This article was originally featured in Forbes on November 7th, 2023.
In 2016, Accenture made a bold prediction. Within the next 10 years, a Fortune 2000 company will have "no full-time employees outside of the C-Suite." The prognostication generated outsized hype for obvious reasons. It was featured in The Wall Street Journal's "The End of Employees," which examined the increasing corporate reliance on 1099 independent contractors to run their businesses.
This vision of Accenture's "liquid workforce" was enticing to business leaders. The workforce-as-a-service model presented businesses with an opportunity to embrace a variable cost model and sustainably scale their businesses. The vision was compelling: a Global 2000 enterprise operating with the speed and flexibility of a startup.
In this future world, millions of people would theoretically be free to pursue their passions, run their own businesses and work the way they want. Technology would facilitate the free, frictionless and instant flow of money across the globe between businesses and contractors, those contractors and their subcontractors, and a million other complex billing and invoicing flows—all based on the fragmented and dynamic nature of the new economy. In other words, this foretold an achievable vision for the future of work.
It's been nearly eight years since Accenture's prophecy, and it's obvious we've fallen short of the promise. Despite the continued growth of the freelance economy, the future of work hasn't materialized the way many expected. This is due in large part to the technological and societal limitations around how flexible work is administered in America.
The Messy Back Office Of Managing Contractors
The way businesses onboard, pay and support independent contractors is fundamentally broken. When I started my own freelance consulting business in 2017, I quickly realized the freedom to work on my terms is sublime. However, the administrative burden of freelancing is not so awesome.
During tax season, I locked myself in a room for a week for a close encounter with my financial life ahead of the IRS filing deadline. Tracking down 1099s from clients, categorizing expenses and reconciling payments were all frustrating and confusing, to say the least. After all of this paperwork, I still had to actually do the work I was being paid for.
It's not just the contractors who suffer from an outdated status quo, though. I soon learned that companies hiring contractors face their own administrative, back-office inferno. Behind each contractor is a W-9, 1099, e-signature, a background check and, finally, a reconciliation process.
For many companies, a majority of these steps are administered manually using internal HR, operations and finance teams, spreadsheets, and dozens of human touchpoints. This onboarding process is repeated for every new contractor, and payments involve dozens of laborious steps that can quickly become a logistical nightmare. That's all before they actually disburse the money.
This chaos compounds for companies working with hundreds of contractors and doesn't even factor in the compliance considerations required for companies to avoid penalties from the IRS (timely issuing, filing and delivery of accurate 1099 forms). To cap it off, contractor data is usually fragmented across multiple systems within an organization, meaning that any change in a contractor's status (a new bank account, for example) requires human intervention to update the record across all systems. I've seen typos on W9s and a misplaced dash on a 1099 form wreak havoc for companies.
The shift toward the future of flexible work was intended to maximize flexibility for forward-thinking companies. Instead, it created an administrative crisis due to processes and systems that were largely the same two decades ago.
The Future Is Making Flexible Work Frictionless
This sobering reality is ultimately what's preventing companies from relying more on contractors and paralyzing those that already rely on a flexible workforce to drive their growth. No matter which side you're on, it's clear that the financial infrastructure underpinning flexible work is broken. A better future requires a paradigm shift in how companies efficiently engage with contractors at scale.
This is one of the reasons my co-founder and I started our company. We were convinced that both contractors and the businesses that rely on them needed a system of record to bridge the gap and provide a frictionless experience to navigate the administrative labyrinth that is flexible work in America.
While there are broader structural fixes required to address a decades-old status quo, there are also tangible steps that business leaders can take to improve the experience. It's the same advice I give to the finance and operations leaders I talk to.
1. Fundamentally reassess your systems and assumptions around administering flexible work. This involves documenting the baseline around your core processes. How long does it take to onboard workers? How long does it take you to pay them? How much time is your accounting team spending in January to prepare 1099 forms?
2. Ask your internal teams what they think. Are the back-office processes easy, intuitive and fast? Are you putting them in a position to best use their skills?
3. Get a pulse of the sentiment from your contractors. Are they getting paid quickly and conveniently? Do they feel engaged with your company and likely to continue working with you?
4. Get outside perspectives by talking to peers at other companies. How are they administering similar processes? Are they using technology to streamline key processes? If so, how?
Businesses that can transform their back-office operations while providing their contractors with an easy, rich experience will have a distinct competitive advantage. Imagine a world where an insurance claims business can deploy 5,000 1099 insurance inspectors overnight after a hurricane strikes and get them paid and reconciled within the week.
If that sounds lofty, consider how we treat full-time employees. We don't blink an eye when W2 employees get fast onboarding, biweekly paychecks, automatic tax withholding and access to benefits. Why can't flexible work be just as smooth? It's the question that millions of Americans are asking.
There's no reason it can't be now.
