If I were a more suspicious person, I’d wonder why some of the most famous tech companies in the US and their equally famous leaders, are unintentionally but actively encouraging their best talent to shift from full-time employment to freelancer.
Four factors are at play:
The plunge in highly skilled foreign workers is driving more freelance work. Axios reported on the consequences of shutting the door on highly skilled foreign workers. According to their reporting, “temporary visas for those with “extraordinary” ability (O visas), specialty job skills (H-1B, H-4, L visas) or who are trade professionals or investors (E, TN, TD visas) fell significantly.” In January, 61,000 foreign experts were granted visas, and that number dropped to less than 500 in April as the pandemic set in and consulates closed. Axios based its analysis on a study by the Migration Policy Institute. While the number rose to over 2,000 in July, and the State Department recently added exemptions in August, that’s still far less than 5% of the January numbers. Moreover, Under other Trump policies, denial rates for the popular high-skilled H-1B visas tripled compared to the end of the Obama administration at 29%, the National Foundation for American Policy found. Remember, the work doesn’t stop because visas aren’t granted.
What’s the consequence? Well, unless there are US citizens ready to take on the work required of our tech companies, the companies are more often than not turning to freelancers inside and outside the US. And in some high demand areas, like AI, the demand is significantly greater than current supply. Ironically, the tech professionals impacted most are those from India, who were the largest beneficiaries of temporary expert visas. Guess what country provides the US with the greatest number of remote tech freelancers? According to one analysis, two thirds of active Indian tech freelancers support companies in the US or UK.
Penalizing remote workers who remote outside the Bay Area. Just 14% of employees trust CEOs or senior managers to lead the return to work, according to an Edelman survey. Only half believe their offices are safe, and many are seriously considering a move outside Silicon Valley. In line with this trend, VMware became the latest employer who has, on the one hand, offered employees the opportunity to work remotely and move to a less expensive part of the country than silicon valley and, on the other hand, plan to insist on a pay cut. VMware’s head of human resources, made the point that the company adjusts salary based on the “cost of labor” in different regional zones and benchmarks salary variations among firms competing for its workers. He adds that, while some employees will see pay cuts, Lang said others could get a raise if they chose to move to a larger or more expensive city. As an example, employees leaving Palo Alto and moving to Denver, must accept an 18% salary reduction, and Los Angeles or San Diego means relinquishing 8% of their annual pay.
VMware isn’t the only company planning to penalize tech and other staff members who decide to work remotely outside the bay area. Facebook and Twitter are considering similar pay policies. Facebook told employees in May that the company would soon transition more permanently to remote work, even after Covid-19 subsides. Employees who leave expensive areas like San Francisco or New York will have to take a pay cut, however, depending on where they live as of Jan. 1, 2021. Chief Executive Officer Mark Zuckerberg said he expects as much 50% of Facebook’s global workforce to be remote in the next five to 10 years.
What’s the problem with this: the work isn’t different and that’s what the company should be paying for. What’s likely to happen? Well, according to Upwork’s most recent report: Freelancing in America, 64% or almost two thirds of respondents believe “professionals who are the top in their industry are increasingly choosing to work independently.” And, according to Edelman’s Trust Barometer, employee trust in their company leadership generally is both low and steadily so. Gallup finds a similar lack of trust in leadership. The combination of actions – a lack of confidence in leaders, a remote work relocation policy that takes as much or more than it gives, and the confidence top employees have in their ability to succeed as freelancers – is likely to push many of a company’s best tech employees to consider the freelance alternative. You can bet that wherever top tech freelancers choose to live, their rate is unchanged.
Employees are frustrated with how their company shows up around social values and priorities. Facebook’s Mark Zuckerberg and Sheryl Sandberg face a continued backlash from employees unwilling to accept Milton Friedman’s iconic defense of capitalism: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” Employees in the tech sector are increasingly publicly criticizing their companies for refusing to take action over controversial and demonstrably false and incendiary statements by President Trump, the deaths of George Floyd, Breonna Taylor, and other black and brown US citizens, and allowing the publication of biased, bigoted and dangerous posts. Zuckerberg has defended Facebook’s position as — in his words — “an institution committed to free expression.” But, individuals like Jason Toff, who joined Facebook as a director of product management a year ago, pointed to a broader upsurge of employee activism inside the company. “I work at Facebook and I am not proud of how we’re showing up,” he posted on Twitter. “The majority of co-workers I’ve spoken to feel the same way. We are making our voice heard.” Andrew Crow, head of design for Facebook’s Portal videoconferencing device, posted on Twitter: “Censoring information that might help people see the complete picture is wrong. But giving a platform to incite violence and spread disinformation is unacceptable.”
Facebook isn’t alone. Tech staffers have protested at Google, Microsoft and Amazon over issues including workplace conditions, climate change and military contracts. What’s the connection to freelancing? Here’s what Gallup says:
“In our recent work with organizations across various industries, we discovered something really interesting and somewhat unsettling: Highly talented employees who are not engaged were among those who had the highest turnover in each organization — on par with low talent, disengaged employees. In other words, when your best employees are not engaged, they are as likely to leave your organization as your employees who tend to have performance issues and are unhappy.
“Why do they leave so quickly? We speculate that your most talented employees are more likely to have high expectations of their workplaces. They are also more likely to have other opportunities available to them. They seek out better opportunities where they can grow and develop their skills. Or they may just want to go where their gifts are appreciated and rewarded more often.”
Remember, many of your top tech experts are already part way out the door. We know that employees are increasingly resembling freelancers in their demand for greater flexibility and autonomy. As a recent article of mine in Forbes pointed out:
“Millennial and Gen-Z workers are increasing treating jobs as gigs, not career destinations, and changing jobs more frequently than any other recent generation. These days, 91% of Millennials plan on staying in their current job for no more than two years.
“The reason employees give for job changing is more and more “freelance-ish.” Freelancers typically point to four critical attractions of a freelancing career: be one’s own boss, more choice and flexibility, and greater variety. The reasons employees give for moving on are strikingly similar: a difficult boss, work that doesn’t interest them or aid them in growing professionally and learning new skills, or an organizational culture that doesn’t provide flexibility.”
With top tech professionals recognizing the growth of opportunity in freelancing, this is no time for company leaders to take the loyalty and engagement of their top technical talent for granted, or assume that they are easily replaced. Nor is it a time to give with one hand but take with the other. Retention of your best people is all about trust. So, it’s not at all surprising that if trust is destroyed, the best tech experts in your organization may move to full-time freelancing or to another company whose values they respect.
Viva la revolution!