Outsourcing
Outsourcing is when an organization contracts out a department or function to be operated by a third party staffing firm, even if the function is carried on off site. A recent Coopers &Lybrand study found that 65 percent of the fastest growing U.S. businesses were outsourcing some of their functions.
Outsourcing enables the parent company to concentrate on its core business and eliminate hiring and regulatory concerns. It's a viable alternative to an outright downsizing, and other advantages may include higher quality production and more efficient service.
Although outsourcing is usually handled by established companies, its growing popularity can represent a substantial opportunity for a knowledgeable industry veteran wishing to become an independent contractor (back to freelancing!). Many creative, self directed employment possibilities are available by applying this concept on an individual basis. Could you perform a necessary function for an existing firm, such as personnel management, purchasing, accounting, advertising, PR or plant maintenance? This also is a way for your former employer to become your first and best client.
Executives at Freeport McMoran, the New Orleans based natural resources conglomerate, have discovered this in spades. Here are two examples: Garland Robinette and his staff of 23 in Freeport McMoran's corporate communications department launched Plan it Communications as an independent entity with Freeport as its largest client; and Dr. Jim Miller, vice president of environmental affairs joined with fellow VP Roy Pickren to spin out an engineering and technical support team that became Crescent Technology, and employs 50 former Freeport workers.
Where It's All Going
More variations and certainly more labels for the basic structures we've covered are likely to emerge as these fields continue to grow. And prospects are that growth will be substantial.
"Contract employees are growing like rabbits on a hormone diet," says Ralph Palmen, a business developer and trainer for Express Personnel in Oklahoma and a consultant on contract staffing issues. Palmen cites a Forbes magazine report forecasting that, by the year 2000, half of America's workforce will be employed on a contract basis. Palmen finds seven reasons for the rapid expansion of the market:
1. Flexibility. By using contract employees, companies are learning how to build flexible work teams of highly specialized position players, around a core of company employees who understand how to orchestrate the skills of each person into a highly productive unit. Palmen says no work form offers greater flexibility than contracting, for both employers and workers.
"The needs of both parties are met in a unique and satisfactory way," Palmen says.
2. Rising wages. Contract employee wages are rising faster than wages for all workers since higher productivity and profits available through effective contract staffing allow organizations to pay more per hour.
"Highly skilled employees who are performing a job well will be better compensated," says Palmen. "It's like a professional baseball team being able to have an offensive and a defensive team. Most baseball teams have players on their minor league teams who are better offensively or defensively than some of their major league players. However, the need to field a team of players with both offensive and defensive skills requires a more complete ballplayer who might not be as outstanding in one area. If they could field a team of their best hitters on offense and their best defensive players on defense, you might see a better overall baseball game."
3. Independent work. "Today's generation of workers have been raised on the mother's milk of 'do it your way,'" Palmen observes. "No group of workers in history has been given such extensive latitude in the choices they make. They have grown up in unstructured environments where they have worked at their own pace and made their own choices. Many of them have literally raised themselves." So, he says, to expect these people to fit into a structured work group is often beyond their life experiences and something they adjust to only with great difficulty. But a self directed work plan is something they can relate to.
4. Worker strategies. With fewer new workers arriving on the job market since the end of the rising Baby Boom generation, there's a long range trend afoot toward worker shortages. Until now, these have been avoided by the entry of more women into the job market. Many positions have also been filled by workers who have been less than fully employed, such as minority and disabled workers."As worker shortages accelerate, we find that portable workforces that can be deployed throughout the community have great appeal," Palmen says.
5. Training needs. "The challenge of training workers in the future presents a logistical problem because of the specialized equipment and procedures required for short run manufacturing processes," Palmen asserts. "As large companies are increasingly decentralized and many smaller companies evolve, the need for third party training and deployment become even more necessary." He predicts the growth of massive training organizations. "These needs can best be filled by organizations that have the capacity to amortize training costs over a large number of work sites."
6. Government regulations. Record keeping in support of mandated government regulations is a significant challenge for businesses of all sizes. "Staffing firms that are better organized to meet this need will get an increased share of the workforce to manage," Palmen predicts.
7. Workplace complexity. As work becomes more technical and complex, so grows the need for greater expertise. "Fast growth companies have found that it's easier to grow when you concentrate on a few key functions," Palmen says. Therefore, more and more companies including many startups are outsourcing as many functions as possible, including those related to human resources. Again, staffing firms that develop the skills needed will play an increasing role in recruiting, training and retaining flexible work teams, he observes.
More Routes to Self Directed Careers
Time to check our progress. What have we learned so far? Where next? In Chapters 1, 2 and 3, we examined what's going on in the New Economy, as best we can tell from what sometimes seems like the eye of a workplace hurricane. That sets the stage for executives to consider alternatives to the 9 to 5, lifetime care of paternalistic employers.
Then we looked carefully at each of the alternatives: starting a business, buying a business, operating a franchise, becoming a consultant, and working as a freelancer, temp or contract staffer.
While we haven't mentioned it yet, there's another significant step in the process toward a self directed career: getting education or training that would prepare you specifically for entrepreneurism in a particular way. Enrollment in M.B.A. programs is at an all time high, and there's more out there than ever in the way of specialized training. The growth of the contracted staffing industry alone has led to a wealth of training and management development instructional programs.
At the same time, many colleges and other educational institutions are offering career counseling and business opportunity matching services for alumni. See the Appendix, Resources, for details on places to look for appropriate programs that might lead you more firmly into entrepreneurism or some form of a self directed work style.
As a final thought on the spectrum of self directedness: Perhaps, if your ultimate dream is a great job in the traditional sense, self employment is an ideal route to the top. Tough as it is, you'll learn unimaginably big and little things that have the potential of taking you to a level you couldn't have reached if you'd climbed the organization from within.
Given all the reasons for and all the forms of self directed careers, it's about time to hit the ground running. Our final chapter will get you up to speed for day one on your own. Buckle up.
