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Year 2010: Permanent Employees No Longer Required

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Jack Welch joined a conference that was held in Duke Fuquay Business School where he was invited to promote his new book called “Winning”. He told audience about how culture is important in a company. Culture builds integration and integration guarantees better products and services for customers. In GE’s 1994 annual report his statements were no different. “Boundaryless behavior…” he said “…has become the right behavior at GE, and aligned with this behavior is a rewards system that recognizes the adapter or implementer of an idea as much as its originator. Creating this open, sharing climate magnifies the enormous and unique advantage of a multibusiness GE, as our wide diversity of service and industrial businesses exchange an endless stream of new ideas and best practices.”

A little over 10 years, does his story still stick? Yes but only in theory… Many multibusinesses have figured out harshly that they need to understand their core business competency and capitalize on that in order to survive, rather than surrendering their many businesses with one culture like Welch said. Simply because, it was not working! Since that was understood plainly, across the globe, multibusiness managements have been under increasing pressure, as they struggle with decisions about what businesses they should be in and how they should structure and influence these businesses. GE, Siemens, Tyco, 3M, and few others have escaped from this fact as they could answer the crucial question: What is your corporate strategy? But this doesn’t mean that they could answer the upcoming question: What is the value behind having permanent employees?

The question is not only directed to multibusinesses but concerning medium and large organizations too. Why do companies have marketing, operations or sales departments? Is that really their core competency to have lots of employees working for them? Most probably, not! Multibusinesses are more akin to danger of fading away, though, because employee means culture and power to them, and one of their core business value is orchestrating them to work together. With the new wave of doing business through on-demand sourcing, every organization will start demoting the role of conducting non-core side of their business in order to be swifter. That role of conducting business will belong to specialized firms, which are future version of today’s consulting companies.

What Lies Ahead?

Futuristic terminology, on-demand sourcing, is about hiring workforce when it is needed and discarding them when the mission is accomplished. Specialized firms will address to the need of on-demand sourcing such as complete marketing, sales, operations (unless they are core values) etc. Specialized firms’ efforts will not only end on forming strong groups to address organizations. They will also be responsible from building a customized incentive package for those groups of temporary employees to work together.

Consequently, everybody except the core business builders and top decision makers will be outsourced by organizations to specialized firms. Specialized firms will come up with their own group of people to serve on-project basis.

What Should Be Done to Be There? The Real Opportunity

Jack Welch mentioned a genius idea in the conference. “Why are we not grading our mature boys (employees)?” Welch asked, explaining that evaluation should not stop after education. In an on-demand sourcing situation, employees will be hired by specialized firms. But they probably need to use a grading system before going ahead and forming a group of employees for an organization. Organizations, in parallel, need to see grades of specialized firms before hiring them. So grading and analytical proof on core-decision making will be key. If there were sufficient proofs supporting top organizations’ decision makers, it would be easier for them to take critical steps and hire right specialized firms for their needs. Rating firms will give organizations the historical success of specialized firms and grade them just like S&P does it for countries. Rating will bring auto control system to both employees and specialized firms.

Through on-demand sourcing, optimizing cash reserves will be easier than ever. Also organizations can be much more agile, business-oriented and focused. The other side of the story, employees, will be more satisfied as the on-demand way of employment will fulfill their incentives more than today in the business environment. Also, how much they earn will depend on their grade, which translates into how trained they are on a specific subject. This will force them to learn more and hone their skills continuously. With all outsourcing craze going on in the world, we don’t have more than 5 years to see this trend shaping our lives so better get prepared for it.

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