I was recently asked to do some work for a large financial services company to help them think through and create a framework around building an organisation that genuinely operates differently.
Until this engagement, my view was that independent contractors are generally blue-collar workers (sourced through controversial labour brokers) or specialists who interface with mid- to large-sized companies for specific projects – it is now known as the “gig economy.”
This company had two executive directors contracted on a part-time basis to bring their expertise to the organisation daily yet were also able to service multiple clients. Unlike a non-executive director who may be called in quarterly to serve at a board meeting or more frequently at a management meeting, these two individuals worked almost every day at their “client” as executives.
Why this experience proved noteworthy for me is that it highlights the pervasiveness of independent contractors and the plethora of different relationship types they may have within an organisation … full time, part time, half day, executive management, senior management, mid-management, no management – the combinations are endless.
At this point, I think it’s important for me to come clean about my views on working from home versus coming in to that central office environment that we call work. I certainly recognise the benefits of working from home or a coffee shop in terms of travel times, lack of distractions, etc. but, in all honesty, I have not seen this model work successfully over a long period of time.
Two cracks that start to appear once the novelty has worn off are the cost of managing the outputs but, more importantly, the rapid disintegration of the cultural glue that is an unintended consequence of the random encounters in the kitchen or at the coffee station and those awkward urinal or bathroom moments.
Many small businesses I have encountered have found themselves with half-baked projects left behind by one of these evacuating independent experts
Pros and cons
I am conflicted about choosing one model (everyone is permanently employed) over the other (as many people as possible are outsourced) as I see pros and cons in both. If you forced me to choose, I would not hesitate to choose the permanent team model at an office but, in the ideal world, a blended approach is probably the most effective way to navigate a rapidly changing environment or market.
In the corporate domain, a blended model is plausible (and is currently fairly common practice) but in the small-business context this blended approach is far more complex to execute.
Independent experts who work for small businesses are more than likely not in a strong financial position themselves and are highly susceptible to switching their allegiance to higher paying clients.
Many small businesses I have encountered have found themselves with half-baked projects left behind by one of these evacuating independent experts. Because these projects are incomplete, they have zero effectiveness or value, and the small-business owner has neither the time nor the capability to complete them on their own.
The small-business environment generally has far less sophistication and capacity to manage these independent experts in terms of budgets, deadlines and alignment
How independent business experts can hurt SMEs
We need to distinguish between a person brought in as an independent to do a job, and a business expert brought in to build or implement an element of the business, for example, a process or a website or new software. Small businesses are in a build phase constantly and thus need these expert builders.
If the small-business owner experiences a business expert leaving before a project is completed and has the courage to retry (which most don’t), they are generally confronted with a situation in which the next independent expert pooh-poohs the previous methodology and insists on starting again. Budgets are always exceeded as multiples of the original budget, and this in a context where every cent counts.
The small-business environment generally has far less sophistication and capacity to manage these independent experts in terms of budgets, deadlines and alignment to brief which makes both scope and budget creep a virtual certainty. Another element not often spoken of is the emotional toll of cycling through independent experts who feel like a series of broken relationships leaving one feeling self-conscious and inadequate.
So the question of independent experts is not so clear cut for small businesses. While there are many exceptions and many great independent experts, by far the majority of small businesses I have been involved with over the past 20 years find themselves in the dilemma of not being able to afford these resources full time but cannot manage and conclude the work required themselves. As a result, there are gaping capacity and capability holes in businesses that take many years to fill and which are smoothed over in the meantime with a combination of hope and glossy brochures.
How it can work
Where I have seen small businesses succeed is when their products and services are built from a strong internal core competence, and where the growth and depth of those competencies is slowly layered by additional internal resources or external experts with very specific, short-term value addition and not long complex engagements.
I call these resources the “riveters” and “welders” who come in to do a specific job and then leave. Only once the business gets to a stage where there is sufficient capacity to manage these independent experts and there are sufficient financial means to withstand the inevitable budget overshoot should a small business consider hiring external experts as part of a blended approach.