Our Least Important Asset by Peter Cappelli

Author:Peter Cappelli
Language: eng
Format: epub
Publisher: Oxford University Press
Published: 2023-08-15T00:00:00+00:00

Effects on Employees

As noted earlier, where vendors are the employer of record of the liquid workforce, the workers onsite for clients are only partially responsible to the client even when the client is a co-employer. All the practices that employers can use to motivate and engage their regular employees, from compensation and benefits to organizational culture to effective supervisors, are largely off the table with the liquid workforce. In practice, this means the organization where these workers do their jobs has largely given up on managing them. The borrowed servant doctrine in employment law allows the client to direct the work being performed by those liquid workforce workers, but that does not include the broader practices of management, such as rewarding employees, setting performance targets, and measuring them.99

What it means for employees to have these split authority structures is not well known. An older literature on boundary spanners, such as sales employees who spend more time with clients than with their own employer, highlights the difficulties when obligations conflict; an equivalent literature on dual allegiance for unionized employees who had obligations to their union and to their employer shows similar tensions. What it means—especially for the leased employees who work full-time and for more than a year onsite for a client but are employed by an organization that arguably has more power over them and who they see less—remains unexplored.100

Assuming the liquid workforce model means the transfer of some jobs from one organization to a vendor, the net effect depends on what the jobs are like in each organization. For some tasks, such as accounting, law, and management consulting, outsourcing means pushing those jobs to professional service firms. It is true that doing so eliminates the possibility that accountants, lawyers, and strategic planners will ever get to be operating executives in those corporations, but they may well be better paid accountants, lawyers, and consultants with more autonomy than they would have had in the corporations.

The changes that get the most attention and that involve more employees are at the bottom of the corporate pay scales—janitors, food service workers, gardeners, and so forth. In corporations, employees in those jobs had similar benefits to other employees, in part encouraged to do so by IRS regulations and laws like the Affordable Care Act, which prohibit having better healthcare benefits for some employees than for others. As others have noted, a janitorial service that only does that work might be less likely to offer benefits like healthcare to its employees or have compensation systems that tie janitor pay at least in part to the pay of higher-paid employees. When a bank or other large corporation outsources its janitorial work, it is quite likely that the individuals doing that work will have lower pay and less access to benefits than janitors employed by the bank would have.

The other consequence is that their career paths become more limited. It was possible to work one’s way up from the shop floor at companies like UPS when virtually all positions were filled from within by people who began as loaders or drivers.

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