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Is Employment the Best Model for Creative Work?

Dorian Taylor is a Techvibes Guest Contributor and this post was originally published on his blog.

It is dif­fi­cult to get a man to un­der­stand something when his salary de­pend­s on his not un­der­standing it. — Upton Sin­clair

If you are em­ployed full-​time as a knowl­edge worker in a pro­duc­tion ca­pac­ity, that is, you per­son­ally gen­er­ate the in­tel­lec­tual cap­i­tal your em­ployer ul­ti­mately sells, it is a safe bet you are get­ting screwed.

I un­der­stand that such an in­dict­ment is not one that is ut­tered lightly. It has indeed taken me a number of years to come to rest on my as­sess­ment, and to at­tempt to pre­sent it in a co­her­ent and re­spectful man­ner. The ex­am­ples and sce­nar­ios I give are from my own ex­pe­ri­ence, but I be­lieve they are far from ex­cep­tional.

A Call Op­tion on Your Time

The fore­most item to rec­og­nize as a knowl­edge worker and gen­er­ator of in­tel­lec­tual cap­i­tal work­ing as an em­ployee is that un­less you have ne­go­ti­ated oth­er­wise, your em­ployer ef­fec­tively pos­sess­es a call op­tion on your time.

This means that for a pre­de­ter­mined price, your em­ployer can help it­self to as much of your time as it wants. It can de­mand that you show up early, stay late or work all night, work on week­end­s and hol­i­days, get on a plane at a mo­ment’s no­tice and so on. In my home province of British Columbia, Can­ada, an or­ga­ni­za­tion’s right to be­have this way with re­gard to so-​called high-​tech­nol­ogy pro­fes­sion­al­s is pro­tected by statute.

Of course you can refuse, but that kind of be­haviour isn’t be­coming of a team play­er. Un­like a con­sul­tant, who charges to draw breath, and whom the or­ga­ni­za­tion can typ­i­cally only threaten with ter­mi­na­tion, an em­ployee can be made to suf­fer in a myr­i­ad of ex­otic ways. These can range from bor­ing or un­pleas­ant as­sign­ments, to being passed over for bonus­es and promo­tion­s, to pret­ty much any other in­con­ve­nience a dis­af­fected man­ager could un­cer­e­mo­ni­ous­ly con­coct.

But even if you ne­go­ti­ate com­pen­sa­tion for every sec­ond you outlay to your em­ployer, it is still in a po­si­tion to de­mand your scarce time for its abun­dant money — and in that con­tex­t it is prob­a­bly in your in­ter­est to take it. Since most or­ga­ni­za­tion­s nar­row to­ward the top, there is sig­nif­i­cant com­pe­ti­tion for the rare prize of up­ward mo­bil­ity. In this tra­di­tion, the first prize goes to the com­pany, the sec­ond prize goes to the most con­spic­u­ous­ly per­forming em­ployee, and for ev­ery­body else it’s busi­ness as usual.

Of course you can quit, but it’s ex­pen­sive to quit. It’s equally ex­pen­sive to find a new job, not to men­tion rife with un­cer­tainty that you will find a bet­ter deal or even a deal at all. In the mean­while, you lose all your perks and good­ies. Quit­ting looks bad on a résumé. You have car pay­ments. You are ex­pecting a baby. Et cetera.

A Her­itage of Com­mand and Control

The re­la­tion­ship be­tween em­ployer and em­ployee has a rich cul­tural her­itage: slavery, serfdom, in­den­ture, and of course, the mil­i­tary. In each of these mod­el­s, there ex­ist­s an owner of as­set­s and means of pro­duc­tion who con­fer­s marginal ben­e­fit­s upon one or more in­di­vid­u­al­s in return for them bear­ing the ma­jor­ity of the ef­fort and risk as­so­ci­ated with said owner’s exploit­s.

In a con­fig­u­ra­tion of com­mand and control, the op­er­a­tional in­for­ma­tion trav­el­s up­ward and the or­der­s trickle down. Ad­di­tional in­tel­li­gence is gin­gerly dis­pensed from the top on a need-​to-​know basis. How­ever, if you con­sider for a mo­ment the rea­son why you’re even there, this dis­par­ity of in­for­ma­tion makes no sense. At least in prin­ci­ple, you are al­most cer­tainly the most equipped and in­formed per­son to do your job. The in­for­ma­tion that would be most helpful — the strate­gic plan — is that which is most likely kept from you.

But even though you may be the best-​in­formed, it is en­tire­ly an­other issue to be able to act on your in­for­ma­tion. Un­less you have some deriva­tion of the word man­ager in your job title, it is dif­fi­cult to avoid re­verting to a pat­tern of con­tin­u­ally pitching your method and ask­ing for per­mis­sion. Be­cause if man­ager is what you are, it is cu­ri­ous­ly not your method under scrutiny but rather your re­sult­s. Not being able to pro­duce re­sult­s di­rectly, you have an in­cen­tive to en­sure your sub­or­di­nates stay in the safe zone, which means no risks and no meth­od­s you don’t un­der­stand. The head and the hands of the op­er­a­tion do not be­long to the same per­son. This sit­u­a­tion will never im­prove until those who per­son­ally gen­er­ate in­tel­lec­tual cap­i­tal are treated as man­ager­s in their own right, and pos­sess the ex­ec­u­tive au­thor­ity re­quired to de­cide how best to de­ploy their time.

Bleak­ness and doom­saying aside, how­ever, here is some good news: as a knowl­edge worker slash cre­ative pro­fes­sional, you are the true owner of your means of pro­duc­tion. It’s right be­tween your ears — and there’s noth­ing any­body can do to take that away from you.

Right of First Re­fusal To Your Life’s Work

Well, ac­tu­ally that’s not en­tire­ly true. You can take it away from your­self, with a flick of the wrist called as­sign­ment of intellectual prop­erty right­s.

I once worked at a com­pany that of­fered a bounty for new patents that was around half of that which it of­fered for re­cruiting new em­ploy­ees. While this could be ex­cused as op­er­a­tional ne­glect or even a cler­ical mishap — hey, patents don’t happen nearly as often as new hires — it had all the trap­pings of a sar­don­ic joke.

What I mean is that as a con­di­tion of my em­ploy­ment, and bar­ring a few spe­cific items I dis­closed at the out­set, my employer was en­titled to just about anything I could come up with — even in­ven­tion­s that drew on ex­pe­ri­ence from years prior to the in­cep­tion of our re­la­tion­ship. If I was to as­sign this in­tel­lec­tual prop­erty to them and they were to patent it, I would have had to pay them what­ever they asked to use my in­ven­tion com­mer­cially at any point in the next 20-​plus years. Even if all they chose to do with it was file it away into obliv­ion.

My em­ployer could ex­pect this out­come be­cause bolted to the boil­er­plate em­ploy­ment agree­ment was a clause that re­quired it. To have con­tested this clause, of course, would have gen­er­ated an atyp­ical ex­pense and put me into di­rect com­pe­ti­tion with those who don’t bother to read doc­u­ments of this kind. The em­ployer gets the IP for free. The afore­men­tioned bounty is just a con­so­la­tion prize.

This all amounts to a strong dis­in­cen­tive to in­vent anything of sig­nif­i­cant value while under em­ploy­ment; it also gen­er­ates a strong in­cen­tive to de­fect. This isn’t a frivolous issue ei­ther, it has se­ri­ous ram­i­fi­ca­tion­s for an in­ventor’s fu­ture earn­ing poten­tial. Con­sider this: if you happen to be fresh­ly em­ployed at a given com­pany when you man­age to gel a mer­chantable idea that you’ve been mulling over for years, what’s stop­ping you from quit­ting, patenting it your­self, and starting a busi­ness around it?

Oh, right. The thing stop­ping you is the threat of the ru­inous law­suit im­plied by the non-​com­pete clause which is hand­ily bolted to the IP as­sign­ment clause in your em­ploy­ment agree­ment.

There Must Be an Up-​Side

I have listed below, in order of in­creasing like­li­hood, some of the pu­ta­tive ben­e­fit­s of work­ing under an em­ploy­ment con­tract, which apply equally to those who are tasked with gen­er­ating in­tel­lec­tual cap­i­tal as well as those who are not.

  • Eq­uity grants and stock op­tion­s

It is im­por­tant to un­der­stand that in the vast ma­jor­ity of sit­u­a­tion­s, these as­set­s are es­sen­tially lot­tery tick­et­s. Fur­ther­more, you are al­most cer­tainly not going to be granted eq­uity un­less you can count your em­ployee number on one hand.

Stock op­tion­s con­sti­tute an even greater fan­ta­sy, as they typ­i­cally come at­tached to a litany of con­di­tion­s that re­strict when you can buy them, ex­truded out over a pe­riod of years. If you miss an ex­er­cise window or part ways be­fore you vest, the option­s nat­u­rally be­come void. And then there’s the small mat­ter of the number of shares you have the op­tion to buy, the price at which you can buy them, and what they end up ac­tu­ally being worth.

But let’s say you do man­age to get your hands on some com­pany stock. Good for you! Of course the first thing you’re going to want to do is get rid of most of it, be­cause it is im­pru­dent to hold on to a sig­nif­i­cant parcel of un­di­ver­si­fied in­vest­ment. But where do you un­load it? Un­less the com­pany is pub­licly traded, buy­er­s are scarce and you have no rea­son­able way of know­ing what the stock is worth. If you can’t find a buyer, you ef­fec­tively have no op­tion but to wait around until the com­pany goes pub­lic, gets ac­quired, or tanks.

  • Bonus­es, com­mis­sion­s and profit shar­ing

I will dis­tin­guish be­tween two kinds of bonus­es: the kind that ev­ery­body gets, such as at the end of the year, and the kind that are awarded for per­for­mance, which in­cludes boun­ties.

It is safe to as­sume that the first type of bonus is bud­geted up front, and can be ef­fec­tively un­der­stood as an in­ter­est-​free loan from the em­ploy­ees to the com­pany, who de­ploys a strat­e­gy iden­tical to that of the United States IRS. The sec­ond type of bonus can be com­pletely ar­bi­trary, with no re­li­able way to trig­ger it.

Lastly, if for no other rea­son than mor­bid cu­rios­ity, I would love to see an or­ga­ni­za­tion that pays its pro­duc­tion em­ploy­ees on a com­mis­sion or profit-​shar­ing basis, or for that mat­ter any­one who isn’t in sales.

  • Re­tire­ment sav­ings matching

I ad­mit­tedly have the least amount of ex­pe­ri­ence with this type of ben­efit, but I as­sume it con­fer­s at least a tax break of some kind on the part of the em­ployer. Moreover, you can bet that it is bud­geted into your salary, so if you don’t rise to the op­por­tu­nity, you’re ba­si­cally gifting your em­ployer by that amount.

  • Health in­sur­ance

In the US I imag­ine this is a cru­cial of­fer­ing; in Can­ada it is ul­ti­mately a con­ve­nience. In both coun­tries it spell­s out to significant tax-​free money. Like­wise in both coun­tries, the buying power of the or­ga­ni­za­tion dras­ti­cally cuts the cost of insurance pre­mi­um­s. De­pending on your em­ployer’s pref­er­ence, these are ei­ther dis­played as a line item on your paystub or har­mo­nized into your salary some­how.

It is also im­por­tant to rec­og­nize that what is dubbed health in­sur­ance is more ac­cu­rately un­der­stood as sub­si­dized health expen­di­tures for the du­ra­tion of your em­ploy­ment. In­sur­ance is in­sur­ance. This ben­efit ter­mi­nates when your job does. Your job is not in­sured, there­fore you do not have health in­sur­ance.

  • Sick days and paid va­ca­tion

Yes, you still get paid even if you are bedrid­den, be it on a beach ham­mock or with the flu. But make no mistake, both of these con­di­tion­s are in the bud­get. One is sta­tis­ti­cally ac­counted for, the other is typ­i­cally set aside as an ex­plicit per­cent­age of your salary. With the ap­pro­pri­ate equip­ment and dis­ci­pline, you could repli­cate these con­di­tion­s your­self.

  • Sta­ble in­come, reg­u­lar pay­cheque

Of course, di­rect deposit every two weeks. I can scarcely think of a more ef­fec­tive way of en­gen­der­ing irrespon­si­ble fiscal be­haviour. Per­hap­s you can ar­range to have your em­ployer deposit di­rectly to your credit card ac­count.

As for or­ga­ni­za­tion­s them­selves, their mean lifes­pan de­creas­es every year. Fur­ther­more, from bailout to blowout, there is no short­age of good rea­son­s to go look­ing for re­dun­dan­cies. Sta­bil­ity is an il­lu­sion. It is en­tire­ly plau­si­ble that you could be sent home this Fri­day evening with lit­tle more than a two-​week sev­er­ance cheque.

What Does the Al­ter­na­tive Look Like?

I want to un­der­score that I do not be­lieve that those in the em­ployer’s po­si­tion ne­far­i­ous­ly plot to ex­ploit the poor, downtrodden work­ing class. The sit­u­a­tion is more in­dica­tive of a naïve pro­gres­sion from in­dus­trial to post-​in­dus­trial re­al­i­ties in so­ci­ety, or­ga­ni­za­tion­s and man­age­ment, with no­body stop­ping to eval­u­ate the side ef­fect­s. Moreover, you can bet that the afore­men­tioned con­ces­sion­s that em­ploy­er­s have made were spurred by em­ployee de­mand — they’re trying, they’re just not doing very well.

I once worked at a com­pany where an ex­ec­u­tive was caught saying something in the order of “if we paid ev­ery­body what they were worth for every hour they worked, we’d be bankrupt three times over.” While this re­mark ini­tially sound­s crass and somewhat re­pel­lent, I be­lieve it was an hon­est re­port on the state of that com­pany’s in­fras­truc­ture.

At this point it is un­der­stand­able to envy hourly wage-​earn­er­s — at least they get paid for their ef­fort­s. It is im­por­tant to recog­nize that em­ploy­ment is a long-​ter­m, high-​risk ar­range­ment. It is not only ex­pen­sive for in­di­vid­u­al­s, as I men­tioned, to quit or be let go, and then to find and ne­go­ti­ate a new job. It is also ex­pen­sive for or­ga­ni­za­tion­s to hire peo­ple, let them go, find re­place­ments and leave desks empty. Moreover, a sloppy hire can eas­ily do more harm than good.

The ques­tion to ask then is why don’t more cre­ative pro­fes­sion­al­s work in­de­pen­dently? You own your means of pro­duc­tion and with the In­ternet you have di­rect ac­cess to mar­ket­s. No­body tells you how to do your job, you can choose when you work and with whom, and you get paid in cash for every hour you put in. You can also write off all sorts of work-​re­lated ex­pens­es that as an em­ployee you pay taxes on, such as housing, bank fees and in­ter­est, telecom, gear and sup­plies, en­ter­tain­ment, pro­fes­sional dress, travel, pro­fes­sional services, as­so­ci­a­tion mem­ber­ship­s and train­ing. I don’t know about you, but that list rep­re­sents, and has his­tor­i­cally rep­re­sented, a sig­nif­i­cant chunk of my in­come.

Like­wise, why would such a con­fig­u­ra­tion thrice-​bankrupt an or­ga­ni­za­tion pur­chasing your services? It would­n’t have to manage a pay­roll or HR de­part­ment in the same ca­pac­ity. It would­n’t have to man­age health and re­tire­ment ben­e­fit­s to the same ex­tent, spend as much cap­i­tal on equip­ment or even take out nearly as much real es­tate. It would also gain back the count­less hours you oth­er­wise spend pitching your boss. The sheer act of paying you is a tacit vote of con­fi­dence.

But most im­por­tantly, an or­ga­ni­za­tion would not be sub­ject to the risk as­so­ci­ated with hir­ing a new em­ployee. There is only one form of dis­ci­pline: you’re fired, and that is only con­comi­tant with a fail­ure on the part of the pro­fes­sional — or the organiza­tion — to per­form. The stakes are low and sev­er­ing a sub­op­timal ar­range­ment is cheap for both par­ties. Independent op­er­a­tion di­ver­si­fies a cre­ative pro­fes­sional’s time in­vest­ment, ren­der­ing it more re­silient. Like­wise is an or­ga­ni­za­tion’s in­vest­ment in that per­son’s style and per­spec­tive.

Cre­ative pro­fes­sion­al­s are also free to or­ga­nize in cor­po­ra­tions or co­op­er­a­tives of their own, in­cluding what can be ef­fec­tively cast as sin­gle-​per­son cor­po­rate avatars. It is not a to­tally triv­ial un­der­tak­ing, and would re­quire a mod­icum of re­spon­si­bil­ity and ini­tia­tive, but legal en­ti­ties like these are cheap and ac­counting soft­ware is plen­ti­ful. Fur­ther­more, they do not nec­es­sar­ily com­pete with or ob­so­lesce their erst­while em­ploy­er­s — the former still need out­let­s for their work, be­cause it is often wildly es­o­teric. Those who do not in­cor­po­rate can use pro­fes­sional as­so­ci­a­tion­s as sur­ro­gates for health ben­e­fit­s. As for risks to cash flow, dry spell­s can be ab­sorbed ear­li­er on by credit lines and later by cash re­serves. Slow pay­ment and non-​pay­ment, while a painful re­al­ity to the small play­er, can be kept to low fig­ures through a strin­gent billing pol­icy.

Why This is Im­por­tant

My over­ar­ching in­ter­est in writing this piece is that I be­lieve cre­ative and prob­lem-​solving work is at the core of where we are now and where things are going. The prob­lem of yes­ter­day was how do I make a mil­lion bucks? The prob­lem of today is what do I do with my mil­lion bucks (once I make it)? It is the prob­lem of ef­fec­tive de­ploy­ment of re­sources, and it cuts across every dis­ci­pline.

I am firmly con­vinced that the con­ven­tional model of em­ploy­ment, as it can be found in all but the most in­no­va­tive of organiza­tion­s and agree­ments, erodes the ca­pac­ity of cre­ative pro­fes­sion­al­s to do their very jobs. Its in­cen­tive model is out of joint with what is useful to these peo­ple, trading scarce time for abun­dant money in the best sit­u­a­tion­s. It chill­s oth­er­wise wildly pro­duc­tive in­di­vid­u­al­s with a moun­tain of risk. Gov­ern­ment, as ex­pected, is an age be­hind. My char­ac­ter­i­za­tion is harsh and my pre­scrip­tion is dras­tic. It by no means may be the only one. I tender here a sketch for going for­ward, and I am eager to see how it res­onates.