Challenges Ahead

To create guilds that would play such a role requires that all the important constituents in the American employment system meet a series of significant challenges. Guilds, workers, and firms must effectively build a new employment system, operating outside of and across companies. Policy makers and educators can assist in this effort by providing enabling infrastructure and institutional support.

Challenges for Guilds

The major challenge guilds face will be to develop service offerings that appeal to mobile twenty-first century workers and figure out how to get paid for doing so. Portable health insurance and pension plans are among the most important services required by workers who lack ties to a traditional employer, and most of the organizations that aspire to fill the guild role are focusing much attention in these areas. Also important will be services that allow ready movement across firms and across industries.

The HR department of the traditional corporation maintained personnel files, job classification schemes, and salary scales that enabled workers to build careers and to move freely from division to division. Guilds will need to create similar tools to let workers build careers as they move from project to project across firms. Among the mechanisms required will be skills accreditation standards, industry-wide job descriptions and salary guidelines, even ways to build the equivalent of a personnel file over a career spent working for many firms.

The beginnings of cross-firm accreditation schemes are emerging. Web project brokering sites allow both buyers and sellers to submit evaluations on the quality of their experience during a transaction. On elance.com, for example, a customer who hires an e-lancer to create a Web page can rank the designer's performance along a 1-to-5 scale on such measures as "Timeliness" and "Quality Work". Companies and researchers are working on ways to make such on-line reputation systems more effective (Dellarocas 2000). Other innovative services that guilds could provide include screening of candidates for positions, "under"-employment or "income smoothing" insurance to cover freelancers who are temporarily unable to get enough work (Laubacher and Malone 1997), and test-based skill accreditation of the sort being provided today by Web sites such as brainbench.com.

Another area with great potential is developing innovative approaches for funding education and training. An interesting approach could involve providing loans in exchange for a portion of the future earnings of a pool of workers. This would be an extension of a 1990s Wall Street innovation—issuing bonds against future income from an entertainer's library of records or films. This practice began in 1997, when the rock star David Bowie raised $55 million through the sale of bonds backed by the expected flow of royalties from his recordings. Such bonds are now routinely issued by Wall Street firms (Orwall 1997). Extending the idea, securities could be issued, for example, to finance the education of a group of young software engineers from India, with the principal and interest paid for by a portion of the salary and stock options they subsequently earn (Davis and Meyer 2000).

Providing career-related services of this sort is a logical future step for professional associations and unions active in sectors where employer-worker ties have become more tenuous. In such industries, professional societies can be expected to take a more active role in keeping members' skills up to date and matching those skills with appropriate jobs. And trade unions are likely to move away at least in part from an exclusive focus on collective bargaining and offer help with training and placement. This shift has been foreseen by leading students of the American labor movement—Charles Heckscher touts "associational unionism" (Heckscher 1996); Thomas Kochan envisions a move to "full-service unionism" (Kochan 1996); and Richard Freeman calls for "open-source unionism" (Freeman and Rogers 2002).

New approaches are also likely in the temporary staffing industry. Some staffing firms today try to attract the best talent by offering generous benefits and career guidance. Innovative agencies could move even further along this path by declaring themselves advocates for talent, effectively assuming the role that Hollywood talent agencies now play for actors and directors. Aquent Associates is already doing this.

Guilds will also need to decide what range of services to offer and where on the worker services value chain to operate. At one extreme, guilds could offer a onestop shopping experience, providing a full range of benefits, placement, and training, services under one roof. At the other extreme, they could specialize and operate only in areas where they have particular expertise. Even guilds that pursue the onestop approach are unlikely to do everything themselves. Offering "shopping mall" convenience will involve bundling products from many providers—health insurance from an HMO or hospital group, pension plans from financial services firms, and job matching and career training from specialists in appropriate niches.

Emerging guilds are pursuing a range of approaches today, ranging from initial attempts at full-service offerings by some of the Web project brokering sites to highly-focused job matching/career development services being offered by professional associations. One possibility is that guilds will evolve in the same way many industry sectors have in recent years, with some organizations assuming primary responsibility for aggregating and maintaining contact with workers; others continually developing innovative services offerings; and still others running large-scale, high-volume operational functions—such as maintaining resume banks or cross-firm personnel files—at low cost (Hagel and Singer 1999). There will likely also be room for brokers, like the intermediary role Working Today plays today between a health insurance provider and specialized professional associations.

Regardless of what kinds of services guilds offer, there will be costs associated with providing them. Aspiring guilds will thus need to develop business models that allow them to pay these costs. One approach is to get employers to pony up. Unions active in industries with flexible employment practices, such as SAG and the construction trade unions, have collective bargaining agreements that were first negotiated in the heyday of the industrial era and today require employers to pay a premium above workers' base salary to cover benefits and administration costs. Staffing agencies charge employers a similar premium above base salary.

New types of arrangements are being tried out as well, including fee-for-service, retainer and membership approaches. For example, elance.com requires prospective buyers of services to pay a $50 fee to post a Request for Proposal on its site. Through its e.office service, freeagent.com assumes responsibility for invoicing and collecting from a free-lancer's clients and also offers access to group-rate benefits, for a monthly charge of $274. Working Today's members each pay $25 in annual membership dues, and it also uses a small percentage of the health insurance premium paid by covered members to defray administrative costs.

Finding ways to cover the cost of benefits, placement, and training for lowerwage workers will be a major challenge. At some traditional employers, benefits and training are funded through a flat overhead rate added onto staff salaries.^[3] Such systems have a redistributive effect—funds paid in on behalf of higher-paid workers effectively subsidize the lower-paid. Accomplishing a similar redistribution outside a traditional organizational setting will require convincing workers of varying income levels to band together or attracting government subsidies. Subsidized vouchers, which would allow workers to choose where to go for benefits or training, could allow lower-wage workers to receive services comparable to those enjoyed by their higher-wage counterparts, while retaining choice and flexibility in the system.

Whatever package of services they offer and however they charge for those services, twenty-first century guilds will have to attract and hold onto workers' allegiance. For professional associations and unions, this will mean competing for members' attention and loyalty in new and unaccustomed ways.

Challenges for Workers

In moving from traditional to flexible employment practices, workers must find new places—likely a portfolio of formal organizations and informal networks—to invest the loyalty they formerly gave to the firm. This is understandably difficult now, since there are few viable organizations with a track record to which workers can confidently transfer their allegiance. For many, face-to-face work groups and networks are to a degree taking the place formerly held by the firm. In Silicon Valley, stories abound of such groups moving around as "tribes". This is a start. But such small groups cannot fill all the old roles played by firms. Just as new technologies require early adopters who will take a chance on something unproven and bring a novel invention into the mainstream, so emerging guilds will need early adherents willing to stake their allegiance before the payoff is certain.

The second challenge for workers will be envisioning anew how their work life might evolve over time. Specifically, workers will have to rethink the concept of career, seeing it not as a hierarchical progression within an organization, but rather, as ongoing skill development. Making a career no longer means moving "up the organization", to quote a popular management book from the 1970s. Instead, it involves progressing through a series of assignments that provide continual opportunities to learn and to apply that learning in practice. Those brought up with the old corporate-climbing mentality will need a new mindset and a new set of skills. In many cases, this will mean returning to a craft mentality, where progress is not measured by position, but by growing mastery (Denning 2002).

Challenges for Firms

With the dissolution of the old employment system, companies began filling important positions with outsiders. The practice of raiding other firms was at first confined to top management positions but has nowspread throughout the ranks. This is a major change from past practice, and many firms have yet to recognize its repercussions (Cappelli 2000b).

The first is that the old talent strategy—We'll get and keep the best—is no longer viable for every company. Such an approach may be possible for industry leaders with the ability to offer a compelling package of compensation and challenging work. But not every company has the assets to win this game. Those with limited resources will have to show the kind of resourcefulness that general managers of professional sports teams rely on when they face salary cap constraints. Firms will have to think hard about what positions are crucial and must be kept in-house and which might be filled by other means—by promoting promising young people on their way up, aided by coaching from experienced insiders or outside advisors; by bringing in a "rent-a-players" for certain periods; or by outsourcing work to specialist firms.

In the days of the old employment system, companies could solve their talent problems internally. Firms must now look outside, and the emerging guilds are promising potential partners. One important way firms can adapt to the new employment system is to begin developing relationships with the emerging guilds that are launching experiments to serve mobile workers.

Challenges for Policy Makers

At the federal level, one key challenge is creating a level playing field for guilds. Benefits and training funded inside firms currently enjoy significant tax advantages, and until these differences are redressed, the development of guilds that can operate outside of and across firms will be hampered.

Another challenge will be finding ways to support local experimentation. New Deal labor legislation and regulation arose in response to the needs generated by the rise of mass production and large bureaucratic organizations. The challenge in today's age of flexible organizations will be to create macro policies that set the overall rules of the game, while at the same time allowing for continual innovation. In the short run, the most promising approach may be providing training subsidies and grants to support creative grass-roots efforts. Out of grounded local experiments, success stories will emerge that can serve as models for subsequent changes to the macro-policy framework.

Policy makers will also want to attend to the needs of today's low-wage workers. In the past, getting hired by a large corporation provided lesser-skilled workers with a path to upward mobility. Such opportunities are much less prevalent today. One effective way to provide them in the new system is by a skills-building approach, where the goal is to increase low-wage workers' prospects by increasing their productivity. This requires investment in worker training and programs that link workers with real jobs.

Finally, diplomats and immigration officials will want to keep a lid on potential talent trade friction. During the late 1990s, to mitigate shortages of high-tech workers, the U.S. granted more than 100,000 special H-1B visas to computer engineers and technicians each year. Because the shortage of IT workers was so severe, the H-1B slots for 2000 were all filled before the end of March. European nations began to compete for these skilled foreigners as well, with Germany, the U.K. and Ireland all taking recent steps to ease restrictions on immigrant IT workers. At the same time, current exporters of high-tech workers, India in particular, is attempting to curb its talent outflow (Heavens 2000, Atkins and Gardner 2000, Brown 2000, Grande et al. 2000, Gardner 2000). But in sectors where output can take the form of bytes, the Internet allows overseas nationals to remain in their homeland and still undertake work for firms based in the United States or Europe. This practice, known as offshore development, is already common in the software sector (Filipov and Barnard 2000). During times of slack labor demand, tensions may also arise when high-wage domestic jobs migrate in this way to overseas workers.

Wealth today is generated primarily by brainpower, and not, as in the past, by the control of natural resources or physical capital. Given this, the global movement of knowledge workers has the potential to spark international tension, and even outright conflict, in the same way that rivalries over natural resources and immigration generated friction in the nineteenth and twentieth centuries. To reduce potential problems, policy makers will want to maintain enough movement of people and work across international borders to encourage diffusion of expertise and address talent market anomalies, but not so much as to cause tension. And to meet the IT skills gap, more effort could go into retraining U.S. workers.

Challenges for Educators

The primary challenge for the educational system will be to help workers to learn continually over the course of their careers. As a first step, schools can commit to lifelong learning as the educational model for the twenty-first century. Technology also offers opportunities for new forms of pedagogy, in which communities of likeminded practitioners learn from each other.

Educational institutions might also assume a leadership role in promoting crossfirm and industry or occupation-wide learning and research. Twenty-first century business structures rely increasingly on workers holding skills applicable not only in a specific firm, but across firms within an industry, or even across industries. Educational institutions are well-positioned to develop and disseminate knowledge across industries and occupational groupings. Such efforts will involve schools working closely with organizations that are today assuming the guild role—unions and professional societies, as well as regional employers' groups, and even national industry associations.

^[3]MIT, for example, operates this way.