How the culture clash between contractors and managers stifles innovation: Phillips

If you’re one of the 20% of Australian workers who is self employed, you might be surprised to learn that despite your own confidence in your skills and background, they’re not what your clients are interested in. They probably just want you to top up their workforce, according to new research out of the UK that identifies a big divide in the ways the self employed are perceived.

The survey from the Professional Contractors Group was released for their National Freelancers Day – a day of pride and celebration in being self employed. The survey looks at the motivations of self employed people and very much dovetails with the motivations we’ve found in Australian research.

The UK survey approached the issue in a new way. It compares the attitudes of the self-employed people – ‘freelancers’ – to the ‘business leaders’ who use their services. There’s quite a difference, one that probably points to motivations around innovation.

The survey showed 35% of business leaders describe freelancers as ‘temporary workers’ but no freelancers describe themselves this way. While 84% of freelancers say their clients use them to buy in skills, only 35% of clients cite this as a reason. The main reason businesses use freelancers is to manage peaks in their workload.

Differences also show up in perceptions of skills. Freelancers see their career history and personality as important to the client. Clients see training, qualifications and price as important. The survey showed 21% of freelancers think their ability to challenge the status quo is important, but this only rated with 9% of business leaders.

In overview, what we are seeing is an attitude of confidence amongst self-employed people as potential or actual innovators. But this is not what the business leaders of the clients want. Instead they’re displaying a traditional employer mould of thinking. They want ‘functionaries’ as part of the ‘employer’ capacity to control their organisation. In this sense the business leaders profile more as bureaucrats rather than innovators. Or at least perhaps the business leaders see themselves as the exclusive innovators in which external people play no innovative part.

This disconnect in attitudes between self-employed people and their clients has major implications. It’s particularly significant because both parties agree that freelancers are essential to the growth of the UK economy. They say that working patterns are going in a ‘self employment’ direction. This is a global trend.

What’s highlighted is a cultural problem confronting innovation development. Self-employed people see themselves as innovators. Managers in larger firms appear captured by standard employer attitudes of command and control. Innovation potential exists but is rejected. This should worry governments who desperately want cultures of innovation within societies.

At least in Australia there’s some recognition by big business of a need to work with small business. Australia’s peak big business body, the Business Council of Australia released a report late last year arguing that there’s a strong economic co-dependency between big and small business. What the BCA report didn’t do however is explain how that co-dependency should operate.

Unfortunately the practical reality is that large businesses that use small business people often put in place commercial arrangements that enable the ‘screwing over’ of the little guy. At Independent Contractors Australia we’ve case studied this.

In one particularly bad example, a major global business with a high profile brand contractually screws the owner-drivers it uses to deliver its Australian products. It’s probable that they do the same globally. But in doing so I know from discussions with the drivers that they suppress their innovation potential, denying the business an important opportunity.

Here’s the challenge. The PCG report shows that business leaders are most worried about how they establish the contractual scope when using self employed people. The frequent response is that large businesses resort to giving themselves dictatorial contractual power. The resultant self employed person’s response is to not innovate.

What global surveys are showing is that the self employed most cherish their control of their work. Take this away and they don’t innovate.

Here’s the dilemma. Our changed economies and societies are confronted by a big learning curve. There is a global trend toward self employment. Self employed people recognise the innovation potential inside themselves, but the management status quo is stuck in employer-style command and control. This is innovation constrictive. The potential exists but it’s stifled. This clash of intent needs to be worked through if global innovation levels are to be lifted.

Ken Phillips is executive director of Independent Contractors Australia and author of Independence and the Death of Employment.

This article first appeared on Business Spectator