Lately, I’ve been reading
a number of articles on the rise of so-called temporary organizations. While such
types of teams have been around for a while (e.g., movie crews, emergency
response teams), several related trends seem to be driving their prevalence. One
is the reluctance of workers who get laid off to move elsewhere to find work.
Related to this is the growing number of workers doing freelance work in what
is known as the gig economy. Third is the rise of crowdsourcing. And fourth, with
the increasing opportunities in technology and software for groups to get
together quickly, so-called “flash organizations” are popping up, where
freelance workers get together for a limited amount of time to work on specific
projects with clear deadlines and end points (Valentine et al., 2017).
What do we know about such
temporary organizations and their effectiveness? Are there lessons learned that
we can apply to large, traditional organizations - management practices from
these temporary organizations that are transferable to permanent organizations?
In their paper, Valentine
et al. (2017) describe flash organizations as “crowds structured like
organizations to achieve complex and open-ended goals.” In fact, they unequivocally
state that “Flash organizations advance a future where organizations are no
longer anchored in traditional Industrial Revolution-era labor models, but are
instead fluidly assembled and re-assembled from globally networked labor
markets.”
In a recent research piece,
Burke and Morley (2016) propose defining a temporary organization as “a
temporally bounded group of interdependent organizational actors, formed to
complete a complex task.” (p. 1237) Such temporary organizations of course are
nothing new, both within and outside the context of traditional or permanent
organizations. Task forces, committees, project teams, surgical teams, and
special assignment teams are examples of the former; movie or theater
productions, software development teams, and emergency response teams are
examples of the latter. What they all have in common is a fixed end point,
whether that is defined by time or by the achievement of a certain objective.
On
the other hand, it does not seem like large organizations are going away soon. The
big four technology companies – Facebook, Amazon, Google and Microsoft – have
been increasing their headcount every year, as have the largest U.S. Fortune
500 companies. In my recent book (Henson, 2016), I wrote that despite the
changes going on in organizations today (especially with automation and
robotics), the three organizational building blocks or “infrastructure”
elements of structures, rewards, and processes will continue to be in place to
help an organization achieve its strategy and objectives. The modern
organization, despite much criticism, is arguably still a great invention, and
will continue to evolve. And these building blocks of structure, rewards, and
processes will remain essential to any organization.
Take
the so-called “gig” economy, where there exists an increasing number of
part-time and freelance jobs. According to a 2016 McKinsey Global Institute
report, these constitute approximately 4% of the U.S. workforce. However, the
Wall Street Journal (August 9, 2017) reports that this segment will most likely
shrink due to a labor market that is strengthening as well as disillusionment
with this type of work. After the 2007-09 recession, as companies reduced their
workforce or shut down completely, the unemployment rate increased and laid-off
workers sought part-time employment. With the labor market now growing,
companies are hiring once again, and they are hiring full-time workers. Uber
for example recently hired over 100 drivers for customer-support jobs. Even for
their part-time and freelance workers, many companies are offering perks.
Uber’s competitor Lyft has implemented a “tiered perks” program with enhanced
tax, health and car-maintenance services to its 700,000 drivers, depending on
the number of rides completed. DoorDash, a food-delivery start-up, offers its
independent contractors health-insurance plans and next-day payments. Signing
and referral bonuses are not uncommon in these companies.
McAfee and Brynolfsson
(2017), who earlier wrote the masterful The
Second Machine Age, recently published a sequel to that book. In their
chapter entitled “Are Companies Passé?”, they try to answer this question by
drawing on the work of the Nobel-prize winning economist Ronald Coase. Coase
wondered why, if markets were so great, a lot still happens within companies.
For Coase, the choice between firms and markets comes down to costs. While
markets are efficient, they have higher costs than firms in several areas,
e.g., the costs of negotiating and making decisions, the costs of concluding
separate contracts and enforcing them. Therefore, he concluded, big firms will continue
to exist. In addition, as McAfee and Brynolfsson point out, companies offer
additional advantages:
“Companies also exist because they serve
several other economic and legal functions that would be difficult to replicate
in a world made up only of freelancers who constantly wrote contracts to work
together. Companies are assumed to endure indefinitely … which make them
suitable for long-term projects and investments. They are also governed by a
large and well-developed set of laws … that provide predictability and
confidence. As a result, companies remain the preferred vehicle for conducting
many kinds of businesses.” (p. 319)
Having
permanent employees provides advantages to companies as well: stronger
psychological contracts between employer and employee, greater stability of the
workforce, a larger repository of tacit knowledge, greater protection of
intellectual property, clearer lines of succession, and a “stickier” corporate
culture. Permanent organizations also help employees in these organizations achieve
the four drives that Lawrence and Nohria (2002) have identified that we have
acquired through evolution - to acquire, bond, learn and defend - more so than temporary
organizations do.
While there will always
be a segment of the workforce choosing to remain independent, many still find
satisfaction with belonging to a company (see the four drives above). Uber
found that in 2016, 45% of new drivers left the platform in their first year.
According to a JPMorgan Chase Institute report, while about one in six workers
in the gig economy are new each month, more than half exit within a year.
Not
surprisingly, flash organizations make use of the three building blocks of
structures, rewards, and processes, but with some twists. For example, as
Valentine et al. (2017) have argued, permanent organizations have what is known
as asset specificity, the pattern of relationships that gets established as
employees work together over a period of time and learn to coordinate and
collaborate together. In flash
organizations, roles for workers are clearly defined, and these roles are then
arranged in a hierarchy to make sure that authority and decision-making are
also clear.
Valentine
et al. provide examples of flash organizations in software, project and game
design. In all three cases, the organizations lasted three weeks, and they all
completed their goals to the satisfaction of the leader and received an
acceptable quality rating by three expert reviewers. These flash organizations
had 93 crowd workers, 22 team leads and 24 teams. As a specific example, one
such flash organization was the EMS Trauma Report group, which was tasked to
develop an Android application for emergency medical technicians that they
could use to send advance reports to the hospital while they were still in the
ambulance. Valentine et al. wax optimistic about the future of such organizations:
“We envision a world in which anyone with an internet connection can assemble
an organization from an online labor market and then lead that organization in
pursuit of complex, open-ended goals.”
In a recent article about
their research and on the rise of flash organizations, the journalist Noam
Scheiber (2017) point to three lessons from these types of organizations. First
is the importance of technology in facilitating the emergence of these teams.
Some groups collect many data points on potential candidates to identify the
best mix of members. Second is the need to define clear roles and
responsibilities. And third is the need for what Scheiber calls “middle
managers” but who are actually team coaches, project managers or leaders. None
of these lessons are particularly unique to flash organizations; in fact, these
organizations are continuing to utilize the infrastructure elements of structures and
processes.
For those responsible for
organizing temporary teams, here is some advice. First, select team members
carefully, making sure the teams have the right technical skills but also the
right balance of interpersonal and soft skills needed for members to work
together and develop what Meyerson et al. (1996) call swift trust. Swift trust is
important especially when these temporary teams are virtual, as many of them
are. Iacono and Weisband (1997) have suggested that trust in such virtual teams
is built around “doing” more than “relating” and these involve two mechanisms:
initiating interactions, and relevant and timely responses. In their study, those
virtual teams that had frequent messages initiated by members regarding work
content, and frequent as well as timely responses to these messages, tended to
build trust more quickly and ended up performing better than other teams.
Second, define roles and
responsibilities carefully while allowing for some flexibility. This is
especially important when managing and resolving conflicts with members or
groups in the temporary organization who identify with different entities. For
example, in an interesting case study of the Panama Canal Expansion Program,
where there were multiple parties (including a local Panamanian company and
U.S.-based contractor), conflicts often arose that were not necessarily
resolved by defining roles and responsibilities alone (van Marrewijk et al.,
2016). The authors found that interventions (such as having celebrations,
creating images of a unified team) were necessary. Presumably, this also helped
to build trust. There are some who have argued that since members of these
temporary organizations are not likely to work again in the future (with some
exceptions; this is certainly not true of temporary organizations within organizations),
they are less concerned about long-term benefits (for example, acquiring
teamwork skills). Rather, the focus of these teams is on the task, for example,
clarifying roles and responsibilities. However, as the Panama Canal project
study has shown, an exclusive focus on the task is not sufficient.
Interpersonal relations still need to be considered. Furthermore, because of
the need to develop swift trust, leadership skills become very important.
Third, for teams that are
embedded within large organizations, proactively shape the right culture for
the team. Some of the key cultural elements to have in place include
transparency, adaptability, trust, and teamwork. And fourth, make sure the
leader is an effective “boundary-spanner.” Such leaders have not only the
desire but the skills to network, build alliances, involve different kinds of
stakeholders, and the ability to influence upward and laterally. They willingly
share information and collaborate with different groups. When these teams are
embedded within a larger organizational context, the issue of knowledge
sustainability and transfer become critical. Capturing lessons learned is
important, not only in terms of the content of the project but also in terms of
collaboration. The larger organization can learn a lot about effective
collaboration from those temporary teams that become truly effective.
In addition to a rise in
temporary organizations, we are also seeing a rise in temporary workers within
organizations. Estimates are that roughly 20-30% of the workforce is made up of
independents working for more than one organization. Independents are “separate
and not equal” in many organizations.
There is perhaps a larger
issue here that is beyond the scope of this post, but worth mentioning. Some have
suggested that the decline of permanent employees may have contributed to the
rise in wage inequality in the United States. In the past, when organizations
hired many employees for all sorts of work (including janitorial work), there
was at least in principle the opportunity to get promoted. With the increase in
outsourcing, many organizations have trimmed their permanent payroll to focus
on their core activities. Such outsourced firms generally pay less, with fewer
benefits and fewer opportunities to get promoted and get pay raises.
At the same time, as
McAffee and Brynollfson have pointed out, jobs that require high social skills
have increased as a share of total employment. They state three reasons for
this. First, since the world is becoming more complex and fast-paced, managers
are needed to serve as “transmission belts” and facilitate the challenges of
coordination (e.g., communicating, negotiating, etc.). Second, we are more
persuaded by good stories and anecdotes than statistics and data. Third, we are
social animals and like to work together. They argue that the companies of the
future need to be more egalitarian and more transparent, i.e., that they share
more information more widely than those in the past.
Bakker, R. (2010).
Taking Stock of Temporary Organizational Forms: A Systematic Review and
Research Agenda. International Journal of
Management Reviews, 12: 466-486.
Burke, C. and
Morley, M. (2016). On Temporary Organizations: A Review, Synthesis and Research
Agenda. Human Relations, 69 (6):
1235-1258.
Iacono, C. S. and
Weisband, S. (1997). Developing Trust in Virtual Teams. https://pdfs.semanticscholar.org/49fb/0072ab1c85bbb6a2ec3c60c85594f1f9f24d.pdf
Meyerson, D. et
al. (1996). Swift trust and temporary groups. In Kramer, R.M. and Rylwe, R. R.
(eds.), Trust in Organizations: Frontiers of Theory and Research. Thousand
Oaks, CS: Sage, pp. 166-195.
McAfee, A. and
Brynjolfsson, E. (2017) Machine-Platform-Crowd.
New York: W. W. Norton.
Scheiber, N.
(2017). The Pop-Up Employer: Build a Team, Do the Job, and Say Goodbye. The New York Times, July 12.
Valentine, M. et
al. (2017). Flash Organizations: Crowdsourcing Complex Work by Structuring
Crowds as Organizations.
www:http://hci.stanford.edu/publications/2017/flashorgs/flash-orgs-chi-2017.pdf
Van Marrewijk, A.
et al. (2016). Clash of the Titans: Temporal Organizing and Collaborative
Dynamics in the Panama Canal Megaproject. Organization
Studies, 37 (12): 1745-1769.
