Have you heard phrases like “non-employment work arrangements,” “freelance talent platforms” and “labor market intermediaries”? They reflect an emerging trend in which work and workers exist “beyond employment.”

John Boudreau

John Boudreau

Many leaders have hardly noticed the rising frequency with which these terms crop up in discussions about the future of work. To CFOs and other leaders, “non-employment work arrangement” may sound like something to be delegated to specialists in procurement or personnel. Or they might ask, are these new arrangements just simple extensions of cost-reduction techniques we’ve seen for years, such as outsourcing, temporary contract workers and consultants?

In fact, these new approaches to getting work done may well fundamentally change the way you compete and generate economic value. Leaders who overlook them risk making the same mistake that taxi services made when they dismissed the emergence of the Uber ride-sharing service. A world where work moves “beyond employment” will challenge fundamental strategic assumptions in virtually every industry and sector.

Getting a handle on these new work arrangements is difficult, because the vast majority of accounting and HR systems assume that regular full-time employment is the way work gets done. The combination of leader indifference and system myopia puts you in danger of missing significant opportunities and failing to anticipate new challenges. When work is done by non-employees, you need to rethink what it means to be a leader, to engage your workers, and to match the right workers with the right “job.”

If you rely on technology, you need software coding. Should you recruit and employ computer coders? When Apple introduced its new iOS operating system, a contest on freelance platform Topcoder was running within days, motivating thousands of application developers to learn the new system and compete to showcase their skills. And Topcoder’s parent company, Appirio, provided freelance support to consolidate the legacy HR system for Four Seasons hotels.

If your business pivots on product or advertising design, should you employ designers and advertising producers or hire an ad agency? You might first want to look at what the freelance platform called Tongal is doing to advertising. As my colleagues and I noted in a recent Harvard Business Review online article, Tongal doesn’t employ any of the creative talent they use to make ads. Instead, its talent platform connects advertisers with free agents who make ads. Clients like Nestle, Lenovo and Ford send work to Tongal, which offers service at low prices that ad agencies can’t match.

But low cost is just the start of the story. Tongal has access to thousands of workers, not just a few in your organization or an ad agency. The platform is a system for organizing the work, including crowdsourcing the ideas and videos with a contest, picking the best ideas and having those video producers pitch their approach. The winner gets to make the ad. Tongal simultaneously protects creative talent from client demands that exceed the original scope, and helps the ad buyers find and track the freelancers’ quality and reliability.

Even when work is done by employees, do they really need to be your own employees? Enel S.p.A., an Italian electric utility company the the second-largest in Europe by market capitalization. It takes around 180,000 workers to run a company that size, but Enel does not employ nearly that many. Over 100,000 of the workers are contractors. And when Siemens created an innovative hearing aid for children, it didn’t hire employees to devise its marketing campaign. Instead it borrowed employees at the Walt Disney Company through an alliance, and they came up with packaging that included a comic book and a children’s story about coping with hearing loss.

These examples are just the beginning. Non-employment ways to get work done include things I’ve written about in a prior column, including talent trading among companies and using unpaid video gamers to solve scientific puzzles that eluded scientists. My forthcoming book “Beyond Employment,” with Ravin Jesuthasan and David Creelman, describes these examples and more, and offers leaders a framework to help optimize decisions about using them.

These are not simply ways to outsource work and cut costs. They change how you and other leaders get work done. You need to make good decisions about these options. That means your people management and resource planning systems must include not just regular full-time employees, and your accounting systems must do more than merely track the cost of freelancers, contractors and temporary employees. It means your decisions must optimize combinations of employment and non-employment arrangements to achieve speed, quality and innovation. It means getting better at the fundamental task of leaders: getting work done through others.

Today’s organizations, largely built on regular full-time employees, evolved because they were the most effective ways to bring workers and work together to achieve their missions. That’s changing fast.

Are you prepared to define your organization’s value chain to include getting work done on platforms or through freelancers, alliances or creative contracts? Do you have a good idea what it means to “lead” when those you lead are not your employees and may work only on short-term projects?

It is time for you to learn to lead an organization that extends “beyond employment.”

John Boudreau is professor and research director at the University of Southern California’s Marshall School of Business and Center for Effective Organizations, and author of Retooling HR: Using Proven Business Tools to Make Better Decisions About Talent.

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