“Job market evolves into spot market”

Posted: 29 Dec 2010 09:11 PM PST

By DIANE STAFFORD

The Kansas City Star

Welcome to the "adhocratic" work force.

Not familiar with that term?

It describes an evolution in the job market: As the economy recovers from the recession, more and more workers in the 2011 labor force will be hired on an ad hoc basis, teaming up in work groups created for a specific reason for a specific period of time.

"And we'll see even more of this in the future simply because it's enabled through technology and the kind of work we do," says Brian Mennecke, a management information systems professor at Iowa State University.

"Spot markets for labor will be more common because the type of work people do now is often very fluid. Companies need the right labor at the right time."

In a CareerBuilder survey released Wednesday, 34 percent of hiring managers said they'll hire contract or temporary workers next year, up from 30 percent this year and 28 percent in 2009.

Research by The Human Capital Institute indicates that one-third of the U.S. work force is now composed of non-traditional "contract" workers, sometimes referred to as freelancers, free agents, contingent workers or temps.

The institute says the pool of these workers, who often are part-time, is growing at more than twice the rate of the full-time work force.

Throughout the recession and the faltering recovery, temporary help — one measure of ad hoc employment tracked by the U.S. Bureau of Labor Statistics — was one of few employment sectors that scored month-to-month job growth.

The trend has been building. From 1990 to 2008, the bureau said in a report, employment in the temporary-help services industry grew from 1.1 million to 2.3 million and came to include a larger share of workers in higher-skill occupations.

The ad hoc worker doesn't only get temp jobs through employment agencies, though. Many market themselves and move from job to job on their own.

Another labor bureau study found that about 1 in 9 U.S. workers is self-employed.

Mennecke noted that recent information-technology graduates at his university were more likely to be hired on a contract basis in contingent or just-in-time jobs. He said the young workers like the flexibility and higher base pay that can come with contract work.

It's not just entry level, or even midcareer, job hunters who are joining the adhocracy.

Increasingly, top-level managers and executive teams are being shaken from established bureaucracies, replaced by temporary CEOs and troubleshooters brought in for their expertise in solving specific problems.

Also, a fast-paced world requires quick innovation, and bureaucracies often inhibit change.

In "The Innovator's Dilemma," author Clayton Christensen chronicled how the transition from mainframes to personal computers, from landlines to mobile phones, from floor trading to online trading and from film to digital photography all came from outside the market-leading companies.

Other factors in the change to adhocracy have been a brutal recession and a cautious recovery.

Corporations are sitting on piles of cash rather than investing in new employees to replace the ones they downsized in cost-cutting moves. Employers are waiting to add to permanent payrolls until they're more certain about the recovery, their future taxes and health care expenses.

Furthermore, it's simply easier to bring in or release temporary workers as needed. There's less expense in hiring or firing and less worry about employment-related lawsuits.

Finally, as Mennecke noted, technology makes much contract work possible.

In 1998, Anthony Townsend, who holds a doctorate in industrial relations and organizational behavior, used the term "virtual teams" in a seminal academic paper in the Academy of Management Executives.

"It was a natural extension of the contract employment trend that really started in the 1980s," Townsend said. "Technology allowed us to do meaningful work across distances and draw from a fantastic pool of workers to do the work."

The work-at-home-in-your-pajamas trend was cemented, and all that mattered was getting the job done.

This job market fluidity — this adhocracy — has plenty of upside for employers. They can draw talent from the best and brightest, no matter where they're located, for precisely as long as needed.

And because the talent pool is so far-flung, there's a damper on wages, which happens naturally whenever workers outnumber available jobs.

(It must be noted, though, that contract workers often command higher base-pay rates than employees who do the same work. That's partly because employers pay up to one-third of their payroll costs for employees in benefits and taxes that they don't pay for independent contractors.)

For many workers, an adhocracy is a comeuppance. Accustomed to "real" jobs — with retirement benefits, subsidized health insurance and paid vacations — they're not comfortable with being entrepreneurs in charge of their own careers.

Townsend said he worries about workers who don't have the valued skills that lend themselves to virtual teams and sought-after contract work.

Currently, ad hoc work is rife in IT, marketing, design, social networking and writing, but it extends into every professional sector.

"What are the key jobs in the adhocracy? Accounting? Computer programming? I'm not sure what they are," Townsend admitted.

But, he said, he knows this:

"Over the last two decades, we've cleared out layers of management and downsized work forces. We've gotten down to key skills. It's a buyers' market, which is great from an organizational standpoint, and great for the people who have the needed key skills. It's just hard to figure out how to translate some skills to make a living in this environment."

Inside
American companies create more jobs abroad | A9

To reach Diane Stafford, call 816-234-4359 or send e-mail to stafford@kcstar.com.

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