E-Employment - Is It Time
to
Change the Way We Work?
Compelling Arguments for the Next Internet Revolution
by Ron Messer, MBA, CMA, CA
SUMMARY: Corporate culture and values
should be more like the open-source software movement in order to take advantage of the
potential of virtual employees.
he
Internet changes everything. The
fact that this statement has become cliché in a relatively short time is quite in keeping
with the speed at which the networked world is unfolding. While there have been several
'glitches' in the business models developed by the numerous dot.com companies that
populate the Internet, the future still looks very promising for e-commerce.
The Internet is primarily a medium for exchanging
information, typically about goods and services, including their prices, specifications
and quantities. Both buyers and sellers benefit from this exchange--including B2B and B2C
markets. What is interesting is that while e-commerce facilitates the transfer of
information between third parties transacting for goods and services, it does not address
other economic exchanges, most notably the sale of labour. Even though the Internet has
enabled agency relationships between those demanding and those supplying labour (through
what has become popularly known as 'e-lancing') it has not--as yet--fully
elaborated other network-enabled work options.1
There will always be a need for individuals to
commit themselves to the goals and objectives of companies through employee/employer
relationships. In all likelihood, this will become increasingly true with the expected
demand for knowledge workers and the realisation that knowledge is the capital of the
twenty-first century. While alternative forms of labour markets have emerged--such as
employee contracts and outsourcing--every organisation will require at least a core of
people who have committed themselves to a corporation's long-term vision.
The promise of the Internet and--more
broadly--information technology for today's knowledge-worker is the ability to create a
seamless web of communications links that overcomes time and space
constraints. In other words, individuals will be able to work 24 hours a days, seven days
a week anywhere is the world. Fax machines, e-mail, voice mail, conference calling, FTP,
video conferencing and the Internet allow knowledge workers to quickly send and receive
the information needed to perform their duties.
What this means, is that a financial analyst
employed by an investment bank in New York, can live and work in Vancouver without having
to relocate. The benefits to both parties are quite obvious, including a lower cost of
living, cheaper wages because of foreign exchange differences and no office space
requirements. These cost savings can amount to as much as 70% of the average pay for a
financial analyst.2 In addition,
there is the benefit of having a wider range of workers from which to choose when
searching for expertise. These knowledge-workers will be unfettered by time constraints
(quitting time in New York is early afternoon in Vancouver) and space constraints (New
York and Vancouver both look the same to the Internet). 3
This scenario presents an intriguing possibility
because, typically, investment banks and management-consulting firms hire young and eager
MBAs from the nation's graduate schools. They pay them well, but in exchange require
significant amounts of travel and long arduous work hours. But this type of environment is
not suited to individuals who plan to raise a family. Consequently, it is not uncommon to
find few 30 - 50 year old employees in these firms. This is unfortunate, because this age
demographic has the benefit of being not only well trained and educated but also more
worldly-wise. Providing Internet-enabled time and place benefits to these
knowledge-workers through flexible work hours and virtual office arrangements would be a
true 'win-win' for both the knowledge-based business and their employees.
So why isn't the virtual world of work unfolding?
I believe that there are two issues that need to be addressed before e-employment can
occur, these being: (1) corporate culture and (2) value creation.
Changing the Notion of Culture
Most knowledge-based businesses pride themselves on their culture. Many examples come
to mind, like McKinsey and Co., Goldman Sachs, Microsoft and Cisco. Culture is a set of
shared values that defines and differentiates a group from its peers and other groups.
These values are collectively agreed to and are considered important, if not vital, to an
organisation. They are articulated through attitudes, beliefs, customs and folklore (for
example, humorous/heroic stories about a company's founder).
Culture typically develops and is reinforced
through face-to-face interaction. In these forums, corporate values are shared and
re-affirmed. The question then becomes whether the Internet and related technologies can
create and sustain a culture. I believe that the networked world can nurture a culture
that is as genuine as any other. I also contend that the best model for understanding
'virtual' culture is the open source software movement, which began with the development
of the Linux operating system.4
Open source software is (arguably) a response to
the commercialisation of intellectual capital. In the case of the Linux operating system,
programmers from around the world, linked through the World Wide Web, collaborate and
co-ordinate the difficult exercise of developing a superior computer operating system. It
is truly astonishing that an apparently diverse group of individuals will freely
contribute their time and energies to an unpaid project that benefits a large number of
people. This phenomenon is evidence of a 'virtual' culture that demonstrates a unique set
of values and beliefs--including the importance of freedom of expression, beneficent
anarchy and mastery of technology (i.e. the 'hacker' culture).
5 From this environment has emerged not only a serious challenge
to one of the most powerful companies of the twenty-first century (Microsoft), but also a
new organisational form that will become the prototype for the way in which corporations
operate in the future. 6
While the culture of the open source software
movement may not fit with that of an investment bank (like Goldman Sachs) the main point
is that culture can exist and thrive in both the 'real' and the 'virtual' worlds.
Furthermore, if the virtual world offers distinct and quantifiable benefits, it presents
an opportunity for companies to obtain competitive advantage in a knowledge-based economy.
But, is it true that open source software
groups--and the culture in which they exist--provide value? I claim that they most
certainly do, as evidenced by the success of companies which have incorporated the work of
the open source community into their strategic business plans, such as Red Hat Inc.
Changing the Value Proposition
Knowledge-based businesses invariably mention the V (value)-word in their discussions
with prospective customers, such as in creating 'value-added' opportunities for companies
and enhancing the 'value proposition' for consumers. They earnestly believe that their
products and/or services can generate greater 'value' for an organisation, meaning that a
company will become more profitable if it buys what they sell. While it is arguable
whether this is the case, it is certainly true that knowledge workers are persuasive in
convincing frantic CEOs of this 'fact'.
A large part of the culture which knowledge-based
businesses (such as investment banks) create and encourage involves developing a feeling
of confidence that their members have superior knowledge. For this reason they can provide
persuasive (but not necessarily real) value to clients. Sometimes this
cultural expression is referred to as ego, arrogance or 'attitude' (to knowledge-based
firms it is simply a matter of confidence in their abilities). Invariably, however, it is
considered a prerequisite for selling value--persuasively--to potential customers. Yet, if
the persuasive element is removed from the value proposition, the customer is not worse
off. In fact, they will probably be better served, in that they will be more open to real
value-added goods and services (and less 'b.s.').
The open source software movement is known for
its 'no-b.s.' style. Programmers volunteering their services must provide value or they
are quickly ejected from the 'club'. Persuasion becomes a non-issue when face-to-face
interaction is eliminated, as in virtual communities. In this context, communication
becomes focused on content and not form; there is less style and more
substance, which ultimately is the real intent of providing value--i.e. a true,
unadulterated 'value proposition'.
Changing Culture to Create Better Value
The open source software movement has shown us not only that culture can exist in
cyberspace and but that it can create valuable economic outputs, like the Linux operating system.7 Genuine
value enhancing propositions for knowledge-based businesses, such as wage savings and
larger talent pools far outweigh the somewhat antiquated notion that persuasive skills
provide real value to customers.
These observations suggest a world where
knowledge-based businesses--such as investment banks--can utilise the specialised skills
of individuals anytime and anywhere, by allowing technology to both
facilitate and enable the exchange of information to generate knowledge and thereby create
value for customers. At the same time a knowledge-based business's investment in culture
can be retained, albeit in a different way, through the new virtual world of work.8
It should be noted that the e-employment work
mode suggested here is significantly more expansive than simple telecommuting, which only
overcomes (by using technology as an enabler) local--short-distance--space constraints.
Furthermore, telecommuting does not address time constraints and does not achieve the more
significant cost savings noted when the Internet's capability to overcome space
constraints is fully utilised.
Although there is currently no pressing
imperative for knowledge-based businesses to act on the opportunities created by the
Internet, the prospect of some new and innovative firm capitalising on technology to save
labour costs and hire increasingly rare skilled knowledge-workers should spur companies to
action.9 Otherwise, it is
sad to say that for the laggards, the Internet really will change everything.10
Endnotes
1 See Katharine Mieszkowski, "The E-Lance
Economy," Fast Company, November 1999, Issue 29, p. 66 [Back to text]
2 Estimated annual salary cost savings are
calculated as follows:
- assumed annual salary for a financial analyst with
MBA in NYC--associate level--is $US 100,000
- no office space requirements = $US 3,000 (assumes
100 ft2 @ $US 30 psf)
- foreign exchange differences = $US 31,000 ($1 US =
$CAN 0.69 - spot rate on Jan. 24, 2000)
- cost of living difference = $US 36,000 (assumes
renting in Manhattan - per www.homefair.com)
- total cost savings = $US 70,000, or 70% of total
annual salary costs [Back to text]
3 Suggesting that a
company's employees can live and work anywhere in the world is a revolutionary proposition
that has significant implications for commercial/residential real estate, taxation of
personal income and employee supervision. [Back to text]
4 While it is true that freeware and shareware has been available for
some time, what differentiates the open source movement is that it allows free access to
an application's source code for development purposes. [Back to
text]
5 For more information on the open source software community
and its culture, visit their web site at www.opensource.org. [Back to text]
6 Virtual communities also exist within the software
development departments of larger companies, such as IBM. For example, inexpensive, yet
highly capable computer programmers from India provide support and coding skills for
large, complex systems projects. This network of IT knowledge-workers is linked via
e-mail, FTP, etc. and is required, of necessity, to co-ordinate its activities. Virtual
culture sustains such working units and also provides value to customers. (See here, for
example, "The Knowledge Edge," Wharton Business School, http://knowledge.wharton.upenn.edu/ [Back to text]
7 Mozilla.org is another example of an open source
software community. This group of cyber-workers is dedicated to developing the Netscape
browser. [Back to text]
8 This will, of course, entail modifications to the
processes which companies have in place to pass on their cultural heritage to new
members--such as changing employee orientations and training programs, as well as
team-building activities. [Back to text]
9 It is intriguing to suggest that the Internet
and e-employment will create opportunities for 'knowledge arbitrage'. For example, a
financial analyst working in Vancouver will have a significantly lower price (i.e. salary)
relative to the same knowledge-worker in New York--due to cost of living, currency
conversion rates, etc. Consequently, if knowledge is the capital of this century, shrewd
businesses should be able to take advantage of this pricing anomaly (e.g. employee
'leasing' companies who buy the services of the financial analyst in Vancouver and sell it
to a New York based investment bank). Compare Daniel H. Pink and Michael Warshaw,
"Free-Agent Finance - Stan Davis," Fast Company, December 1997, Issue 12,
p. 152. [Back to text]
10 Compare, Robin Pascoe, "Business Without
Borders," BC Business Magazine, December 1999, pp. 53-61. For a description of
how the activity of knowledge workers has changed, see Stephen Barr, "What Does the
Next Century Hold for Corporate Finance?" CFO Magazine, January 2000 URL: www.cfonet.com. [Back to text]
About the Author
Ron Messer has an undergraduate business degree (B.Comm.) from the
University of Windsor (Ontario, Canada). He is also a Chartered Accountant (C.A.) and a
Certified Management Accountant (C.M.A.). In addition, Mr. Messer holds a Master of Public
Administration (M.P.A.) degree from the University of Victoria (British Columbia, Canada),
where his graduate studies focused on management information systems. He has also received
a Master of Business Administration (M.B.A.) degree from the University of British
Columbia (Vancouver, Canada), where his studies concentrated on Corporate Finance. Mr.
Messer has extensive accounting and information systems work experience. He is currently
employed as the Manager of Financial Services with the Vancouver International Airport
Authority, which is a private not-for-profit corporation that manages the Vancouver
International Airport. His essays have appeared in journals in Canada, the United States
and Great Britain and he has recently published a chapter on pricing aeronautical fees in
the Handbook of Airline Finance, as well as an article on airports and e-commerce
which appeared in Airports International and Ground Handling International.
Contact: Telephone 604-276-6785; Fax 604-276-7477; E-mail Ron_Messer@yvr.ca.
