Guilded Independence
Guilded Independence

Guilded Independence

January 1 st 2004

The company man is a classic figure of the employer/employee model. We know the type: he—it's usually a man—started sweeping the shop-floor as a youth of 17 and stayed in the same town with the same company his whole life. After 25 years, he received his gold watch; after 40 years, he retired with a generous pension plan.

Not any more.

The feudalistic exchange of loyalty for security is a fading memory of the mid-twentieth century. After 25 years of faithful service, one is just as likely to receive a pink slip as a gold watch. Efficiency is the watchword for corporate survival, especially in a world of hyper-sensitive stockholders. Providing security to long-term employees is a frill, and if loyalty must be sacrificed to increase productivity, then so be it.

These developments are not the result of malice or wilful blindness to human needs. They are simply the result of a fast-as-light economy: the electronic interchange of information and rapid pace of technological R&D means that competition is fiercer than ever before. Corporations must pack lightly in order to stay nimble. No more massive inventories or bloated workforces. As Ray Pennings wrote in Comment in 2003, the dot-com lustre has dulled on the stock exchange, but the organizational model of outsourcing virtually everything has stuck. Just-in-time production, contract labour, and hired-gun management talent are the new norms.

If, as Robert Laubacher from MIT's Sloan School of Management argues, speed and flexibility is the new corporate reality, what is the prognosis for the human capital—those workers who must adjust to less predictable futures? Undoubtedly, there are those who feel bitter and betrayed after being left behind, but, surprisingly, many find that independence gives them a chance to leave behind the drab cubicle-land caricatured in Dilbert or Office Space.

Instead of dealing with incompetence and the internecine trench battles of the workplace, says Daniel Pink of Fast Company, independent workers can focus on projects that are both personal and meaningful. "You can achieve a beautiful synchronicity between who you are and what you do," he writes in a utopian article headlined "Free Agent Nation." Ironically, some people have found that working independently gives them more security, since they rely on a diverse portfolio of clients rather than a single 9-5 commitment.

Free agency, however, comes at a price. Independence may allow you to do what you want, but that doesn't mean you can buy what you want at a price you can afford. Specifically, the independent worker is at a disadvantage when it comes to medical and retirement benefits or professional training. Collective bargaining power, whether for better working conditions, higher pay, or health insurance, is simply unavailable to the free agent. A Working Today survey of independent or contract employees in New York found that most health insurance plans were priced out of the individual's reach, even for those with yearly incomes of $100,000.

Still, the slow demise of the big company doesn't mean that interpersonal connections are disappearing altogether. Instead, they're simply being replaced by social networks that better fit the new employment reality. The changes in the marketplace, says Laubacher, have "moved us away from the mass-production model to a looser, more informal model of community connections."

A paper he published in 1997 set out some of his initial speculations about "the fit between industrial structure and employment structure." Over the next few years, he examined organizational developments that were "filling the gap of some or all of the roles that the traditional firm played."

As his wife is involved in the independent film industry, he naturally turned to organizations such as the Screen Actor's Guild (SAG) for inspiration. The Hollywood example, according to Laubacher, is very useful. Associations such as the SAG do not only engage in collective bargaining but have also assumed many of the talent and brokerage functions of the industry. Laubacher quotes Sidney Sheinberg who, referring to the Writer's Guild of America, says, "If the guild didn't exist, we would have to invent it." Why? Simply because it enables connections between the people who need the work and the companies who need the workers. In addition, the guild provides health plans, pensions, and residual payments for talent between contracts. He found similar kinds of organizations in the trades sector guilds, particularly the construction unions.

Translating the Hollywood or trades models to the high-tech and other sectors presents some difficulty. While organizations such as the SAG hold monopoly control over their profession, the new guilds will have to compete to win worker allegiance. Because of this lack of collective control, any new model cannot be "located in the workplace," according to Sara Horowitz, founder and director of Working Today. If guilds attempt to fashion themselves after the traditional union, they are destined to the same fate as unions in right-to-work states, which have seen both their membership and influence decline dramatically. Moreover, free agents operate outside of the regulatory framework for unions. By definition, free agents can't unionize.

While Horowitz, who grew up in a labour family and earned her degree in labour law from Cornell, believes that "collective bargaining is a great thing," she also knows that "the way the law and the regulations were for labor just didn't fit the way people were working." Working Today and its benefits brokerage spin-off, the Freelancers' Union, have done an end-run around the problem of HR outsourcing by creating a market-based system of "mutual aid for freelancers." In other words, she has created a buyer's consortium for social services, thereby diminishing the need for adversarial negotiation between employees and management.

The political consequences of Horowitz's methods are tremendous, collapsing the distinctions that have polarized American Republicans and Democrats on the issue of labour for years. "Ironically," she says, "it'll be a mixture of right and left." The Republican arguments for economic individualization are "half-right"—yet there is still a need for collective negotiation. At the same time, she is disappointed with the current labour intelligentsia who, she says, are products of the New Left, and "don't care about mechanism." She admires Sidney Hillman of the Amalgamated Clothing Workers Union who had the organizational capacity to form pilot programs and then take them to scale. By marrying mutual aid and politics, he became a cornerstone of Roosevelt's New Deal.

The labour movement "used to know how to run things," says Horowitz. Now, its leaders are confused about basic distinctions, such as that between market mechanisms and unfettered capitalism. "To me, these are structural questions," she says. Even collective bargaining has become a casualty of rigid thinking. Labour leaders forget that "a collective agreement is not a romantic document—it actually has to do with people's lives." Part of the problem, she says, is that workers who do not fit the current model of the employee are not eligible for union membership. As a result, non-traditional workers are unable to participate in union decisions, and their concerns are never even raised, let alone addressed.

Horowitz hopes to build the Freelancers' Union into a microcosm of the future. The power of the market, she believes, can be harnessed into a New Deal adjusted for an increasingly fluid social structure. She wants to "start having people realize the way that we're going to deliver the social safety net is through organizations like ours."

Of course, in order for her to persuade people that a market-based employment structure really can work, she has to demonstrate a functioning, revenue-balanced model. Any new structure must be able to pay for itself. The Freelancers' Union, formerly (and less colourfully) known as the Portable Benefits Network (PBN), was a breakthrough because it generated revenue through its brokerage mechanism. The newly named Freelancers' Union, which began a recruitment campaign May 1, 2003, is expected to provide coverage to upwards of 7,000 people by the end of the year. At the moment, they are two years away from self-sufficiency.

The PBN proved itself invaluable as a social support structure during the 9/11 tragedy. The destruction of the World Trade Center left many workers and their families without jobs or medical benefits. The PBN was the only organization that was able to pull all these people together and provide medical coverage independent of where they worked.

Working Today and the Freelancers' Union are not the only organizations that, according to Laubacher, "provide workers what they received from employers under the old arrangement." While the Freelancers' Union intends to supply concrete, tangible benefits such as health plans and legislative advocacy, other organizations are trying to form social networks that provide a sense of identity and belonging. CPsquare, for example, is trying to develop what it calls communities of practice. Their website ( http://cpsquare.com) describes its goal as creating "an ecology of interconnected activities that provide many ways for people to participate, benefit, and build a shared practice." A bit abstract perhaps—at ground level—CPsquare is trying to connect otherwise independent professionals so they can share knowledge and develop innovative ways of approaching problems.

The challenge that organizations such as CPsquare face, focused as they are on the intangible and often informal working communities, is convincing people that their services are of real benefit. Laubacher describes health care in the United States as a "gushing wound." It's an easy hook that draws people into services such as the Freelancers' Union. Still, as his recent work in the social networks within both the freelance world and traditional organizations demonstrates, clusters of talent, surrounded by looser networks of associates, inevitably evolve.

The current slump in the high-tech industry has dampened the appeal of organizational gimmicks. The changes in competition and information exchange are nonetheless real, however, and while recession and financial uncertainty may slow down the process of social adaptation, the adjustments must take place. "The vicissitudes of the economy are like waves of the ocean," comments Laubacher, "but there are deep ocean currents that reflect larger systemic changes."

James Brink
 
James Brink

James Brink is an associate with Ormston List Frawley LLP, a law firm in Toronto that advises small to mid-size Canadian public and private companies on corporate organization and restructuring, contracts, financing, as well as their securities compliance obligations. James also regularly works with the firm's litigation department in connection with commercial and personal disputes ranging from breach of contract to online defamation.

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