‘Portfolio Careers’ Are Becoming The New Normal
Say farewell to having only one source of income
From Ben Legg, CEO of Digital People International and CEO of The Portfolio Collective
(4 minute read)
Companies are going bankrupt. Millions of people are on furlough - soon to be laid off, because those jobs aren’t coming back. Most surviving companies are reducing permanent headcount, as they realise that the economic recovery will be a long, slow grind. Country-by-country, unemployment is heading towards 15%. Most of those permanent jobs are not coming back, and far fewer new permanent roles are being created.
However, if you know where to look, there is plenty of interesting temporary work out there. Some industries are growing; many startups are hiring; struggling organisations need fresh talent. Unlike in previous recoveries, this time there will be no hiring boom for permanent roles. Instead, we are seeing an increasing demand for consultants, short term contractors, interim managers, advisors, industry experts and other independent professionals.
This is accelerating the pervasiveness of professionals with 'portfolio careers'.
What Is A Portfolio Career?
A portfolio career is one that is not reliant on a single source of income. You are your own boss, working with multiple clients. The work could be large or small projects, part time work, interim management or board roles. You could be paid by the hour or the day, or paid only for deliverables. Some portfolio roles at startups pay no cash, but instead in ‘sweat equity’ (i.e. stock options). Many portfolio workers also create and proactively pitch their own products or services too, as opposed to just reacting to market demand.
At one extreme, a portfolio worker could identify a lucrative speciality and go all-in, such as becoming a drone lawyer (I met one recently - such a cool job!) or a specialist online teacher. At the other end, it could be a more diverse combination of part time and project work, offering a mix of functional and industry expertise. Many people with full time roles also have a ‘side hustle’ going on, which is effectively dipping their toes into building a portfolio career.
Examples of portfolio work include things like maths tutor, public speaker, startup lawyer, website builder, SEO practitioner, industry expert, logo designer, content writer, consultant, interim manager and locum doctor/ vet. You get the point - there are no limits.
Unlike an undifferentiated ‘gig economy worker’, a portfolio career is thoughtfully put together. It is focused on offering differentiated services in order to maximise earnings, and - just like an investment portfolio - is always evolving based on where the returns on your time look to be the most promising.
'many people with full time roles also have a side hustle going on'
Employment Norms Were Changing Long Before Coronavirus
Long before lockdown, the OECD Future of Work study predicted that 50% of developed country workforces would be gig workers by 2030. Many white collar professionals thought that didn’t refer to them - only to Uber drivers, food delivery people and the like. Wrong! The long term reduction in permanent roles affects almost all job types.
Why Did Companies Make Permanent Hires?
Historically, companies wanted to hire permanent white collar employees for a number of reasons:
- Scarcity. It was hard to find good talent, so when you did find it, you wanted to lock it in.
- Training. Most companies operated in their own idiosyncratic way, so it took a long time to induct new employees to doing things their way.
- Trust. In a world in which monitoring quality was hard, you needed to trust your employees not to steal from you or neglect quality.
Why Did Professionals Want Permanent Roles?
Likewise, professional workers also had their reasons for wanting permanent jobs:
- Career. Most big companies promoted from within, so if you wanted to get to the top, you needed to be prepared to stay around for many years.
- Pension. In the days of ‘defined benefit’ pensions, it made sense to stay in one organisation for a long time, to get the best possible pension.
- Healthcare. In the US, healthcare was (and still is) generally paid by the employer for their full time employees.
- Social Pressure. Changing employers too often was considered unethical, and could make you less employable elsewhere.
- Lack of Transferable Skills. In the pre-internet world, an enormous amount of company knowledge wasn’t codified - it was learnt on the job and was considered company- or industry-specific. Therefore, it was hard to learn transferable skills that could help you move between companies, industries or functions.
From Jobs For Life, To Jobs for A Few Years, To Jobs For A Few Weeks
For decades, ‘jobs for life’ were evolving into careers working for multiple employers. The average age of companies in the S&P 500 has changed from 30 years old in 1980 to just 10 years old now. Old companies were declining and the new companies were hiring, leading to more job switching. Mid-career changes of employer, stimulated by studying for an MBA, or being poached by a headhunter, was also becoming more common.
The internet has accelerated this trend further. We have LinkedIn and other job sites, online training, video conferencing, dashboards to track almost anything. Working in a startup is considered cooler and a faster way to both learn and get rich than going to a big, established company. It also leads to more churn, as startups pivot often. Given all this, the average time that professionals stay at each employer has been drifting down, and is now below three years per employer.
The coronavirus lockdown has just accelerated this evolution that was already happening. Now that all white collar professionals are working from home, companies can hire talent from anywhere in the world. For example, my small consulting business has a virtual team of 10 people. All of them are paid per project/ deliverable, we don't have an office and none of them live in London (near me).
So what does the future look like?
Employers Want Far Fewer Permanent Employees
Employers don't need, or want, as many permanent employees as they had before:
Talent Mobility. It is now much easier to find ‘good’ talent, on LinkedIn and other job sites, or by using headhunters - so organisations don’t need to lock in their talent so tightly. Also, talent needs vary over time, and new blood is seen as a good thing.
Need For Flexibility. Companies now need to be much more nimble, spinning up new teams and closing down others at a much faster rate. That is better done with temporary manpower. And it is now easy to find consultants or outsource specific projects, such as a discrete piece of analysis, getting an expert opinion or building an app.
Hyper Competition. In the global economy, most organisations need to become the best in the world at something, or risk death. To be the best in the world means tapping into world class talent and global expertise. Such people are often only available as a consultant rather than a permanent hire.
Training. All companies now do a much better job of being able to explain how they operate to newcomers, so it is now much easier for outsiders to turn up, understand how a company works, conduct a project successfully, then walk away.
Trust. It is much easier to trust outsiders now. There is no cash, most ‘deliverables’ are digital and trackable, and people who do let you down would ruin their reputation through bad ratings/ reviews, or having bad references. This would hurt their future earnings.
Given all of these changes, the only professional roles that are likely to remain permanent are those that require long term continuity and/ or at least 40 hours per week for the foreseeable future. These would include things like CFO, brand manager, product lead etc. According to the OECD forecast, this would mean that less than half of the workforce will have permanent positions by 2030.
'it can be really easy money if you find your speciality niche'
A Portfolio Makes Sense For ALL Professionals
From a professional worker’s perspective, all the old reasons for wanting a permanent contract have disintegrated too. People manage their own careers rather than waiting to be promoted; pensions are moveable; there is no social pressure to stay at one employer, and it is easy to learn transferable skills. The only outstanding factor that might tie some workers to wanting a full time role is healthcare, and that is only in the US (and is a solvable problem, albeit an expensive one).
Indeed, I would argue that a portfolio career makes sense for almost ALL professional workers, even if they have a full time role. The benefits of a portfolio career include:
It provides a diverse sources of income, reducing risk.
You can usually do the work from home.
Typically, the work offers flexible hours, so you can do evenings or weekends.
You pay lower taxes (you can offset a lot of personal expenses against this work)
It creates a back-up plan, just in case you lose your ‘main’ job.
You can learn new skills and expand your network.
It can be really easy money if you find your specialty niche.
It might lead to new permanent offers (if you still want a full time role).
Economists Must Be Smiling
This new normal of portfolio working must be an economist’s dream. Every professional will be continuously striving to earn the maximum hourly rate, forever innovating - learning new skills and trying new things and reinventing themselves forever. In this world, supply and demand of labour will be more synchronised than ever before, and human productivity will be higher too - which should lead to increases in GDP per head.
The portfolio career is a continuation of the atomisation of work and is here to stay. This is a natural evolution of how work gets done more efficiently. Portfolio careers are also more enriching for those professional workers who can master them well.
About The Author
Ben Legg is an engineer, serial CEO of global digital businesses and former COO of Google Europe. He spent his early career as a British Army Officer and McKinsey consultant. He is now an angel investor and startup mentor, focused on supporting entrepreneurs at reinventing industries including healthcare, education and clean technology. He is also an award-winning management author and a co-founder of The Portfolio Collective.
Portfolio Career Workshop
If you are interested in understanding what it means to have a portfolio career, Ben Legg has created an in-depth introduction video that tells you just that. You can learn more by clicking on the link below.