“Everyone needs an Advocate”

Small Cost,
Big Benefits

From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

The super self-employed taking over the world

Sunday, October 14, 2012

The great communist-era Premier of China Zhou Enlai was once asked what he thought were the implications of the French Revolution. He famously replied that it was too early to tell.

In this same tradition the French President, socialist François Hollande, has tried his own revolutionary tactic but it has backfired big time. In seeking to repair France's teetering public finances, Hollande decided to whack France's entrepreneurs with big new taxes. Two weeks ago Hollande announced that anyone who sold their small business would have to pay 60 per cent of the sale price to the government.

What Hollande thought would be uncontroversial erupted into a social networking backlash that exceeded the Australian drubbing recently handed out to Alan Jones over his comments about PM Julia Gillard. French entrepreneurs set up "Les Pigeons" (here's their French Facebook page) capturing a term used in France to describe 'chumps'.

Attracting 53,000 followers in two weeks, and growing, Les Pigeons declared, "anti-economic policies are crushing the entrepreneurial spirit and exposing France to a big risk". With French economic growth stalled and unemployment at a 13 year high Hollande has hurriedly dropped the tax move.

I don't know if Les Pigeons paralleled the storming of the Bastille but the movement certainly made a point and quickly. The Economist has observed that Europe's problems aren't just about the euro but a chronic failure to enable entrepreneurship.

Hollande's entrepreneurs tax attack showed that he just doesn't understand that the greatest wealth creation potential sits at the broad base of self-employed entrepreneurs now widely distributed through most developed economies. This is an economic revolution sweeping the globe. But it's constrained by ossified thinking by governments and economists about what makes economies tick.

The human resource profession suffers from the same misplaced concepts reinforcing economists stagnant views. HR people are obsessed with the idea that firms as economic units must operate as employment pyramids of command and control. Any people engagement that is not permanent employment is seen as creating structural weakness. That is, only permanent employees are loyal to the firm and committed to performance. Wrong!

Research released by Melbourne's Monash University shows a different picture. It's been known for a few years that the much larger bulk of Australia's 2.1 million self-employed are white collar (professionals, managers administrators, etc). HR people display a fear of these people, believing commitment to the job is less than that of employees.

The 2012 IPro Index (stands for Independent Professionals) shows high levels of commitment to work, probably exceeding that of employees. The Monash report on these self-employed professionals indicates that 96 per cent adhere to agreed work schedules, 95 per cent meet work or project goals quickly, 87 per cent say they do not waste time and 97 per cent meet work or project goals to professional and organisation standards. Results like this would be a dream outcome for employee profiling.

The index results are counter-institutive to the ideas of how business is supposed to be organised to achieve best results. 'Contracting out,' which is really the topic under investigation, is supposed to create a transient workforce. But name any employment-structured organisation that doesn't have constant churn of staff. Yes there are some, but staff stability doesn't necessarily translate into high performance. Performance is more complicated than assuming it comes from permanency.

What's happening is that the surge in self-employment; that is people being businesses of one, is changing the structure of economies and firms. This is what French president Hollande doesn't understand. Bonded and loyalty driven employment is deconstructing. People are thinking like and becoming 'business people'. That's what the IPro Index is showing.

There's a different mental approach to work. It's not loyalty and commitment to a firm that matters, what drives self-employed business people is loyalty to their own sense of professionalism and a commitment to the job at hand. The index shows that self-employed people are committed to their client organisation for the duration of the job.

This happens because it's a client relationship based on mutual benefit. Further, self-employed people out-profile employees on work satisfaction and happiness measures. This enhances performance.

What's happening is that as large organisations chase performance they are inevitably drawn to the use of self-employed people. But this clashes with prevailing human resource concepts of what a firm is supposed to be. The Monash University research demonstrates any concerns are based on declining concepts rather than hard facts.

Just as France's President Hollande has discovered self-employed entrepreneurs know how to get things done.

Post has no comments.
Post a Comment

Captcha Image

Recent Posts

Be Protected!

You can become a Protected Member

Only $40 a month (plus GST)

You receive:
Tax Investigation Support
Unfair Contract help

Member benefits info here
Join as a Protected Member