09 February 2011

Changing What it Means to be Employed

Bad: increasingly employees face the same risk to future income as entrepreneurs. Worse: they don't share the same potential for returns.

Entrepreneurs face huge risk. More than half of businesses (about 90% by some estimates) fail. But entrepreneurs face this risk for at least two reasons: if they are successful they have the chance to be very successful AND various kinds of success can mean more autonomy and choice about how to live their lives.

Employees today in any arena face huge risk. Government employees and academia have joined the ranks of employees in the private sector, in small or large companies. Employees are probably as insecure as they've ever been, unsure what combination of demotion, reduction in benefits, or job loss they're likely to face. Or, more accurately, they simply aren't sure when they'll face these changes. But unlike entrepreneurs, employees don't face much of an upside. If the business or organization they're in is successful, they are more likely to be employed. (Even that is dicey, given the penchant for outsourcing.) But organizational success for the employee is as likely to mean more stress from additional work as it is to mean promotions and profit sharing.

I don't think that entrepreneurs and organizations can protect employees from market forces. Employment is simply going to be less secure. That, it seems to me, is a fact of life.

Entrepreneurs and organizations can do more to share success with employees. On the downside, the economy has already made employment more like entrepreneurship in terms of risk. This negative can be more than offset by doing more to include employees in the upside of organizational success, giving them more autonomy and more potential for shared equity and profits as organizations succeed.

Hope for reward can offset some of the stress of dread of risk. Also, employees who can make more than just their salaries can also save a little more in anticipation of the inevitable job dislocations that it seems simply come with a dynamic, global economy.

Finally, as employees are treated more like entrepreneurs they're likely to act more like entrepreneurs, helping organizations to become more responsive to changing markets, adding to organization's ability to provide profits and salaries.

Today's situation could be very different. Good: employees are increasingly treated like entrepreneurs, sharing risks, rewards, and responsibilities. Better: organizations and employees are healthier and feel more in control of their own destinies and economic health.

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