Do Flex Workers Stifle Innovation?

Theoretically, the rise of flex workers in any given labor market should improve innovation and productivity. But does it? Recent research suggests the opposite might be true. 

A case in point could be the Netherlands, which has a government renowned for rolling out trailblazing policies, studied the world over. The flexibility of the Dutch labor force is also a long established fact.   

The country, which ranks fifth on the European Commission’s list of most innovative economies, has seen the proportion of its flex workers rise from 12 per cent in 2001 to around 16 per cent in 2012. But a Dutch professor warns that if this trend continues, innovation in the Netherlands is at risk.

A highly flexible workforce does not ensure innovation but rather stifles it, according to Professor Alfred Kleinknecht, in his farewell lecture from his post at the Technische Universiteit in Delft. The retiring professor claimed that employees with a flexible contract are not as tied up with an organization, prove less loyal and are less inclined to dream up new products or production methods.   

The main reason behind this is that companies relying on flexible workers spend less money on training staff, and consequently will possess less accumulated experience, which leads to knowledge being less readily shared out. 

Kleinknecht might have a point. UK companies failing to give flexworkers access to efficiency-driving business tools cost the economy £30 billion a year in lost productivity, according to research by O2 and the Centre for Economic and Business Research.

Of the 1000 middle managers interviewed (in organizations of 250+ people), some 25 per cent said they refrained from giving flexworkers access to new technologies because of issues around trust, responsibility and readiness for change.  

This is potentially good news for Millennials, who stand a better chance than most of their predecessors of being natural 'knowledge workers', thanks to their ease with tech stuff.

Says the American author Andrew Jones, whose book, "The Fifth Age of Work: How Companies Can Redesign Work to Become More Innovative in a Cloud Economy" is just out: “Firms that are knowledge-intensive will require knowledge workers, and increasingly, that means millennials who have a whole new set of assumptions around when, where, with whom, and sometimes even why, they work.”

Productivity concerns related to flex work is an issue that is on the radar screen of policymakers in Brussels. “Companies operating in Europe face pressures to cut costs and increase productivity. Instilling good management with regards to good workplace management could go some way in helping companies achieve those goals”, writes Linda McAvan, the British Labour Party politician and a Member of the European Parliament.

She hosted an event debating the recent findings of a new Economist Intelligence Unit report on workplace absenteeism entitled ‘Out of Office!’ This research into the biggest causes of sick leave in Europe linked flex contracts with absenteeism.

Andrew Jones believes that these issues will resolve themselves in the future, when employees will be first and foremost mobile — both flex workers and company employees. "This depends entirely on new forms of technology, but it also underscores a significant shift in cultural values. Millennials, particularly, do not want to work in the "social cages" of their predecessors," according to Jones.

Whether he will turn out to be right remains to be seen. For the time being, one hopeful sign is that in Deloitte's 2013 Millennial Survey, one overwhelming finding was that Millennials like to think of themselves as innovators who work for innovative companies.