Silicon Insider: Changing Staffing

It was marketing, after all, as much as IT, that transformed the modern corporation, and kept it healthy and competitive through the end of the last century.

The Great Challenge Ahead — External and Internal

But that was the last war. As the next boom emerges around us, the U.S. corporation is again going to be challenged, both from without and within.

The external challenge will come from companies in the growing number of industrialized and emerging nations that have learned the U.S. model well and are now turning it against its originators.

In many cases, these international companies will have key advantages tackling the biggest business opportunity of the new century: the billion new consumers arising in underdeveloped world.

But the internal threat is just as great. The nature of the American economy is changing. For the last 25 years, small firms have provided nearly all of the new job creation in this economy. That will only continue.

But now, added to this is the fundamental shift taking place in the nature of work and jobs. Besides the sizable fraction of employees who mostly work at home, we are now seeing a growing army of non-employee employees: contractors, permanent part-timers, virtual employees, and piece-work professionals.

These millions not only represent a new and powerful force in the U.S. economy, but increasingly they are assuming corporate jobs once only available to company insiders. And unlike traditional employees, these gypsies will come and go, driven by the needs of their employers and their own personal whims.

Hiring by the Minute

In one respect this is very good news. Besides increasing the general level of personal economic freedom in America, it will also allow talent to move rapidly according to need and opportunity.

It will also make U.S. companies more competitive, as they will be able to quickly change their shape and composition, and turn on a dime to meet fleeting market forces. This very adaptability is American industry's best chance to stay competitive in the new century.

But this change will also carry with it great risk for individual companies. The new corporation will be increasingly amorphous, exhibiting only a tiny core of permanent employees surrounded by a cloud of workers of various levels of career commitment to the company, coming and going, their numbers waxing and waning, according to need. Many will never see the company in person, but merely be hired by the month (or minute) off the Web.

It's a tantalizing model, but a scary one, too. The risk should be obvious to any manager. For one thing, it suggests that companies will have to remain in a permanent recruiting mode, perpetually filling 50 percent or more of their ranks with new or returning contract employees. Worse, companies, to remain competitive, must also figure out how to retain the best of the employees for the longest possible time.

Enter Human Resources. The next business war will take place in, of all places, the Personnel Department.

Personnel as Key Competitive Factor

HR has long been the sleepiest part of the modern corporation. Sure, during the dot-com boom, it got pretty exciting, especially in the tech world, where headhunters and greed played havoc with the org charts of many established companies.

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