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Archive for March, 2016

Is tech turning contract work into the future of employment?

More and more work is happening over the web…..

Technology has made it easier than ever for employees to work remotely. TechRepublic talked to experts and CEOs about why more and more companies are using contract workers.

Technology has made working remotely easier than ever. And many companies are taking advantage of this­­—not just by having workers telecommute, but by outsourcing certain jobs to contract workers. The movement towards contract work—think platforms like Amazon Mechanical Turk, ClickWorkers, CrowdFlower—is part of a larger trend away from regular employment and towards piecing together tasks.

Gartner analyst Diane Morello has been working with companies for years to help them keep up with workforce trends. The movement towards contract work “reminds me of when my immigrant grandparents came to work in New York City and did piece work,” she said.

While the technology is certainly there, she thinks that the success of piecework hinges on the “basics of organizational and institutional competence.”

“It’s about whether or not companies can make this work,” said Morello. “That’s the bigger challenge out there.”

Morello thinks that companies need to catch up with the idea that they need to outsource work. She speaks to 10-12,000 companies around the world, employing about 250,000 people. Among all those companies, she sees “a very small fraction understanding that they can start to break down work into increasingly smaller components and break it apart to some kind of massively parallel processing mode,” she said. “They can have bits and pieces done and then reassemble that onsite.”

Most companies she talks to still think of this as outsourcing. “They’re not really advancing their models and thinking around how work is getting done, or more important how technology in this digital technology platform enables them to reach hundreds of people to get work done in smaller chunks in a faster way,” said Morello.

The big difference, she said, is that it’s a shift towards work as a transaction versus a relationship. Not only do business want work done in small pieces, but she sees “a consuming audience who wants to do that.”

“The businesses we talk to who are struggling to find the right talent and the right people say they want the relationship,” she said. “But when you delve into it, what they’re looking for are people who can finish work products.”

Businessowners agree.

“I absolutely see larger companies outsourcing things that are non-core,” said David Chang, entrepreneur-in-residence at Harvard Business School, and previous co-founder of SnapMyLife.

Chang used Trip Advisor as an example, where “the sheer volume of work” created a huge demand for contract work. “At TripAdvisor, we had classifiers who helped with that,” said Chang.

He also sees a distinction between core and non-core functions as important. In core tasks, “the company wants to build up a competency or muscle around a key area,” said Chang. “For Apple, hardware/software is core, so they don’t outsource it,” he said, “while at Microsoft, they happily let others deal with hardware (e.g. Dell, HP).”

It’s all part of meeting a huge demand to complete tasks.

“There are thousands and thousands of companies that are all feverishly looking around for people to do work in the context of information and technology and web design and the like,” said Morello.

“This is a channel to get some work done.”

Businesses, Morello believes, will “splinter into two different directions. One will be those businesses that have extraordinary cultures, core sets of values, and taken advantage of all the aspects and ways that they can piece together someone’s expertise in the work,” she said.

The other group “will continue to work with a single pipeline that tends to go through HR. It’s probably not going to operate at the speed that the modern business community is operating at.”

Digital technology, she said, will “blow the employment model apart. It will send people in one direction where there are a lot of users of digital technology to find the expertise they need anywhere on the planet.”

There’s a risk, Morello said, for not taking this seriously.

“You are either leaders or you are laggers,” she said. “Nobody can be in the middle.”

The 3 big takeaways
  1. Platforms like Amazon Mechanical Turk, CrowdFlower, and ClickWorkers take advantage of a remote labor force to get tasks completed.
  2. Outsourcing small tasks is part of a bigger trend that shifts business models from “relationship” to “transaction,” according to Gartner analyst.
  3. Separating core and non-core work is essential to managing flow of work—and many companies are becoming more efficient by farming out non-core tasks.

By Hope Reese – Tech Republic

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M&A Bankers Saying No to More Junk

Looks like the large debt deals are slowing down due to risk….

Banks retreat from the lucrative but risky business of backing debt-heavy buyouts

Banks are increasingly turning down companies seeking financing to pay for debt-laden takeovers after the recent market rout left them saddled with debt from earlier deals.

Credit Suisse Group AG, Jefferies Group LLC and Wells Fargo & Co. are among the firms turning down new requests for financing—typically from low-rated companies—as they retreat from the lucrative but risky business of backing debt-heavy buyouts, people familiar with the matter say.

Banks guarantee the funding in these deals, hoping to then offload all or most of it to bond and loan investors. They promise to provide the money themselves if they can’t find others to buy the debt. But as markets swooned in the months since the summer, investors have lost their appetite for the riskiest securities, making them harder to sell.

Some banks have unloaded the debt at discount prices, taking losses, while others are holding the loans in hopes of getting better prices later, which ties up bank capital and can hurt profitability. Banks were left with at least $1 billion in debt on their books over the past 12 months, according to banks and analysis by The Wall Street Journal.

With banks less willing to underwrite the most leveraged loans, the flow of new takeovers has slowed. U.S. mergers and acquisitions announced this year have fallen 21% from a year earlier to $229 billion, according to data from Dealogic. The pullback has made it hard for private-equity firms, which use a lot of debt in their takeovers, to get deals done. Those that are getting done, many are built to minimize junk debt, or debt rated below investment grade.​New junk-bond sales are down 70% this year.

Banks including Wells Fargo and Jefferies have also started cutting the number of finance bankers in response.

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Making collaboration across functions a reality

There are already tools and networks that make collaboration across functions a reality….

Fast-changing global markets put a premium on simplifying processes radically and breaking through silos.

Companies have long struggled to break down silos and boost cross-functional collaboration—but the challenge is getting more acute. The speed of market change requires a more rapid adaptation of products and services, while customers increasingly expect an organization to present them with a single face. Even well-established multinationals routinely fail to manage operations end to end.1The result: interactions with customers are sluggish; complex, customized products are hard to create on time and on budget; and blocked lines of communication make new sales and distribution channels difficult to navigate.

The basic principles for improving performance—imposing stretch targets from the center, empowering cross-functional teams, standardizing processes, tightening up execution—are mostly familiar. But making these things happen is a different matter. In many companies, ownership of processes and information is fragmented and zealously guarded, roles are designed around parochial requirements, and the resulting internal complexity hinders sorely needed cross-business collaboration. What’s more, in our experience, companies that apply traditional solutions (such as lean and business-process reengineering) either exhaust their managers with efforts to rework every process across business units or, by contrast, focus too narrowly within functions.

Our observations of 25 companies in a wide range of industries in Europe, Asia, and North America have led us to conclude that perspiration is as important as inspiration in addressing these challenges. Here’s the story of how two companies launched new approaches successfully. One needed to focus narrowly to fix a critical process that compromised its core business. The other, swamped by the complexity of its processes, required a broad-based transformation.

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By Ruben Schaubroeck, Felicita Holsztejn Tarczewski, and Rob Theunissen – McKinsey & Co

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PwC Wants To Use ‘Gig Economy’ Workers to Staff Projects for Its Clients

PWC may be doing it for themselves however the power is when it is a third party market place…

Freelance workers are a significant part of its future. 

PricewaterhouseCoopers, one of the Big Four accounting firms and No. 53 on Fortune’s 2016 Best Companies to Work For list, is looking to cash in on the so-called gig economy.

The company said Monday that it has launched a marketplace where freelance workers can upload their resumés and apply to work on projects for PwC clients. If PwC deems them qualified for a specific project, the freelancers will be invited to bid on the job by submitting their per-hour rate. Then it will be up to PwC to decide what workers get the gig.

Miles Everson, leader of PwC US Advisory, said the platform will allow the firm to tap into the growing segment of the workforce that’s independent. “We’ve seen a big increase in the freelance workforce,” he told Fortune on Monday. Part of that trend is driven by demographics—mainly people retiring. But there are other people who are voluntarily “choosing to move around,” Everson said. “They’re building micro-entrepreneur careers by moving from one set of projects and experiences to another.”

Solid figures for the size of the independent workforce are often fuzzy and hard to pin down, but there is evidence that it’s growing. In October, for instance, the Freelancers Union and Upwork, a freelance talent marketplace, released a survey of 7,100 working adults in the U.S. that showed that one in three U.S. workers—or 54 million people—were freelancing, an increase of 700,000 from the year before.

PwC’s new platform called “Talent Exchange” is only available in the United States and is primarily geared toward the firm’s consulting business. It launched February 8 and as of Friday had garnered 4,650 registrants. Everson said PwC is still determining what percentage of applicants actually come away with a job, but he projected that freelancers will eventually make up 10% of the firm’s consulting workforce in the U.S., which now stands at 13,000.

Companies that rely heavily on independent workers—Uber and Lyft, to name a few—often say their hiring of freelancers reflects workers’ preference for flexibility, but they’re often criticized for using freelance workers instead of hiring full- or part-time employees. Independent workers—sometimes identified by their 1099 tax designation in the United States—are usually a cheaper alternative to a traditional W-2 employees since employers don’t have to pay for their Social Security and unemployment insurance or for their overtime and breaks.

In response to that critique, Everson said, “The jobs that we’re creating—they’re not low paid. We’re looking for highly skilled people who want an alternative work-life arrangement.”

He also said that workers can maintain a 1099 designation if they want or there’s a way for them to work through the platform under a W-2 status. “My view is that this is not wage arbitrage.” PwC might actually end up paying more for freelancers than it would if the work was done by its regular employees, he said.

That’s due—in large part—to the type of talent PwC is after. Many of the jobs it’s trying to staff with freelancers require skills that are in high demand and are hard to find. For example, PwC needs experts in Salesforce’s cloud software, but “we can’t hire them fast enough from a full-time standpoint,” Everson said. “If you’re the best at what you do, you’ll get a high rate.”

PwC’s new marketplace for freelancers is called “Talent Exchange.”

By Claire Zillman – Financial Times

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Is failure of leadership the reason why frontline workers are disengaged?

Executives generally overestimate their effectiveness as motivators and leaders.

Only three out of ten American workers feel engaged by their job, according to a Gallup Poll published in 2015. Data from McKinsey’s Organizational Health Index, encompassing a decade of survey results from 3 million employees at almost 1,300 organizations, offer insights into why this may be true.

Part of the problem, it seems, is that senior people have a rose-tinted view of realities on the ground. For example, a 2013 study of our OHI database showed that top managers in organizations are more positive than frontline workers about the ability of their organizations to perform over the long term. The biggest discrepancies (exhibit) concern perceptions of whether organizations have the ability to motivate their employees—to engender the enthusiasm that propels extraordinary effort and delivers great results—and assessments of whether their leaders can inspire action by others. Not surprisingly, top managers also overestimate their visibility: for example, separate McKinsey research shows that during transformations, 86 percent of senior executives believe that they are actively demonstrating the change they want employees to make, but only 53 percent of employees do.




According to the Gallup research, actively disengaged employees cost the US economy between $450 billion and $550 billion in lost productivity every year. Yet McKinsey data show that when employees are intrinsically motivated, they are 32 percent more committed to (and 46 percent more satisfied with) their jobs, suffer significantly less burnout than other employees do, and perform 16 percent better.

By Michael Bazigos and Emily Caruso – McKinsey Quarterly

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Tech Companies, New and Old, Clamor to Entice Cloud Computing Experts

Skills are hard to find…

Amazon Web Services, a globe-spanning cloud computing network that is part of the online retailing giant Amazon, has rapidly become one of the most powerful forces in technology. It has also become a target for poachers.

Last October, at a conference in Las Vegas with thousands of corporate executives and software developers in attendance, A.W.S.’s chief, Andy Jassy, strode before an intentionally poorly disguised image of Lawrence J. Ellison, founder and chairman of the Oracle Corporation. Foot-tall words like “bullies,” “extorted” and “strong arm” appeared next to Mr. Jassy and the image of Ellision. The logo of Oracle, one of the biggest companies in Silicon Valley, was barely crossed out.

“Our marketing team needs work on redaction,” Mr. Jassy joked.

The hunt for the hard-to-find talent that can build and run the massive data centers behind cloud computing is pitting three generations of companies against one another. Old-guard companies like Oracle, tech’s current giants like Amazon and its peers, as well as Bay Area start-ups are offering big salaries and big perks for cloud computing experts.

On the social media site LinkedIn, for example, there are over 130 engineering positions available at Oracle Seattle. Many of them are the kind of jobs that now pay $300,000 to $1 million a year, according to Shannon Anderson, who has been recruiting engineers in Seattle and the Bay Area for 25 years.

Seattle and its surrounding towns are a hot spot for this kind of tech talent because they are home to A.W.S., which runs the biggest cloud computing service, and Microsoft, which has a large cloud business called Azure. Google also has a cloud computing office in the area. So does Facebook.

“Someone working deep inside Amazon is getting five to 20 recruiting offers a day,” Ms. Anderson said. “Compensation has doubled in five years.” For a recruiter, who is typically paid a percentage of a star engineer’s compensation, “this is a very good time,” she said.

Cloud computing, which powers an increasing number of our devices and services, allows a vast collection of computers — often spread around the world — to operate like one giant machine.

These computing clouds are being filled with once unimaginable amounts of data from apps, websites and sensors on all sorts of things. Fast-growing online services like Snapchat run on cloud systems. Apple has its own cloud, as does Facebook. Cloud systems even offer the computing muscle needed for things like artificial intelligence.

As other tech sectors show signs of slowing, cloud services have created unprecedented demand for highly educated engineers and mathematicians who can build and operate these flywheels of data. Instead of asking about the latest computer coding languages or how to make a web page load faster, the most important question in tech hiring has become: Can you handle petabytes? That is the data in about 13 billion images, or roughly the amount of printed information that would fit in 20 million file cabinets.

“It’s an aggressive market,” said Corey Sanders, director of program management at Microsoft Azure. “We are all data engineers now, and we can convince people that this is the best place to learn that.”

The ability to deal with so much data has also become important to industrial companies like General Electric in figuring out things like jet engine maintenance schedules. G.E.’s pitch to cloud computing experts: We offer a chance to rebuild the industrial world.

In the last three years, G.E. has hired 1,500 software developers and systems engineers, and trained a similar number of existing employees to work on cloud systems connected to everything from smartphones to wind turbines and jet engines.

“We’ve hired from every large company, places like Amazon and Google, as well as start-ups, or out of schools,” said William Ruh, the head of G.E.’s cloud business. “We pay well, with attractive benefits, a life and a chance to work on the mission to remake American industry.”

Still, he said, “I’m totally shocked at how fast compensation is moving up.”

For smaller companies, the gold rush is more complicated. In San Francisco’s South Park neighborhood, Tom Chavez runs a company called Krux that scans data from more than three billion devices, creating a trove of seven petabytes of information retrieved by several hundred companies. Many of his 160 or so employees are just the kind of people the giants, along with other start-ups, are looking for.

“LinkedIn or Facebook can offer an engineer with a few years’ experience a package close to $1 million,” said Mr. Chavez, who co-founded Krux and is its chief executive. “We wanted someone out of Stanford for an internship, and Google offered her an annualized $180,000 for the summer,” or about $45,000 for three months.

Facebook also wants employees like the people Mr. Chavez has hired. In fact, Vivek Vaidya, a Krux co-founder, calls the steep salaries Krux is compelled to pay “our Facebook tax.”

Krux takes up several floors of a brick building at the base of South Park, a onetime place of sweatshops that has filled with start-ups and venture capitalists.

On the ground floor, development engineers get daily calls asking if they want to jump ship. A nearby team of data scientists gets 20 or more unsolicited emails a week via LinkedIn. Upstairs, Krux’s recruiter strives to keep people, even as he looks to take from others.

“I can’t compete with a $50,000 signing bonus from Google, so I focus on the person, what really motivates them,” said Cade Garrett, who has recruited about 100 people to Krux.

Besides offering stock options that could be valuable if the company has initial public offering, a fast-growing start-up can offer younger engineers a crash course in technology — the kind of training that could one day allow them to start their own companies.

“I tell them this isn’t the best-paying job, but they have to think about where things are going: Everything they do here is mission critical,” Mr. Garrett said. “You go to Google, you can’t be sure that in a couple of years you’ll have a product to show.”

Mr. Chavez thinks industry titans like Larry Page, the chief executive of the Alphabet holding company that includes Google, are intentionally driving up salaries. “If I was Larry, I’d do the same thing: throw a few more million at people and cut off everyone else’s oxygen.”

Even so, Mr. Garrett tries to keep engineers’ contact information off the Krux websites to foil recruiters. And he is more than happy to do his own poaching. Zenefits, a fast-growing online employee-benefits company currently reeling from the departure of its founding chief and a round of layoffs, is a target.

“Absolutely, I’ll call into any company that is in trouble,” he said.


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Managing talent in a digital age

More changes for labor related business….

Online labor platforms make it easier to find—and harder to retain—talented people. They give companies a real opportunity to transform the way they recruit, develop, and engage their employees.

It’s safe to say that when one out of every two working-age adults in the United States has registered for a certain website—LinkedIn, for example, boasts more than 122 million US members—it has achieved critical mass. In fact, LinkedIn and sites like Careerbuilder and have changed the way employers and employees connect, and digital marketplaces such as, Toptal, and Upwork have transformed the sourcing of contractors’ services around the world.

Digital labor platforms have also created a more transparent job market. Top performers know their value and are growing more footloose as a result; many are going online to find new opportunities and to evaluate potential employers. What’s more, a lot of people now scour platforms such as Glassdoor to learn what current employees have to say about their job satisfaction, company culture, and lifestyle. Companies that don’t manage their workplace reputations carefully or engage their employees appropriately will find themselves on the losing side of an increasingly digital war for talent.

A new wave of digital tools can help companies to focus not only on hiring but also on managing, retaining, and developing employees. Digital labor platforms can pull these tools into an integrated whole as companies widen their labor pools, refine their recruiting and screening methods, and deploy their employees more effectively. Such tools, and the platforms that include them, can put the right person in the right job, identify gaps in skills, help employees as they gain new capabilities, chart career paths, and nurture the development of the next generation of leaders.

In short, digital labor platforms occupy a place at the frontier of big data analytics and IT-enabled performance improvement. Companies can capture substantial value by applying digital innovations to some of the most critical organizational challenges: matching the supply of and demand for labor, boosting productivity, and getting the most out of people.

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By Susan Lund, James Manyika, and Kelsey Robinson – McKinsey

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