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Google, Inc. and Uber have a high percentage of their total workers as contractors or contingent workers. While both companies have successfully created a unified/strong culture, Uber’s independent drivers have raised pertinent issues that need to be addressed.

1. Google, Inc.

  • Google, Inc., simply Google, is one of the most successful technology companies in the world. The company has been a dominant player in the wider technology sector in recent times and the unrivaled leader in specific technology areas such as in Search Engines.
  • Another major feature that characterizes Google is its employment structure. Google is among the companies that have more employees employed as contractors or contingent workers than permanent employees. According to a report by the New York Times, as of March 2019, Google had approximately 121,000 such workers, often referred to as temporary, vendor and contract workers (TVCs), and 102 full-time workers.
  • With a ratio of 121,000 TVCs to 102,000 full-time workers, this means that Google employed 54.26 percent contractors or contingent workers. This implies that majority of the workers are actually in this category. Having more TVCs than full-time or permanent workers has several implications for Google in terms of building and maintaining a strong culture.
  • Apparently, despite being ranked one of the best employers or places to work in the world, Google has often had problems with its TVCs, especially in terms of engagement, compensation, and benefits. For example, some reports show that the TVCs were often treated differently compared to the full-time counterparts.
  • The temporary workers at Google feel less engaged and second-class workers compared to their full-time counterparts.
  • The impact has been that among Google’s entire workforce, there seems to be a significant difference between the temporary and full-time workers. This has adverse implications on creating a strong united culture.
  • Despite the seemingly evident adverse implication of having a larger temporary workforce, Google has demonstrated that this can be handled effectively to create and maintain a strong culture. The company’s strong culture has made it an ideal employer for many people.
  • Regarding the issues raised by the TVCs, Google responded effectively by addressing them through policy changes. This resulted in the TVCs applauding the company’s reaction.
  • Google’s strong culture is the product of a long-term process. Having more TVCs than full-time workers has had its challenges in retaining this culture.
  • However, the continued success of the Google culture to date clearly shows that having more contractors or contingent workers may not necessarily be detrimental to building a strong organizational culture.
SUCCESSFUL COMPANIES WITH HIGH PERCENTAGE OF THEIR WORKERS AS CONTRACTORS & ORGANIZATIONS THAT SCALE AND REMAIN AGILE

2. Uber

  • Uber is another company that employs more contractors or contingent workers than full-time workers. The transportation company that provides vehicle hiring services among other related services usually contracts drivers. All drivers are classified as independent contractors.
  • With all drivers working for Uber being independent contractors, it means that 100 percent of the drivers work as contractors. However, considering that drivers are not the only workers working for the company, this proportion might be slightly lower if the entire workforce is to be considered.
  • Having all drivers working as independent contractors has not gone well for Uber’s company culture. The Uber drivers have often raised issues with this employment status and even proceeded to seek legal redress.
  • The often highly publicized lawsuits and strikes from Uber drivers in different countries have attracted attention and negative criticism against the company. It has led to the company’s workplace culture being seen as toxic and poor.
  • This has resulted in adverse implications on creating and retaining a strong organization culture. For instance, Uber has had problems with its drivers for years and across many countries leading to unnecessary business disruptions. The company has also suffered financially from the negative workplace culture.
  • With the challenges of having its drivers as independent contractors, Uber has struggled to retain a strong culture. While retaining its position on treating the drivers as independent contractors, the company has tried to settle scores with its drivers. In the US, the company settled with most of its 60,000 drivers with settlement costs ranging between $146 million and $170 million.
  • With its recent IPO, Uber also promised to address some of the key issues with its drivers and culture. The CEO informed to the potential investors that it was going to act with integrity, passion, and humility.
  • The company has still a long way to go to ensure a stronger company culture with its drivers working as independent contractors. However, the company, thus far, has created a strong culture considering that it is still operational in many countries and employing drivers.
  • Nonetheless, viewed from a different perspective, Uber is not really doing enough to ensure that it retains a strong culture in view of its larger contractor workforce. Settling disputes with drivers through providing financial incentives is not a sustainable solution. Giving out millions of dollars to drivers to silence them only covers the problems in the company’s culture.
  • A strong company culture cannot be built on such a basis. Engaging the drivers more and providing them with more benefits and packages may be the sustainable solution. Otherwise, Uber will continue to have a larger workforce of independent contractors that is less committed and loyal to the company.
SUCCESSFUL COMPANIES WITH HIGH PERCENTAGE OF THEIR WORKERS AS CONTRACTORS & ORGANIZATIONS THAT SCALE AND REMAIN AGILE

Organizations that Scale and Remain Agile

Netflix and Slack are two organizations that have scaled and remained agile at the new scale. In the report below how each company scaled, the challenges faced during the scaling process, and how the company resolved the challenges are briefly described.

1. Netflix

  • Founded in 1997 to offer online movie rentals, Netflix quickly expanded to offer DVD online rentals and sales in 1998 and subscription services for DVDs in 1999. The company introduced its present form in 2007, when streaming services for movies and television shows were launched.
  • Initially launching in the US, Netflix expanded its geographical coverage to Canada in 2010, Latin America and the Caribbean in 2011, Europe between 2012 and 2015, Australia, New Zealand and Japan in 2015, and to a further 130 countries in 2016, offering its services to a total of 190 countries in 21 languages. During the six years between 2010 to 2016 Netflix expanded operations from one to 190 countries.
  • In the four-year period between 2002 to 2006, Netflix’s membership grew from 600,000 to 5 million. Expansion to markets in the Americas and parts of Europe by 2012 added a further 19 million members. Two years later in 2014 Netflix had over 50 million members, and in 2017 the company achieved 100 million members globally. Currently Netflix has over 193 million paid memberships.
SUCCESSFUL COMPANIES WITH HIGH PERCENTAGE OF THEIR WORKERS AS CONTRACTORS & ORGANIZATIONS THAT SCALE AND REMAIN AGILE
  • As Netflix moved from a fulfillment model to a technology and development, streaming model, the structural cost basis changed from fulfillment expenses exceeding that for technology and development. To transition to a streaming model, Netflix incurred costs from payroll, Website modifications, recommendation service modification, implementing telecommunications systems and infrastructure, adding internal software system, and creating solutions for movie downloads to consumers.
  • Netflix faced the challenge of maintaining profitability while transitioning between the two business models. A key expense during this time was the cost of adding content to the streaming platform. Costs were incurred both in arranging licensing agreements, and to market new content acquisitions in the different markets.
  • To offset the technical and to ensure profitability for content purchased under multiple year, fixed cost agreements, Netflix needed to ensure subscriber retention and acquisition met or exceeded expectations.
  • Netflix’s ability to remain agile is accredited to inculcating a culture of trust with employees being trusted to make their own decisions and by sharing information with all departments of the organization. A distinction is made between top-down decision-making and providing context according to company strategy, defined roles and objectives, knowledge of the stakes involved, and transparency with decision-making.
  • Netflix ensured that a strong brand identity was built. It did this by offering a service with content that members wanted and enjoyed, and by ensuring marketing and public relations activities and customer service was effective. Beginning in 2013, Netflix began developing its own content and by 2019 the company is estimated to have spent $15 billion on original content.
  • The company streamlined operations by switching from running their own hardware infrastructure to opting to host operations in AWS and Open Connect.

2. Slack

  • Founded in 2013, with eight employees, by 2016 Slack had 385 employees, and 2.3 million daily users sending 1.5 billion messages. Of the 2.3 million daily users in 2016, 20% only began using the service in the new year.
  • Users were on Slack for 10 hours each workday in 2017, and averaged active usage of 140 minutes per day for each user. Currently, the company has over 119,000 paid customers and over 12 million daily active users from over 150 countries.
  • By 2019 Slack had a retention rate of 90% among users and over 1,500 app integration.
SUCCESSFUL COMPANIES WITH HIGH PERCENTAGE OF THEIR WORKERS AS CONTRACTORS & ORGANIZATIONS THAT SCALE AND REMAIN AGILE
  • Slack faced the challenge of ensuring technical capacity met the requirements of an expended service, and of ensuring that the company had the right talent to assist with the expansion.
  • When Slack began operations it also faced a challenge in selling its product to teams, with founder Stewart Butterfields recognizing the difficulties in creating a product fit for use by team with different needs and characteristics.
  • When it began operations, Slack did not have any sales persons, and it did not advertise.
  • Slack maintains organizational agility by implementing more human skills like empathy and cross-functional collaboration, applying business to customer expectations to business relationships,
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