Revisiting the Shamrock Organization

The New York Times on Sunday reported that many top dogs in financial services are deserting the big banks and moving into smaller entities such as hedge funds and other investment vehicles where there may be less restrictions on pay (particularly for those currently in institutions taking government money) and the regulatory environment may be less tight. We hardly needed more proof that there is little loyalty to financial institutions beyond the size of the pay packet, so no need to ponder that further here. The NYT goes on to speculate that this may be a good thing, because it means that risk will be spread across many more institutions compared to the high concentration that characterized the run up to the current crisis.

I also wonder if this is not a further acceleration of a more general shift towards smaller firms becoming the innovators, the most attractive employers and mainstays of the wider economy in future. We see big pharma forming partnerships with biotech companies, a proliferation of small technology start ups, Porsche and other car companies (successful and unsuccessful ones) highly dependent on a network of smaller suppliers. The media world is full of small scale on-line businesses, freelance production companies, and small music labels.

Charles Handy, back in 1989, talked about the Shamrock organization as one of three evolving models for structuring companies, with a much bigger proportion of the workforce either freelancing or working with smaller firms who, in turn, perform short term contracts for other companies.

With the loyalty link between employer and employee even further frayed by the mass layoffs of the current environment, we have a situation in which the desire for individuals to reduce their own risk profile through lessened dependence on a single employer, is simultaneously coupled with the economic need for companies to be much more able to adapt to changing circumstances. So, we would do well to go back and study the prescient Handy once again. If individuals put more effort into figuring out how to develop more flexible, 'portfolio' careers, and companies into evolving leaner, increasingly contractor based structures, we could reduce risk on both sides and maybe start to produce an employment model that is better suited to our times whilst also enabling individuals to feel more in control of their own lives.