Small Business Labs

Why "Total Talent Management" is Important to Freelancers

One of key trends we follow is the growing awareness of the importance of contingent talent by corporate HR departments. 

Long viewed by HR departments simply as a way to save money, the independent workforce (freelancers, contractors, independent consultants, etc.) is starting to be be seen as a strategic resource.

Corporations large and small are increasingly turning to independent workers to improve workforce agility and flexibility, provide specialized and/or hard to find skills and as a way to add competitive advantage.

This shift in thinking is leading HR departments to change how they engage and manage contingent workers. 

A relatively new HR buzzword - "Total Talent Management" - is being used to describe systems and policies that  integrate all aspects of workforce management, from temporary agency workers and traditionally hired permanent employees to independent contractors and some types of outsourced services. 

This shift is important to freelancers and other independent workers in several ways:

• Companies are changing how they find and hire contingent talent, which impacts how independent workers market themselves. Our post from last week, Sources of Contingent Talent Shifting, covers this topic. 
• Companies are becoming more aware of how much they spend on contingent workers and the risks they bring, especially misclassification risk. This is leading to the greater use of "freelancer management systems" to engage and manage contingent workers. Independent workers need to be aware of these systems and how they are changing the way corporations source and manage contingent talent. 

According to the Staffing Industry Analysts, the concepts and ideas around total talent management are just starting to get traction. 

But despite being a nascent trend, the shift towards total talent management is another signal that corporations large and small are increasing their use of freelancers, independent workers and other forms of contingent talent.

NBC Comedy to Look at Life in a Coworking Space

According to Variety, NBC has ordered a pilot of the comedy "Sharing", which it describes as:

“Sharing” is a single-camera entry from Universal TV about disparate groups of people who work side-by-side in a shared office space. Jeremy Bronson wrote the pilot and exec produces with Jimmy Fallon and Rick Schwartz. Damian Lanigan is a co-exec producer.

I wonder if Fallon has ever worked in a coworking space?

Digital Nomad Trend Taking Off

Tanya Mohn's New York Times article Coworking on Vacation: A Desk in Paradise hit a cord with readers. It lit up social media with thousands of tweets and Facebook posts. 

The article focuses on coworking facilities in exotic or tourist oriented locations that also provide accommodations.

These spaces are targeted at people who want to take "workations".

Key quote:

These new centers are an offshoot of co-working spaces, which offer the benefits of an office environment on a temporary basis. But they also provide a place to sleep, have fun and mingle with colleagues — not in humdrum office parks, but in exotic locations around the world, in the European countryside close to urban centers or in warm-weather destinations like Bali.

This is part of the broader digital nomad trend, a topic that travel writer Mohn has covered extensively. Her article The New Digital Nomads - Run Your Business From Anywhere in the World defines digital nomads as:

"... professionals with a location-independent lifestyle that allows them to work anywhere in the world there is a good Internet connection — from beach towns and cafés to co-working spaces in major hubs from Berlin to Bangkok."

Digital nomads who travel to exotic locations like Bali get most of the press.

But more and more people are taking advantage of telework tools to work remotely while they take long weekends away from home, live temporarily near relatives or live full or part-time where they want to live instead of where their job is.

Data on the number of digital nomads is non-existent. But a couple of interesting statistics from the 2014 MBO Partners State of Independence study show how widespread the digital nomad movement could become:

• 22% of all independent workers surveyed reported less than 10% of their revenue came from their local area.
• 14% reported that none of their revenue came from their local area.

22% projects to almost 4 million independent workers who are effectively teleworkers and potential digital nomads.

Based on the reaction to this article, we expect many will become digital nomads and/or take workations in the future.

Uber Study - Drivers Satisfied, Like the Flexibility

Uber released a survey of their drivers last week.  As with all things Uber, it's being widely covered. The key findings, at least from my perspective, are:

• 78% of Uber drivers are satisfied with their experience driving for Uber.
• 74% reported Uber has made their lives better by giving them more flexibility with their schedule.
• 81% of the drivers work part-time as Uber drivers
• As of December 2014, Uber had 162,037 active drivers on its platform.

Not surprisingly, the satisfaction numbers echo the what we've consistently found in the many years we've been studying independent workers (freelancers, independent consultants, etc.) - independent workers like being independent.

And as we have reported many times, most like being independent because it provides work autonomy, control and flexibility. Uber drivers agree.

There are many articles on the study, including:

The Atlantic has my favorite article, mostly because it points out how small Uber and the sharing economy are relative to the U.S. economy. Key quote:

About 160,000 drivers have fired up Uber on their phone since 2012. That's less than one month's net job creation. It's about 0.1 percent of the workforce. It is a rounding error. 

Business Insider provides a pretty good summary of the key data.

Slate provides a good overview and a good look at Uber driver earnings data.

New Republic is surprisingly positive about the study, the results and independent work.

Newsweek attacked the survey methodology, which I think is unfair. All surveys have issues and problems. But overall the methods used in this survey look sound.  

Sources of Contingent Talent Shifting

DCRTrendline's New Sources of Talent covers research by Ardent Partners showing that hiring firms are shifting how they locate and hire contingent talent (freelancers, contractors, etc.).

The Ardent Partners chart below from the article shows survey data on this shift.

According to the article, the big shift is away from traditional staffing firms and towards:

Private Talent Pools

This source of talent is something that is already known to employers. It consists of alumni and former workers, retirees, and past contingent workers. Private talent pools are able to provide workers who have already earned trust and whose quality has already been measured.

Social Media and Social Networks 

Social media and social networks are expected to grow by 60 percent over the next two years. Social platforms, such as LinkedIn, are already serving to connect non-employee talent with companies. Additionally, social media and networks can be used to discover workers with experience in niche industries and hard-to-find skills.

Online labor marketplaces

In 2014, companies looking to find contractors that specialize in fields and industries or for specific projects or tasks are using freelance networks and online marketplaces more often. According to research from Ardent Partners, reliance on online labor marketplaces is expected to grow by 96 percent over the next two years.

Crowdsourcing

Companies are increasingly looking at crowdsourcing to quickly obtain talent and innovation in everything from graphic design to writing to marketing services. Crowdsourcing is becoming a cost-effective means of tapping into global talent on a consistent basis. Ardent Partners expects that this source of talent will grow by over 400 percent through 2016.

In addition to these shifts, Ardent Partners is also forecasting rapid growth in the contingent workforce.

Their data shows that currently 32 percent of the average company’s overall workforce is considered contingent or contract-based. Ardent is predicting that by the end of 2017, almost 45 percent of the global workforce will consist of contingent workers.

Ardent Partners focuses on businesses and their use of contingent workers (contingent worker demand). Our work is focused on the contingent worker supply side (independent workers).

Despite looking at this topic from different points of view, our results and forecasts are consistent. This leads us to have greater confidence in both sets of forecasts.  

Book Review: The Future of Work

I'm more than a bit behind on my book reviews, which is why it's taken me so long to get to Jacob Morgan's excellent book, The Future of Work.

Morgan is one of the leading futurists examining work, so it comes as no surprise he does a great job of describing the forces that are changing work and explaining how organizations and their leaders can successfully respond to these changes.

The book begins by covering "The Five Trends Shaping the World of Work", which are major megatrends impacting business, society and, of course, work. 

The rest of the book focuses on how firms can successfully navigate these trends and become successful "Future Organizations".

The book  culminates with a chapter than covers the "Fourteen Principles of the Future Organization". 

These principles provide actionable guidance on the changes required for future business and work success.  

As someone who focuses on independent work, I really enjoyed chapter 4, The Freelancer Economy.

It nicely summarizes trends driving the growth of the freelance economy. 

I also found the chapter 3, "Seven Principles of the Future Employee" quite interesting.  I will cover this chapter in more detail in another post in the near future.  

The strength of this book is how well it synthesizes the wide range of trends driving the future of work. This synthesis provides both an excellent primer on the future of work as well as useful guidance on how to prepare for these changes.

Those who follow future of work trends closely may feel little new ground is covered. I agree, but this misses the point. 

"The Future of Work" organizes and explains a very complex topic in a way that's easily understood. This makes this book a valuable resource and well worth reading by anyone trying to understand the future of work.

The Internet of Pets

The giant, annual Consumer Electronics Show held last week in La Vegas was a major coming out party for new products with sensors, advanced network connectivity and products related to the emerging Internet of Things. 

Internet products for pets were a part of this and Popular Science's article CES 2015: The Internet of Pets covers several connected pet products. Key quote:

A new breed of connected technology aims to boost Sparky's health and safety, and help him have a little bit of fun, too.

My favorite new product by far is the Scout 5000.  Here's Pop Sci's description:

While the Scout 5000 has all the GPS bells and whistles, it goes one step further. Sort of like a GoPro for your dog, it allows you to see what your dog is seeing. The video is live-streamed to your phone, and if the dog is in a stressful situation, you can soothe him or give him commands. The collar also has bark detection, which can notify you when the dog is being a little too rowdy. Bad dog!

This product obviously has important potential use cases in law enforcement, rescue situations and other applications where highly trained dogs are used. 

But I'm confident it will also be popular with pet parents who want to see and hear what Sparky is experiencing in his/her day to day life. 

Gallup Wrong About Solopreneurs

I'm a big fan of the Gallup organization and often reference their work. Which is why I'm so disappointed by their article American Entrepreneurship: Dead or Alive?.

Gallup is simply completely wrong about solopreneur businesses. Key quote from the article:

Let's run some numbers. You will often hear from otherwise credible sources that there are 26 million businesses in America. This is misleading; 20 million of these reported "businesses" are inactive companies that have no sales, profits, customers or workers. The only number that is useful and instructive is the number of current operating businesses with one or more employees.

The 20 million "inactive" businesses Gallup refers to are "non-employer" businesses (also called solopreneur businesses). This is the term the government uses to describe small businesses that have an owner, but don't have traditional employees.  

Many non-employer businesses are very small part-time or hobby businesses. Some are inactive.

But millions of non-employer businesses are not only active, they are the major source of income for their owners.  

My business - Emergent Research - is an example of an active non-employer business. Emergent Research doesn't have traditional employees, so it's counted as a non-employer business by the U.S. government and considered inactive by Gallup.

But Emergent Research has customers and sales and generates most of my family's household income. 

So please don't tell me my business and the 18 million other American solopreneur businesses that collectively generate over $1 trillion in revenue are inactive and/or don't matter. 

I suspect Gallup doesn't understand how the government defines non-employer businesses. Nor does it seem to know that millions of successful solopreneur small businesses are included in this category. This is the only explanation I have for their position that firms like mine don't really exist.

The large and positive economic impacts that independent workers (solopreneurs, self-employed, freelancers, etc.) have on the U.S. economy are covered in the 2014 MBO Partners State of Independence report. 

Key economic impact points from this report include:

1. Solopreneurs are a major source of employer small businesses: 15%, or about 2.7 million, solopreneurs reported they plan to grow their businesses in the next 2 years and add traditional employees. This is not a surprise; over half of all U.S. businesses with employees started as non-employer businesses.

2. Solopreneurs hire others via contract hiring: In 2014 38% of independent workers collectively reported spending about $92 billion in the past year hiring other independent workers on a contract basis. This is roughly the equivalent of hiring 2.2 million full-time workers via contract hiring.

3. Solopreneurs are major sources of household income: Over 10 million U.S. households - roughly 1 in 12 -  get more than half their household income from a solopreneur business. 

1 in 3 Small Business Owners are 65 or Older

Barlow Research Associates is an analyst firm that helps financial institutions better understand the small business sector of the economy. 

For over a decade Barlow has fielded a quarterly survey of businesses on topics of interest to financial institutions. Because of their history and the comprehensive nature of the their surveys, Barlow has lots of interesting and insightful information on small businesses. 

The Barlow chart below shows the rapid aging of U.S. small business owners. It's from a slide deck presented in a recent Barlow webinar.

Since 2007 the average age of the owner of a small business with revenue between $100,000 and $10 million has increased from 55 to 59.  

It also shows that 1/3rd of all small business owners in this size category are aged 65 or older and only 12% are aged 45 or younger.

Not surprisingly, a lot of these aging owners are starting to think about retiring. Because of this, about one third of all small business in this size category expect an ownership change of some sort over the next 5 years.

There's a long standing myth that most small business owners and especially startup entrepreneurs are young 20 somethings. As this data shows, it's not true for traditional small business owners.

It's also not true for startup entrepreneurs, but I'll save that data for another time.

Thanks to Barlow for their permission to publish this data.

The Boom in Ag-Tech

Entrepreneurs Push to Raise More Food More Cleanly, Profitably covers the rapidly growing field of agricultural technology.

Key quote:

Experts predict that, in five years or so, the growth of the so-called ag sector will outpace today’s hottest technologies in terms of the number of startups and venture-capital investments.

“It’s going to be bigger than cloud software, it’s going to be bigger than Big Data, because everybody eats,” said Paul Matteucci, a partner with U.S. Venture Partners and founder of Feeding 10 Billion, a nonprofit center to help ag-tech entrepreneurs. “And it’s going to be completely entrepreneur-led.”

OK, so bigger than the cloud and Big Data may be a bit of hyperbole, at least in terms of the next 5 years. But Matteucci is right that everybody eats. We also agree that Ag-Tech is big and going to get a lot bigger.

Others also agree.

Farm 2050 is is a joint effort by a of diverse group of companies - including Google and DuPont - committed to advancing the future of food through supporting Ag-Tech entrepreneurs and startups.

Their particular interest is the application of robotics and data science to rethink and improve the way we seed, cultivate and harvest food.  The partnership is providing capital, manufacturing facilities, testing equipment, and management mentorship to selected Ag-Tech startups.

A good example of the Ag-Tech revolution is Blue River Technologies, which recently secured $10 million in venture funding. Their lettuce thinning machine is pictured below. 

This device watches rows of lettuce crops, comparing what it sees to millions of saved images. When it detects either a weed or a number of lettuce heads crowding each other out, the machine sprays fertilizer too potent for the target, but nourishing to the surrounding crops.

This greatly increases crop yields, reduces pesticide use and lowers overall production costs. Pretty cool. 

We cover Ag-Tech in more detail in our small farms section.