is the lack of official power and influence that internal project managers have: the team members are not “their” employees; they have a perceived smaller stake in the future of relationships and future performance; and they are outside the formal structure of the organization.
Interestingly, the study found that to “get things done” and create a positive influence over the client team members they work with, IPs predominantly rely upon their expertise and personal relationships. Even their official role in a project, such as being the official project lead, is a less important source of influence. Being hired for their expertise and know-how in a certain area, it is not surprising that this is one of the main areas IPs rely on to influence the client team. More surprising is the fact that IPs can build such personal relationships, especially since they are normally coming into a client team as an outsider. IPs show great skill in establishing relationships fast and successfully navigating the client organization.
Expertise and strong relationships = great performance
The study also showed that not only are expertise and personal relationships the greatest source of influence, they are also closely linked to the IP’s overall performance. The use of expertise and personal relationships to influence is associated with higher performance. So why is that?
It is unsurprising that a client is insourcing expertise by hiring an IP. But the use of this expertise also appears to foster greater project commitment in the IP itself, which, in turn, is associated with greater performance and a greater connection to the task at hand. It is also possible that showing expertise is a means of establishing trust and a basis for a working relationship. A number of IPs felt that demonstrating their expertise and how that would help employees was one way in which they could facilitate the development of trust between employees at the client firm and themselves.
Looking at the success factors for an IP compared to a traditional consultant, the results show a similar picture, with expertise and strong relationships being the most important success factors. Having access to other sources, knowledge and data, and the internal visibility of the project is less important for an IP than for a consultant from a traditional consultancy.
What is striking is the similarity between what sets IPs apart in the minds of clients and the factors that are related to performance: their expertise and their ability to integrate into an organization and teams of employees.
At a-connect, we find that for an IP to be successful on any given project it always comes down to the right combination of different qualities. That is why, for us, the understanding of a person and their “spike”, which we define as a unique combination of qualities, experience and knowledge, is so much more important than simply understanding a career path or a CV.
