Our Evolving Workforce: Independent Earners

TLDR: We need to start treating technology as a trade where it is appropriate. There is a significant issue with productivity within New Zealand, it is lacking, and we need to change how we manage and engage our varied technology workforce.

Generally, where there is a long-term, ongoing requirement, for resource, that should be via a full-time employee. Where work is less than six months and seeking targeted outcomes, that should be via a contractor.

Pre-COVID, we were starting to see the technology workforce move more and more toward an independent earner model, contractors. One large recruiting agency had that ratio at 40% contractors, 60% permanent employees, slowly trending toward independent earners.

As I have written previously, the rough balance should be around that ratio if you are employing skilled technical resource. That is the optimum split to get the most out of your workforce. As we know, independent earners don’t cost more than an employee, will allow you to target blocks of work, hire skill when you need it and release it when you don’t, and generally increase your productivity.

But we are still doing the hiring in a somewhat constrained way that is a hangover from the past. We want to see long contracts, which are hard to budget for. We have panels that add time and overhead to the process for no value. The margins by some consulting companies are excessive, driving up cost.

So, we need to change our thinking.

We need to move to a more flexible model for contractors and companies that want to hire them.

Imagine that you want to put a new bathtub into your bathroom. You know the bathtub you want, roughly, the colour, and when you need it to be installed. You are going to need a plumber to install it for you.

To hire the plumber, because of the region you live in and regulatory requirements, you only have a choice of three. Even though you know of two plumbers in your neighbourhood who could do the job well, you are forced to go through a panel to choose the plumber.

You interview all three plumbers to see if they are up for the job and how much they are going to cost. You arrive at a choice of one.

The plumber you have chosen tells you that they will need a three-month fixed contract, 40 hours per week, to install your bathtub, they will also want to live in your house and you to supply their tools. You agree with this.

Due to regulations, you must adhere to strict contract definition rules. You draw up a standard thirty-page contract, and you and the plumber seek legal advice before finally agreeing a signed contract.

The plumber starts work.

For the most part, they sit around waiting for various other components to arrive and be installed. In that time, you use them to fix some other plumbing issues around the house, after agreeing with contract variations.

Finally, the bath is installed, the contract complete, and at a bargain price of $60,000, of which $6,000 goes to the panel who supplied the plumber.

Sounds far-fetched? For a plumber, absolutely, to hire a contractor for a government agency, not so much. Here is how that analogy should work.

Using research, word of mouth, checking qualifications, and online reviews, you choose two plumbers whom you think can do the job. You contact them, they turn up the next day (ok, so that would never happen) and do a site visit.

Quotes arrive for work a week later, and you choose your plumber. You pay for half the materials upfront. The plumber arrives and installs the bath over three days. The work is certified. You get the bill for $3,000 excluding the bathtub cost.

You can see where I am going with this.

For all intents and purposes, once a technology professional is past a certain point in their career, they are either going to be designing how to install the bathtub, managing the installation of it, or doing the actual installation.

Contractors are the design and do part of that equation and in that respect, are just another tradie.

As an aside, I have long advocated for technology apprenticeships to train new technology workers. Clear career pathways and formal training coupled with practical experience, would build some highly skilled professionals.

Back to our independent earners.

In the future, I am quite sure that contractors are going to have to become a lot more flexible, as are companies and agencies that hire them.

In short;

  • Companies and agencies define the work that is required and the type of skilled resource they need to carry out.
  • They scan the open market, or use agents, and look for that resource based on previous experience, qualification, price, reputation, and references.
  • Preferred practitioners are invited to review the brief and provide quotes for the work.
  • A professional is chosen.
  • A short-form contract (this already exists) is signed. It is worth noting that in most case with a tradesperson you do not sign a contract, however, in the case of technology contractors this provides a safety net for both parties, mainly if the work is high cost and value.
  • Work is undertaken and completed.

This allows excellent flexibility for the independent earner who can manage multiple engagements in the same way that a tradesperson does. It will enable a company or organisation better value for money, more extensive access to skilled resource, based on defined outcomes, hiring the exact support they need. The process removes much bureaucracy, overhead, cost, and time.

This clearly will not work for a lot of people, which is why we still need that balance of full-time employed and independent earners. The independent life is not for everyone because it carries some overheads and perceived risk that a full-time employee does not have to worry about.

Generally, where there is a long-term, ongoing requirement, for resource, that should be via a full-time employee. Where work is less than six months and seeking targeted outcomes, that should be via a contractor.

We need to start treating technology as a trade where it is appropriate. There is a significant issue with productivity within New Zealand, it is lacking, and we need to change how we manage and engage our workforce. 

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