There are many factors driving the Great Resignation, but a shifting power dynamic in today’s labor market tops them all. With more bargaining chips at their disposal and significantly improved technology to help them re-imagine their career paths, workers are reexamining the value of their skills. And it’s paying off in higher salaries.
To get a better idea of where the new power dynamic is leading and how it’s impacting the future of work, I talked to Pat Petitti, cofounder and CEO of Catalant, a platform that connects highly skilled workers to strategic consulting opportunities. Petitti’s company has witnessed the shift firsthand. Many of the highly skilled independent consultants in their marketplace left the corporate world for opportunities that offer more freedom.
Gary Drenik: Do you think the pandemic alone altered the traditional power dynamic between employers and employees? In other words, if it weren’t for the pandemic, would we have seen such a major shift in the labor market?
Pat Petitti: Yes, but not as quickly. Technology was already leveling the playing field for many employees before the pandemic. With the proliferation of sites like Glassdoor, employees were realizing their skills were more valuable than they were being compensated for, and they were growing tired of “fluffy” perks meant to keep them happy. The shift would have still happened, but it wouldn’t have been prolific enough to have a name like “The Great Resignation.”
But where are we now? Companies no longer have so much power in determining an employee’s lifestyle. Another great shift — the transition to remote and hybrid work — is to thank for this. Employers don’t have as much influence when it comes to which offices new employees report to, where they live or how they commute. And employees who decide to resign today without a new opportunity waiting for them have more options than ever. The bottom line is that workers — especially highly skilled professionals whose knowledge is in demand in the marketplace — can create whatever work-life balance they desire.
The Great Reckoning is a more apt term for this conversation — employees have always wanted more flexibility, and now they finally have the power and structural framework to build the balance they deserve.
Drenik: How should companies adjust to this new labor market where they need to meet employees’ expectations?
Petitti: Businesses need to invest in concrete, strategic ways to improve employee work-life balance and career progression. Right now, they’re losing out to the opportunities presented in the freelance economy, where in-demand skills can net an individual flexible, well-paying work. Whether businesses can afford to offer the flexible hours and diversity of work to their employees in the same way freelance and consulting roles can provide remains to be seen.
However, instead of fighting against the rise of more freelance-based work, businesses should embrace it. According to a recent Prosper Insights & Analytics survey, about 14% of the workforce said they prefer to work from home because it allows them time to pursue other opportunities on the side. The hunger within the workforce to apply themselves beyond a “day job” should be seen as an opportunity, not a threat. More and more, businesses can rely on these savvy, skilled professionals to fill gaps in their workforce — especially when they may only need the help for 5 to 10 hours a week. A future-proofed organization has the capability to engage independent consultants the same way they approach hiring full-time hiring and consulting procurement.
Drenik: What sparked the new trend in highly skilled workers becoming expert freelancers? Why is this shift happening and what does it tell us about the broader shift in the consulting industry?
Petitti: Consulting has always lent itself to a hybrid approach, but the broad acceptance of remote work helped many highly skilled workers get off the fence and into the freelance market. At the same time, technology is making it much easier for companies to engage with freelance workers. The digital infrastructure to offer benefits, onboard, provide technology access and carry out other important processes remotely has adapted to support freelance employees.
For consulting in general, there’s a pivot to be far more agile. The months-long ramp-up of traditional consulting firms is slowly being phased out — independent consultants can typically start working within days or weeks, and projects can be completed at a lower cost and at a faster pace. This is good news for large or long-standing businesses looking to operate with the speed and agility of a startup.
Drenik: Specifically, what skills are in high demand in the freelance consulting market?
Petitti: Right now, we’re seeing high demand in market research, supply chain optimization (up 625% from January 2021 to April 2022), corporate strategy and digital transformation. But those are pretty large categories. One of the biggest benefits of hiring a freelance consultant is knowing the exact skill set and experience you’re getting. Do you need a consultant to help execute a market sizing analysis in a specific geography to help you look into whether a potential acquisition is viable or not? By the time, a traditional consulting agency would likely contract and onboard, your window of opportunity on the acquisition might close.
In this way, consulting is about to become hyper-specialized. No matter how niche a skill might be, chances are there is a business that might need exactly that knowledge. It may only be for a 10-hour per week engagement, but the specificity of skills can lead to a highly lucrative living for experts that still represents significant ROI and reduced investment for the enterprise.
Drenik: Do you foresee the labor market becoming primarily freelance workers in the next decade? Why?
Petitti: The pool of freelance workers and highly skilled consultants will continue to grow over the next decade. Technology has made it easier than ever to generate value in a distributed environment, and for those with niche skills and highly valued knowledge, opportunities will only continue to grow. Once businesses realize how much value these short-term, highly focused engagements can add to their organization and mitigate risk, we’ll quickly see this kind of work style become more popular.
Drenik: Thank you, Pat, for this conversation about the future of freelance consulting and the ever-shifting power dynamics of the labor market.