What if we had contracts at work, just like sports?

Exploring the idea of contract gigs becoming mainstream at workplaces.

If you are a fan of football, you are probably familiar with the hottest saga of the summer, involving one of the greatest players ever.

As things stand, for the first time since 2000, Lionel Messi will not be heading into the upcoming football season as a Barcelona player after his contract expired on June 30, 2021.

For the uninitiated, unlike other gigs, popular sports like Football, Basketball, Pro Wrestling all follow a ‘contract’ model where team sign players for ‘X’ number of years during which they can only play for the club they chose to sign with.

When a player’s contract expires they can mutually agree to either extend the stay or decide to part ways signing a deal with a different club.

In Messi’s case, having played for Barcelona all his life, he has so far signed nine different contracts in the time period, basically choosing to extend his stay every time his old contract was close to expiry

But what if somebody signed a deal for 5 years but ends up wanting to leave to a different club say at the end of just 2 years?

Simple.

Rather than wait for the player’s contract to expire, the new team which wants to purchase the player will pay a ‘fee’ to the current club effectively ‘buying out’ the player from contract.

Then the player signs a deal with the new club and the cycle repeats.

With that primer on sports contracts out the way, we’ll get back to our workspaces.

Or specifically to the question:

“What if contracts were mainstream at workplaces?”

At present, contract jobs are reserved for temporary gigs; seen as an unstable risky career choice at worst and nothing more than a stop-gap at best.

But should we choose to take a leaf out of the sports playbook, how would things work?

A fresher joins a company and the offer letter and along with the comp & perks, it also comes with years of service.

Let’s say the company and the employee signs a deal for 3 years.

Now, right off the bat there is a clear timeline to operate on.

Ideally, both parties are going to be invested in each other’s growth for the next three years, at the very least. At the end of the deal, should there be a mutual consensus that the tenure was a success and nobody is itching to move on, they could simply sign new deal with improved terms.

What would contracts mean for Companies?

Here are a few reasons I find this idea interesting.

Avoid unpleasant surprises when hiring

It’s no secret that hiring and retaining talent has gotten tougher in recent months.

The job market is absolute mayhem.

Renegotiating at the last minute, pulling out without notice, and leveraging your offer for a better one with another company have all become household antics in remote work leaving hiring managers scrambling to fix the mess.

Personally, I’ve heard several stories from founders and senior folks who have went through a lot of trouble to close a key position only to see the rug pulled from underneath by a candidate because it has simply never been easier to do so.

Without getting into the argument of right and wrong, companies invest a lot of time and effort in identifying and finalizing candidates and they deserve a blanket of certainty around the process.

Billions Contract

Have smooth transitions when it’s time to move on

Going back to the football parallel, there’s a small detail about player contracts that I left out in the beginning – when a player does decide to move on from their current contract when it has expired, it does not happen overnight.

In fact, they are free to negotiate with other clubs once they are into the last 6 months a time period more than enough for the current club to prepare for the player’s exit and find a replacement.

FIFA 17 Career Mode: Best contract expiry signings

The above screenshot is from the popular video game FIFA where as the “manager” you can see the option to sign someone on contract expiry. If you don’t want to wait for 6 months until their contract expiry, you could simply buy them from the current club by paying a fee.

Coming back to workplaces, in most cases there’ an element of surprise when somebody decides to quit, catching the company off-guard. Sure, there is a notice period. But what if you couldn’t find an able replacement in that window?

There is a good chance that you don’t fill that vacant position right away or worse, rush through and get someone on board who doesn’t quite fit in well.

Instead, should workplaces choose to do it football style, any time someone chooses to leave, there is a longer window to handle the transition efficiently because as a company you’ll have a lot more time on your hands to find replacements.

Experimenting with channels

Last week we had one of my good friends and mentor Roshan Cariappa, VP Marketing at Vymo deliver a session at All Things SaaS on Enterprise Marketing.

When one of the attendees asked who should the first marketing hire be for a tech startup, Roshan went on to explain why he’d always bet on a generalist who could pick up 2 or 3 different things at any point.

His reasoning was simple.

Let’s say my startup wants to experiment with Paid Ads. There’s so much vertical specialization in the market that there’s experts on only LinkedIn paid ads, Google ads, and so on.

We decide we want to experiment with LinkedIn ads and go ahead hire a LinkedIn ads specialist. Two months in, we find out the channel is not working for us and when we turn to the new hire, who cannot add much else, we realize we’ve made a mistake.

Why?

The very notion of experiments is you get to do multiple things at the same time, fail or succeed fast enough to fix on something that is worth doubling down on.

But it’s so much harder to do that when there’s a possibility that you’d still have to keep the new hires on the payroll long after your experiments have failed.

The simpler solution is just to play it safe.

But imagine the same scenario with contracts – you could hire and experiment with a lot more freedom without having to worry about the headache of what to do if things don’t work out.

Lock-in the Key Players

Every company wants to retain its rockstars and it has never been tougher. As we mentioned earlier, it has also never been easier to do so.

But locking-in the key hires assures that you at least have some stability.

I think it’s important to put a disclaimer this is one *key* aspect that I haven’t really quite figured out what to do

My theory on paper is, if Company B wants to hire an employee from Company A, who still has several years remaining on the contract, Company B simply pays Company A to buy the employee out of their contract.

It’s akin to giving out superbikes and crications as signing bonuses but you compensate the company instead who have invested in the growth of the employee.

‘Firing’ may not have to be so messy

Letting people go is never easy for anyone involved – no matter how delicately you handle the situation it is one of those no-win situations that always leaves a sour taste.

One of the reasons why firing is so messy is it needs “pulling the trigger”.

Why?

The current workplace set up is like a highway minus the freeway exit – getting out of the road is never simple or straightforward.

But a contract is just that. A freeway to take, when you are not headed in the right direction.

For the most part, you don’t fire people.

Instead, say for whatever reason you decide to run out an employee’s contract, you inform them of your decision to not renew, giving them ample time to look for another opportunity.

What would contracts mean for Employees?

A lot of the advantages that companies hold in a contract model holds good for employees as well – for example smoother handoffs when leaving, not getting axed out of nowhere are all tempting propositions for employees as well.

Here are a few other reasons why I find it *just* might work for employees.

Take bold choices

One of the most popular decision making frameworks that Jeff Bezos practises is,

“Is this decision reversible or not?”

As much as we’d love to be Jeff Bezos, for most people, given all things are equal, we are hardwired to choose the path of least resistance when it comes to making decisions.

Here’s another wonderful excerpt from Tim Ferriss that delves on this with pristine clarity:

This is precisely why so many of us go for the safest option than what they’d truly enjoy and excel at – while a contract gig doesn’t magically get everyone to go after their true calling, it is certainly a start.

Without the burden of worrying about where we’d end up in 5 years or 10 years if I picked this job today, it is an open canvas to try out what we like.

Sure, there are flaws like relevant experience, carving a niche etc.

But having the freedom to try multiple things without being branded a ‘failure’ is a worthy trade-off I reckon.

Show Proof of Work

Contracts are a great measure of what an individual brings to the table- sure, you could hack your way to getting the first one. But for the company to subsequently ‘renew’ your deal is a show of your ability to get the job done and a great endorsement for your track record.

Careers breaks wouldn’t be scrutinised

For average folks who aren’t necessarily working on moonshot ideas but still want to take breaks now and then to evaluate what they want to do, taking a break comes with a great deal of scrutiny than it should.

I know a lot of friends who unwillingly conjure up reasons for taking a break for few months between few jobs simply because it is frowned upon.

A contract on the other hand has a built-in reset mechanism where every time you are close to running down the contract, you have an opportunity to reflect and reassess before your next gig.

Closing thoughts

While I’ve been interested in the idea, it was not until a recent job posting from AngelList India a few weeks back that I was prompted to think about it .

With the position filled up, the best I could get my hands on is a tweet reference:

Nonetheless, here’s the gist: The role comes with all the benefits of a regular job and at the end of 12 months, AngelList India would itself help find your next opportunity in the Indian Startup Ecosystem.

Secondly, there are a ton of nuances both practical and legal that I haven’t really touched upon, mostly because I have absolutely no idea what it’d look like from a legal standpoint and I absolutely have no idea on how to test out this theory.

Third, there is absolutely nothing innovative about this idea as contract jobs are already a thing – but from what I have seen they are simply not treated in the same level as a regular job or even a freelancing career.

Which brings me to this: While freelancing does offer a lot of the merits of what I discuss here, personally, with freelancing there is no incentive to be personally invested in a company’s growth. A mainstream contract gig is probably the best of both worlds.

I’d love to hear your feedback on this – or if you find the idea interesting as well whether you are for contracts or against I’d be thrilled to have a chat around the practical feasibilities of such a model.

Cheers,

Kris

 


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