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Ray Marcy is the Executive Chair at Healthcare Staffing Services.
Tim: Ray, thank you for taking the time today. Let’s jump right in. What’s your background as it relates to contingent work?
Ray: I spent my whole career in what’s broadly considered to be the staffing industry. Out of graduate school, I when to work for Manpower. I then developed North America for a Swiss-based company, Adecco, which is the largest staffing company in the world today. I went on to become a CEO and chairman of a multi-billion dollar company called Spherion that we built over an 11-year period. Spherion provided virtually any skill to any company in most places around the industrialized world. We operated out of 13 countries with about 1,400 offices, and supplied everything from IT professionals to administrative assistants to accounting skills, and all points in between.
That launched me into a world of human capital consulting where CEOs were beginning to ask how they could deploy human capital more efficiently. I spent a fair amount of my life working with Fortune 500 CEOs in that environment, firms like UPS, American Express, IBM, and Dell.
And today I continue to spend my time in the world of human capital. For the last 10 years I have partnered with private equity firms, and I invest in companies that are in the human capital space today, whether it is healthcare or professional staffing. I help them grow and we eventually seek a liquidity opportunity. I’m now 108 years old and I spend most of my life in the world of human capital.
Tim: You look great for 108.
Ray: Thank you.
Tim: From your perspective, is the buzz today about contingent and on-demand work about a legitimately new trend or is it part of a longer process that just happens to be getting more media attention?
Ray: I would explain what’s going on today as an evolution, not a revolution, of something that has been going on for decades, maybe even longer.
There’s an overriding principle that I subscribe to: a more efficient model will always prevail. That’s true in nature, that’s true in the universe, and that’s certainly true as it relates to employment and how we find meaningful work. A more efficient way of working will always prevail in the marketplace. It might be messy, it might go sideways for a while, it might look like we’re making sausage, but efficiency in the long term will always prevail.
Within that broad concept, I was a thought leader, along with some of my colleagues, way back in the 90s when we started describing what we called the emergent workforce. At the time, it was quite revolutionary. What we noticed was the traditional fabric of employment was changing at a rapid pace. For the traditional worker who worked for Sears for 30 years and then got a gold watch, that fabric was breaking down and being replaced with a new notion of the emergent workforce. There were a lot of negative connotations attached to that emergent worker at the time. They were lazy, they weren’t loyal, they skipped around a lot, something was wrong with them. We argued that the fabric of employment was broken by big companies, not by the workers they were criticizing. It was broken by the IBMs of the world, and the worker was just responding to those actions. Moreover, we argued that the emergent workforce was not less loyal, they just had a different definition of loyalty, and companies the in the future would have to be careful and to understand what that emerging worker was all about. It’s an evolution, not a revolution, of a process that has been doing on for a long time.
Tim: What is your definition of efficiency in this sense?
Ray: Efficiency can take a near infinite number of turns all driving towards a more productive world. When I left Spherion number of years ago I was given the opportunity to take over what was a struggling .com called Guru.com. They were attempting to aggregate all free agent techies around the world. I had a programmer, I’m not sure what time he came into work or when he left, but that programmer was brilliant. I didn’t clock him in, I didn’t clock him out. He was paid weekly compensation based on a high value. It had relatively little to do about time or number of hours per week worked and everything to do with his brilliance and his mind. At some point that had to translate that into dollars, cents, and value, but I’m very sensitive to what makes something efficient. Yesteryear, Henry Ford could look at the assembly line on a Model T and break everything down into minutes per day. Today, harnessing the value of the brain requires a different equation.
Tim: Are companies looking for ways to measure performance other than hours per day and days per week? What are the units and scale of work that you are seeing today?
Ray: There’s a deeper importance being placed on outcomes rather than measuring the task required to get to an outcome. There’s less emphasis being put on how much energy needs to go into something versus determining the value of the outcome itself. When can I get the outcome? What is the quality of the outcome? How earth shaking is that outcome? Again, I think it’s an evolution, not a revolution, but there’s far more emphasis today on outcomes rather than the steps of the process.
Tim: Some people say technology is finally destroying more jobs that it will create. Others say human innovation will, as it has in the past, create new jobs to make mass employment viable. Where would you put yourself on that spectrum?
Ray: I’m optimistic based on the facts. There’s a long history of humans innovating new jobs, and there is more meaningful, fulfilling work today than ever before on the planet. Does that mean that people don’t get displaced? Of course not. People get displaced. But we have consistently throughout history innovated and created more jobs. This question reminds me of my grandparents thoughts that the next generation was worthless. I remember my parents feeling the same way about my generation. I’m wildly optimistic for incredibly good reasons, and it’s historically based.
But what does that mean? Twenty years ago we were all angry that jobs were being outsourced. Jobs have been outsourced for hundreds of years. We just put a label on it twenty years ago. All of the call centers were going to India. Why were they going to India? It was more efficient. It wasn’t more efficient to build a call center there, it was less efficient. The equipment that went into the call center wasn’t more state-of-the-art, it was less state-of-the-art. What was more efficient was the labor—it was less expensive. But what happened next? There was more employment in Delhi and wages went up. And then it became as efficient to build a call center in Nederland, Texas, as it was in Delhi. So we then built call centers in Nederland, Texas, where making $18 an hour was very good money based on rent and local conditions. It became a more efficient place to be. If you’re a coal miner, you may indeed be working a job of the past. In 50 years, there will probably be fewer jobs mining coal. Workers will be displaced and we’ll feel bad about that, and we should accommodate for that. But I daresay there will be thousands of other types of jobs that will be created as a result of that displacement.
Tim: How is the concept of the “job” changing?
Ray: When we began to look at the emergent worker we realized they had a different definition of loyalty. What became clear is that these individuals were taking responsibility for their own career. They were no longer depending on IBM or Sears to take care of them. We argued at the time of the that this approach was healthier. Workers and employers had started to create agreements that were mutually desirable for as long as it made sense for both parties. This change has created a healthier environment than when dad or grandpa was working for IBM and got to a stage in their career where they said, “I really can’t go anywhere else. I’ve been here too long. They’ve changed my job description now three times. I don’t like what I’m doing anymore, but I have no options.” Many of us look back with some kind of euphoric recall on traditional employment. I would argue it wasn’t particularly healthy and it’s substantially healthier now.
Tim: How can the worker of today be successful in a higher churn, more independent space?
Ray: There’s an important discussion to be had around what barriers exist today that keep people from using their talents and skills. One example of a barrier is transportation. Many workers simply don’t have the means to get to good jobs only a few miles away. What if labor could move freely and be unencumbered? There was recently tragedy on the outskirts of St. Louis, in a minority population. The unemployment rate there was nearly 30%. Why was it nearly 30%? There is no immediate employment in the area and there is limited access to nearby employment. Good jobs are less than ten miles away, but the population doesn’t have an efficient way to get to them. What if all of us could travel in an unencumbered way throughout the United States? Meaningful work opportunities would improve significantly.
Healthcare is another barrier that we don’t talk about. The chains that limit talent in the United States because they are encumbered by healthcare are incredible. We are the only developed country in the world where healthcare is largely dependent on employers. Workers don’t change jobs out of fear for their health and stability. Pre-ACA, if a worker wanted to change jobs but had a pre-existing condition, that worker was encumbered by healthcare and essentially indentured to his or her current employer.
These are just two simple examples. If healthcare was a right, and it made no difference whether a person was working or not, and if the complexities of deductibles, waiting periods, and in-network service were gone, if none of that existed, the labor market would be dramatically different, and opportunities would be dramatically improved.
Tim: I would like to follow that thread. Much of today’s contingent worker debate centers on 1099 vs W2 categorization. What are the policies that we should be putting in place to handle this evolution of work we’re seeing?
Ray: The discussion around 1099s and W2s, whatever those categories might be at a moment in time, and especially if they are government induced, are little friction points. Eventually there will be Teflon that’s sprayed on that and eventually they’ll become indistinguishable. It will be about efficiency winning. And efficiency will win when talent can move around freely and find opportunities. That will be good for all parties including the worker and including whatever partnership they enter into to find meaningful work.
Tim: I can’t help but notice that the systemic changes that you suggested are not emphasizing smartphones and getting every person online. This is a interesting point. A very popular media image of today’s contingent worker is the 30-something who runs a technology company via computer from a coffee shop. But what you’re suggesting is the need to design the physical world to better enable work. It isn’t all about technology.
Ray: Let me make myself clear. I’ve been to Africa a number of times, and there’s nothing in many ways more primitive than being on the Serengeti Plains. And within the Serengeti Plains, if you have the opportunity, you will come across the Maasai Tribe. Amazing people. In the last ten years, the Maasai have set up schools that travel with them and they are educating their children. In these Maasai tribes today you will see a smartphone. And somebody, often times the tribal leaders, will be able to communicate with the world. Do you know how powerful that is? But the point is they can recognize the benefit of that technology and react to it by getting a smartphone. Similarly, I was in Brazil not too long ago and was looking up at the favelas [slums] that go up the mountainside—almost every home had a satellite dish and access to smartphone technology. The point is the individual can take care of certain things, and from an affordability standpoint, telecommunications are already largely available for everyone. What individuals cannot take care of for themselves is providing universal healthcare. And they cannot take care of providing a transportation system so they can go anywhere they want within Brazil or the Serengeti Plains. There are certain things that we have to think about that are barriers to talent being able to find opportunity. Talent will take care of getting a cellphone. It’s affordable and they understand the value. But there are different infrastructure needs that did not exist when we built the systems that exist today.
I don’t want to minimize the barriers to accessing technology and the influence technology is having, but there are good options for individuals to solve those problems for themselves. One thing we should not lose sight of is that today for the first time ever all information is everywhere. It will have an amazing impact on our civilization in ways that we haven’t even thought of.
Tim: We’re sitting in the greater Milwaukee area. There is a lot of emphasis on the New Yorks, the Bostons, and the San Franciscos of the world as the places to be for innovation. What are your thoughts on how geography affects innovation and the way we work?
Ray: Where I am becomes substantially less important all the time. But when it’s brainpower, and we’re trying to unite brainpower, there is still a notion of physicality, of being around each other, that is helpful. It is more helpful than just being online, it’s more helpful than just being on the phone. And that’s going to be with us for quite some time. It will continue to diminish in importance. Talents are transferable across lines. The notion of countries, the notion of nationalities, will all get more and more silly, and less and less important. But there will still be pockets where people like to hang. And some of that will be based on historic tradition and legacy. Some of that will be based on climate. But geography will continue to be less and less important.
Tim: A lot of the conversation around contingent work tends to be a very much about high-level, high-talent, in-demand folks. What are the implications for those on the lower end of the skills spectrum?
Ray: In most places in the United States today, manual labor is going to be in less use going forward than it was yesteryear. But nevertheless there is still work in America that requires a plumber, that requires an electrician, that requires a local worker to do the work. My kids started a chain of cafes. You can’t simulate that on the internet. You actually have to go to a cafe and sit down there to enjoy it.
Tim: I’m thinking of simulated coffee right now.
Ray: It probably we won’t get the job done.
But if you’re a young student, being a barista could be a good job. It is work that can only be done locally. There are still local jobs and there is still local trade, and that will never change. Those jobs will continue to exist.
I think the key to any skill level, and it doesn’t matter whether it’s low or high, is for workers to take responsibility for themselves. Workers need to decide what their values are in relation to work. They need to determine how geography affects their work. Am I willing to relocate or do I want to stay here? Am I bound to stay here? But staying “here” could mean that while I am physically in Milwaukee, I could still be working with a company in Delhi. Workers need to look at what’s going on in the marketplace. Even from a micro standpoint, there are opportunities right outside the door. How can those be exploited? As I said before, I’m wildly optimistic, but I’m optimistic based on historic facts. There is a wealth of opportunities. For the young person looking forward into the future, they can do anything they want to do, whether they’re encumbered locally or not. The opportunities will be endless. Will some people be displaced based on trends that are occurring? Yes. And do we have to predict that and protect them from that? Of course.
Tim: Last question. How should businesses be considering this evolution of work and the implications for their own infrastructure and operations?
Ray: They have to understand that it is their job, if they want to be successful, to deploy their human capital in the most effective way they can. They need to sit down and ask: How can we make the best use of our people? Every company needs to think about this, big or small. And they need to know that today’s workers have a different definition of loyalty and different expectations of their work. Workers will hang with an employer, big or small, as long as the mutual requirements for both the worker and the employer are being met. It’s not rocket science. Today’s core metric for sucess is whether or not human capital is being deployed in the most efficient way.
Tim: Any closing thoughts?
Ray: Efficiency wins and I am wildly optimistic about the future of work based on historic fact.
Tim: Thank you very much for your time, it’s greatly appreciated.
Ray: Thanks, Tim.