By Julian Birkinshaw, Professor of Strategy and Entrepreneurship, London Business School and Dena McCallum, Founding Partner, Eden McCallum
The world of knowledge work is changing again, as employers try to determine if and when to bring their employees back to the office. Unsurprisingly, our default setting as employees has changed: in the pre-pandemic world, we had to find a good reason to take a day’s work from home; now we expect someone to explain why we should make the trip to the office, rather than doing everything on Zoom.
While some sort of hybrid office / home model seems inevitable, there are still important questions to be resolved in the short to medium term. How do I get the right mix? Who decides ? And for those who wish to work primarily from home, what are the implications of this choice for their ability to do their job, their career prospects and their personal well-being?
To help anticipate what lies ahead, it’s helpful to take a look at the world of professional freelancers. These are individuals whose default mode of operation has always been without an office – they work either from home or at their client’s site. Many consultants, lawyers, IT developers, project managers, designers and executive coaches have embarked on this path. There are many different freelance models – from the computer programmer who never even meets his client face-to-face, to a team of consultants who work both virtually and in the client’s offices, to the interim senior manager who fills a job. full time role for a few months.
The number of professional freelancers was already quite large before Covid-19. For example, a study by the Royal Society for the Arts in 2017 showed that the number of self-employed ‘gig’ workers in the UK had increased to 1.1 million, with 59% of this group in professional, creative and professional services. administrative. We can expect further growth in this category as professionals adapt to the post-Covid-19 business landscape.
We have been following a particular type of freelancer for twenty years, the independent consultant. Here are some of the things we discovered during this time.
More and more professionals are choosing the freelance option. In the early 2000s, many people thought self-employment was what you did when you were made redundant or when you wanted to work part-time only. This perception has changed considerably, with self-employment now recognized as a legitimate choice among professionals and clients. Proof: in 2002, only 32% of independent consultants planned to remain independent for more than three years; by 2021, that figure had doubled to 63%.
Self-employed people are very satisfied with their work. In our most recent survey, 78% of independent consultants were extremely or somewhat satisfied with their work, compared to 68% for a similar sample of employed consultants. Much of this satisfaction stems from feeling that they have a greater impact with customers: 92% say they offer better value to customers and two-thirds say their recommendations are more likely to be acted upon. implemented now than when they were used.
The happiest self-employed are the youngest – those under 40. While a relatively small group (66 people out of a full sample of 374), 56% of them were âextremely satisfiedâ with their career choice (compared to 44% extremely satisfied for those over 40), 63% declared that it was a “deliberate choice” to move towards this way of working (compared to 43% for those over 40), and 77% said they earn more as a self-employed person than when they were employed.
Self-employed people have more control over what they do. This is true almost by definition, as freelancers sign contracts in specific areas where they have the experience and personal motivation to do a great job. But this higher level of control also affects the wider range of things they do in their workday. Some want to take on mentoring or training roles, others want to do their job narrowly defined and nothing more. The freedom to choose is a big part of what makes them happy.
All of this is good news. This suggests that companies should have little qualms about allowing people to work remotely, as giving people more control leads to greater satisfaction and, as Emma Jacobs recently wrote, “research suggests this may reduce stress, risk of heart disease and improve performance “. Of course we all had working from home during the lockdown, so there are no more questions about whether remote working is possible. The point is that our studies on the self-employed prove that remote working is sustainable over time, and indeed very attractive to many professional workers, especially young people.
Are there any downsides to being a freelance consultant? The most obvious is the lack of financial security. And perception about it intensifies during a recession – for example in our 2021 survey, 52% of respondents say they billed fewer days in 2020 than expected (while only 36% said so in 2018) . Interestingly, the real the number of days billed to consultants was higher in 2020 (143 compared to 135). Our respondents are also less satisfied than the consultants employed on specific issues such as benefits, tangible career paths and status / recognition – but they also say these things are not that important to them. They made a choice in favor of the advantages of flexibility in the work they take on, of the feeling of accomplishment and of impact with their clients.
Implications for the new hybrid workplace
So what does this mean for you as an employer? The first point is simply to adopt these alternative types of contractual arrangements. Observers such as Charles Handy have anticipated a move away from traditional salaried employment for decades, and Covid-19 has – as in so many other areas – accelerated this trend. We expect many more workers to seek flexible working arrangements, and such a change may also be beneficial for employers who wish to reduce their fixed cost base.
Does it create difficulties to have people on different types of contractual relationships working together? It depends on your approach. One respondent we spoke to noted that their project team (doing an IT implementation in a bank) included salaried employees, contractors and consultants, spread across three continents. They never met in person, they didn’t know what their mutual contractual relationship was with the bank, and they worked out really well. And as a firm, Eden McCallum regularly brings together teams of salaried and independent consultants, as well as experts, in an efficient and transparent manner. It requires an open mind.
The second point is that giving your employees – whether employed or self-employed – more freedom to choose what, where and when to do their jobs is generally a good thing. Numerous studies have been conducted over the past 18 months examining the productivity and motivation of locked-out employees, and unsurprisingly they have shown that people like having higher levels of discretion over their working hours and were also more productive. This is consistent with what we have found over many years working with independent consultants. So, first and foremost, you should be looking to get creative in giving people more choices about when to come to the office, what hours to work and, in fact, what projects to work on.
The final point is that you need to clarify the expectations on both sides as employees move towards more hybrid working arrangements. A few years ago, there was a study where a group of employees were randomly assigned to work from home, and their performance was compared to a control group of employees who stayed in the office. The homework group performed well and was happy with the new arrangements, but they were less likely to be promoted afterwards. They had become quasi-independents – fulfilling their assigned roles and enjoying greater freedom, but with the downside that they were not as visible in the day-to-day life of the organization. As our survey indicated, freelancers explicitly make choices about control, flexibility, and client impact over tangible career paths, financial security, and status / recognition. Salaried workers who choose to work remotely may need to be prepared for the same kinds of choices.
The crux of the argument is that there are tradeoffs involved in decisions about how, when and where to work. The employee who wants all the benefits of working from home and all the advantages of being an employee risk being disappointed. In our view, the comparison with the self-employed can be a useful framing tool to paint a picture of the range of arrangements that workers have with their employers. You might be open to some people working 100% from home, but this change will likely require adjustments in expectations on both sides.
As the business world emerges from lockdown, much more flexibility is needed in the working arrangements between employers and workers. The information gained from the experiences of freelancers can be very useful in anticipating the problems that may arise and some of the solutions that are most likely to work.
Julien birkinshaw is Professor of Strategy and Entrepreneurship at London Business School and is the author of 15 books including Fast / Forward, Becoming a Better Boss, Reinventing Management and Giant Steps in Management. Dena mccallum is a founding partner of Eden McCallum where she works closely with clients in the retail, financial services, media and business-to-business services industries.