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In “The Future of Careers, Part 1" we discussed mid-twentieth century cognitive frameworks that impair success in a changed economic order. The first cognitive framework is the assumption of having careers in one organization over a long time period. That has been replaced by a model we call short job tenure/elongated middle age. The second framework we discussed was the Free Agent Model: competent employees effortlessly move from company to company through the assistance of people who work in placement or retained search. That model will ultimately lead you to feel like you are a "loser" because the model only works for some of the people some of the time.
Both of these frameworks are consistent with the work of Diane Mulcahy, Senior Fellow at the Kauffman Foundation and a private equity investor. Her book on the Gig Economy is scheduled for publication in 2016.
Today we will review the implications of working in a Gig Economy based on our research with fifty people who have developed excellent Gig Economy careers.
Climbing Corporate Ladders:
One component of early to mid-twentieth century thinking about careers was the concept of “climbing the ladder of success.” This framework used the corporation or institution as the economic foundation for upward mobility: success means ever increasing levels of job titles, salaries, and responsibilities within the same institution.
This ladder climbig framework may still be viable for large companies/institutions with sophisticated approaches to management development. How many of them exist? What is the probability of you working for one of them?
Most Psychology Today readers are working for small to mid size companies with a “Just in Time” approach to leadership.
When an important leadership role opens up in the company, the CEO and the board want to find someone who can "hit the ground running." They do this by employing retained search firms to find the most qualified candidates inside or outside the company.
The higher up the organization “ladder,” the higher the bias for hiring outside the company: given the drive for “doing more with less,” in-house employees are struggling to simply perform the jobs they were hired to do. They lack the time and the company does not provide them with the resources to demonstrate fitness for higher level jobs.
The Devil You Know Is at a Disadvantage:
Under these circumstances, promoting the in-house candidate to higher management roles can sometimes be perceived as much a leap of faith as hiring an outside person.
Consider the popular term “The Peter Principle.” This refers to promoting a highly competent employee to a level of incompetence. For example, it would be an error to assume that the best sales professional in the company will be the best manager of sales. It would be an error to assume that a baseball team’s best pitcher will be the best coach. As one ascends the corporate ladder, jobs increase in responsibility but they also require different skill sets. Thus a risk for hiring an internal candidate is that the hiring authority violated the Peter Principle.
Another problem for internal candidates is that it is riskier for hiring authorities to promote internal candidates than external candidates. The popular cliché is that “the devil you know is better than the devil you don’t know.” That cliché breaks down in hiring.
Finding out the devil you didn’t know had problems opens the hiring authority to accusations of making bad decisions under conditions of incomplete information. Finding out the devil you know has problems opens the hiring authority to accusations of making bad decisions under conditions of complete information. “You know she came with ‘baggage’ and you hired her anyway???!!!”
From Ladder Climbing to Traversing:
The 50 successful people we interviewed did not think in terms of ladders. They thought in terms of traversing. The skiing term “traversing” means moving in a zigzag pattern along different snow terrain. During an Alpine ski run you may traverse over ice patches, powder snow, or come up against moguls.
Moving up a ladder requires steady discipline and persistence in the face of obstacles. Traversing requires discipline combined with maneuverability.
Schools are excellent in educating students about how be disciplined and persistent in the face of obstacles: from kindergarten to Ph.D. ceremony there is a hierarchy of required elective courses one must pass to get to the next hierarchy of mandatory courses. Running through the educational system gauntlet is a demonstration of intelligence, discipline, and persistence.
Traditional schools are often poor in teaching students about how to be agile in the face of obstacles. And yet this very ability is what it takes to succeed in a gig economy.
Back to the Case of Jack:
In "The Future of Careers Part 1" we discussed the case of Jack:
Jack needed to understand and accept that his career may have begun as an employee but it would most certainly end as a consultant. Jack’s career would not be a single career comprised of a series of corporate jobs. It is more like managing two professional lives -- one focusing on employment assignments and the other focusing on project assignments. This is what we call traversing as opposed to managing one single career. The new model may involve zig zag between full time and project work. It involves moving from W-2 to 1099 and back to W-2.
W-2 forms are tax forms given to full time employees. 1099 forms are tax forms given to consultants or interim employees.
We have learned three lessons from our sample survey: traverse with your career edge, master affiliation needs, and traverse between provincial/cosmopolitan knowledge.
In this article we will focus on the first issue.
Lesson #1: Traverse with Your Edge
In traversing, you lead with the edge of your skis. Your ski edge gives you maneuverability. In career traversing, you lead with your skills edge. Your edge gives you maneuverability through different terrain. James is an example of one of our 50 executives:
After receiving his MBA from Columbia University, James went into banking. Various assignments at Mellon Bank and Bank of America eventually led to James being hired as President/CEO of a California bank. In 2009, James’ bank was acquired and he was without employment. There was a consolidation of banks so career continuation was impossible. James created a one-person consulting firm, whose initial focus was on what James called “credit dependent companies.” Using his personal relationships with West Coast bank presidents, James was able to negotiate settlements so that both sides could have something of value.
By 2013, the recession had lifted, and one of James’ clients came to him for consulting assistance. One consulting opportunity led to an offer to become Chief Operating Officer. His assignment was to double the size of the medical products distribution company and then sell the company to a national player. This assignment was completed within eighteen months. Once again James opened his consulting practice. One of his clients was a nonprofit organization. This consulting assignment brought him exposure to new areas like fund raising and working with agencies in Washington, D.C. This assignment was completed after two years. The contacts James developed brought him to the notice of a boardmember of a non-profit company in his town. James was offered the position of Chief Executive Officer for a California human services organization with a budget of $265 million.
James has been a bank president, a distribution company COO, and a nonprofit CEO. Between these W-2 employment assignments, there has been a constant theme of 1099 project assignment work. Each 1099 assignment led him to the next W-2 assignment.
If you view James' career from a ladder climber's perspective, James appears to have had a “hodge podge” career.
James, however, sees that he is traversing with his edge:
“I have centered my professional life on one strong theme: I solve financial/organizational problems from a perspective of a banker. Had I identified myself as a ‘banker,’ my goose would have been cooked as the banking industry continued its consolidation. Instead I have worked with medical products, retail companies, construction companies, a giftware company, and health care products. It has been fun, a real learning experience. But my core identity remains the same. That never changes: I solve financial and organizational problems from the perspective of a banker.”
The Case of Ted:
Ted began his IT career working with a variety of large corporations, beginning with EDS, the global IT outsourcing firm and Honeywell. Five years later, he moved to Monchik Weber, a consulting firm. His success as a consultant in an assignment involving ocean cargo issues led to an opportunity to become CIO for a company in the ocean freight transportation industry. Five years later, he was once again consulting. But the consulting assignment helped him gain credibility in the financial services sector. Ted is now CIO for a global financial services company.
In commenting on his professional life, Ted describes his edge as a constant while the assignments always change:
“My skills are coaching and developing people in technical environments. Internal or external, I use the same tools. I just apply those tools in different ways.”
The Future of Careers Part 3
To master a gig economy, stop thinking in terms of company centered ladders of success. The concept might have been appropriate in mid-twentieth century developed countries but it no longer applies. Move your conceptual framework to skiing and having the agility to traverse between the W-2 and 1099 worlds. Success requires using your edge. Finding your edge that is not company or industry specific is going to be critical if you are to be a successful traverse artist who moves between W-2 to 1099 to W-2.
From a retirement planning perspective, the traditional model of retirement planning has often been based on disciplined contributions to a company sponsored retirement plan. That model of funding retirement breakfast no longer applies in a Gig Economy where you zig zag between W-2, 1099 and W-2 assignments. And there will always be periods of unemployment between assignments. Traditional retirement planning does not account for this. New models need to be developed by the financial services sector for retirement planning in a Gig Economy.
In the final part of his series we will discuss the last two lessons learned in managing careers in a gig economy: how to master affiliation needs, and how to traverse between provincial/cosmopolitan knowledge.
