What comes to mind when you think about companies like Uber, Lyft, Udemy, AirBnB, Open Table, or Task Rabbit? Do you think of them as visionaries, or temporary flashes in the pan? Do you think they are playing by the same rules, or maybe even creating new rules? Whatever your views, there is one thing that is quite clear, this new breed of companies is leading the change into a new on-demand-style economy. In essence, they’re changing the dynamic of how people interact with companies from education to transportation. But underneath the surface they are also changing the fundamental framework of what it is to be a company, and even redefining what it is to be an “employee” of said company.
What I’m talking about is a shift from traditional employees to a completely independent, on-demand workforce. Not out-sourced, which has been used and abused over the years, but truly on-demand. Be it project or task-based, we’re on the verge of an UBER-like corporate framework. Imagine for a minute, the gravity of that within an organization. It will, in all regards, change the landscape of business as we know It. The question is — how will it impact your business, and what does the end result look like? Here are a few areas we see immediate changes on the horizon:
Overhead Mirroring Demand
Soon the days of carrying a bench of employees to fulfill demand will be obsolete. Companies that can adjust service delivery to take advantage of an on-demand workforce will be able to maximize profit margin in the busy times as well as the slow. Lay-offs will be a thing of the past, and companies will be able to scale as rapidly as needed, exactly when needed. The internal “brains” of the company will be the only overhead to manage, while output capability will be scaled up or down as necessary.
Pay Scales Based on Output and Quality, Not Bench Time
The entire structure of pay will be adjusted to a performance-based model comprised of overall output and quality indicators. Whereas the old way was based on position, experience and seniority, the new way will flatten the structure, allowing the high performers to naturally rise to the top of the pay scale.
Reduction of Office Space
There is no question mobility is here to stay. But this new transition will make a much more dramatic change to the typical office than we have seen before. When the majority of the workforce is on-demand, the office requirements shift. Smaller spaces, built specifically for collaboration with an entirely remote workforce, become the norm. And while this shift is still a bit down the road, it might be time to re-evaluate that 5 to 10-year lease renewal.
Compartmentalizing of Tasks and Projects into Distributable Workloads
The concept to master in the new on-demand economy is “workload management.” All tasks can be broken down into workloads. Whether the workload must be done internally (for compliance, intellectual property reasons, or cost), many will be able to package up for external resources to complete. The trick will be to identify and package all of the workloads that fit into the model, then create the structure and processes for not only getting them out the door, but also for getting the output back in. The companies that master this will be poised to attack in both strong economies as well as weak economies.
Increased Demand for Automated Training
Yes, training is important now. In fact, I would say training is the most under-valued item in business today. But going forward, the method of training will shift. Based on the sheer nature of high-churn, on-demand workforces, automated programs will need to keep up. You can no longer rely on a training department, HR resources, or a classroom environment to grow talent. Online tools will need to be created to manage how new resources move from no capabilities to high performers. Additionally, metrics will need to be established and monitored to prompt additional training when necessary. Your main goal will be to balance the overall level of performance from the workforce, while allowing the cream to rise to the top, and simultaneously eliminate the under-performers. All the while, still managing customer experience.
Whether you feel an on-demand workforce is likely or not, businesses are evolving. Challenging your team to come up with scenarios and solutions is always good practice. You may never have to implement, but being prepared, just in case, is part of a successful CEO’s role. Good luck my friends.