Permanent Contracts Remain the Favorite, but…

Is it more profitable and productive to receive a salary or a fee for a completed task or project, or is performing tasks during working hours the way we envision our work future? We believe that the answer to this question truly depends on the interests, ambitions, and needs of each individual. Some prefer to work on projects and receive a salary for it because they retain a certain freedom and independence, while others prefer the consistency and security, even the routine that comes with a predetermined, most often eight-hour, working time at the employer. Of course, much also depends on the profession we are engaged in. For instance, everyone would agree that parliamentary representatives should be paid based on performance. How much they would profit in that case, we will not speculate, but I believe that parliamentary benches would be fuller and discussions would be a bit more interesting or, let’s say, smarter, and we believe they would be more beneficial to citizens.

Safer Option

And while we dream of impossible things related to the Parliament and parliamentary representatives, the term future of work has been mentioned in the business world for several years, and in the last year and a half, it has become a reality in most organizations. Even the most traditional ones have experienced some form of transformation, and the most agile, fast, and innovative have immediately embraced new forms of work, employment models, and compensation.

Flexible work (flexible in terms of working hours and fees) has so far been mainly associated with certain industries, such as creative ones, and certain types of jobs, but that has changed. All of this is also changing the prism through which employment models for work outside the office are viewed. Companies are abandoning perks that were considered good to have and those relevant for fixed workplaces, such as free lunches and travel allowances, in favor of benefits that more significantly impact the way we work today and will continue to work tomorrow (e.g., equipping home offices). However, when choosing between contracts, the permanent one is still preferred as it guarantees security and more often allows for advancement, as confirmed by Deloitte.

– Specifically, if we look at Deloitte, potential candidates prefer permanent contracts because they consider them a safer option. However, it is important to keep in mind the technological changes that further enable, and even encourage, payment based on completed tasks. Such technologies are changing the fundamental business models of entire industries, as was initially envisioned for Uber’s service, thus transforming its employees from employees into collaborators, or subcontractors – says Gordan Kožulj, a senior manager at Deloitte.

Advantages and Disadvantages

Technological changes will certainly significantly impact the future of work. In fact, they are already affecting it, as seen in the ‘new normal’ phenomenon called ‘hybrid work’. Research conducted so far on the topic of working from home has confirmed that most people have successfully adapted to it and shown that many want to retain the option of at least occasional remote work even after the pandemic ends and we return to normal. According to their opinion, the main advantages of working from home are: saving time on commuting to and from work, flexibility in work, greater comfort, and easier balancing of work and family life.

– Working from home also brings advantages for employers: greater employee satisfaction, fewer absences from work, and increased productivity. However, the biggest challenges of working from home include the lack of face-to-face communication with colleagues, distractions from household members, and certain operational tasks that are difficult to resolve remotely – says Alen Mrvac, a journalist at the MojPosao portal.

New Organizational Design

According to a recent survey on remote work conducted by MojPosao in February, among those who have experienced working from the comfort of their own home in the last year, there is no doubt: 84 percent of respondents want to retain the option of at least occasional remote work, while 16 percent wish to return to the office. On the other hand, two-thirds of workers (69 percent) who have not had the opportunity to work from home so far would like to try that option, while 41 percent of people have no desire for remote work. Generally speaking, 81 percent of respondents who have worked from home in the last year believe that such work should be allowed even after the pandemic ends. However, that opinion is shared by only a third (36 percent) of those who have not experienced working from home. Their stance (44 percent) is that working from home is unnecessary under normal circumstances and that everyone should work on-site. Only 13 percent of those who have worked from home believe that. Sanja Petek Mujačić, director of the consulting firm Hauska & Partner, says that given the circumstances, the changes most often discussed at all management meetings are mainly related to the place and time of work.

– According to my information, most organizations are trying to align their operations, processes, and models while simultaneously adapting to either fully remote work or a hybrid work model. Both require a lot of consideration. Currently, the most popular solution is the hybrid work model or at least some framework of it. Namely, there is no universal hybrid model – each company develops it according to its needs, infrastructure, number and type of employees, but also the needs of individual employees. We are now trying to find the solution that is best for the organization and its people because all insights from the market or research tell us that employees themselves are divided when it comes to desires and adaptation to working from home or in the office. Already within the hybrid model, gradations are discernible, from remote work as the first choice, then occasional visits to the office, working in the office, to permitted remote work. In the upcoming period, we will seek what suits us best and how each mode of work affects engagement and productivity, business results, but also employee well-being – says Petek Mujačić.

Employers’ Desires

The development of new solutions indeed allows us to assign or distribute part of the work tasks, and then perform them outside the company, while the work performance of each employee can be monitored in more detail. This enables the employer to utilize the workforce available in the global labor market and to monitor and manage their work regardless of location.

– The form of engagement of these employees depends on the negotiating levers of both parties. For routine jobs, for which it would be easier to find employees on the global market, the employer would generally prefer to pay workers based on completed tasks because they have the leverage to increase competition and efficiency among employees, while retaining more flexible cost management for their company. For specialized jobs in core activities, they usually want to bind key employees with a more permanent type of contract. However, these employees, aware of their competencies and abilities, want to capitalize on that by being paid based on completed tasks, but also to offer their services to other companies in the market, i.e., they prefer the role of freelancers – explains Andreja Nikšić, HR coordinator at Deloitte.

Investment in Workforce

Ultimately, the relationship between the employer and the employee will still be tied to the relationships in negotiating powers, but new technologies are expanding the labor market terrain for both sides. Employees with highly sought-after expertise will have more opportunities to become independent, and the freelancer form will be financially more attractive to them, while employers will encourage middle and lower-skilled workers to freelance. Therefore, in the long run, there is a tendency for most future jobs to be contracted with freelancers, unless some market regulators are involved in the process.

Petek Mujačić adds that it is most important for employers to have engaged and motivated employees who possess the knowledge and skills necessary to create value for the employer, and which employment model is in question will depend solely on the needs and pace of work. It should be noted that there is no solution that fits everyone. For example, if you occasionally need expertise on your projects, then it suits you as an employer to engage such an expert on a project basis. Or if the pace and scope of projects vary greatly throughout the year, planning and resource engagement should be guided by that principle. However, if certain competencies and knowledge are crucial for your business, and it is not easy to quickly find a replacement in the market, you should invest in such personnel, motivating them to remain a member of your team for as long as possible. Such a dynamic view of workforce planning as well as the development of those people you will need in the future is one of the major tasks of human resources departments and the entire management. 

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