This piece by Thomas Malone, the Patrick J. McGovern Professor of Information Systems and director of the Center for Coordination Science at the Sloan School of Management, and Sloan School Research Associate Robert Laubacher originally appeared in the Boston Globe on August 24, 2000.
The traditional employment contract -- the implicit agreement by which workers provided loyal service in exchange for job security, benefits, and a chance at career advancement -- was a product of the mid-20th century and business conditions prevailing then.
Over the last quarter century, fiercer competition, corporate restructuring, demographic changes, and startling advances in information technology have brought about a very different world.
More than one-quarter of American workers do not hold a traditional full-time job but work as independent contractors or as part-time or temporary employees. Some of these people want full-time jobs but can't get them; others, many of them working parents, have voluntarily chosen the freedom and flexibility of working independently.
In the future, we believe many more people will work as "e-lancers'' -- electronically connected freelancers -- who move from job to job. But these independent workers will still have the same needs that traditional employees did. How, for instance, will they find financial security? Who will provide for their health care and retirement? Where will they go to socialize with peers and to learn new skills? Today these problems are frequently framed in the context of the old employment system and are diagnosed with solutions from an earlier time. We believe new ways of thinking are needed to deal with these new problems.
One particularly promising new approach has emerged from our work in MIT's initiative on "Inventing the Organizations of the 21st Century.'' This approach no longer relies exclusively on the "usual suspects'' of the industrial era -- employers and government -- to provide the benefits associated with a traditional job.
Instead, it relies on a rich ecology of other organizations to look after the needs of mobile workers as they move from assignment to assignment. We call these other organizations "guilds'' by analogy to the craft associations of the Middle Ages.
Medieval guilds grew out of tradesman's fraternities and mutual assistance clubs. Guilds trained apprentices and helped them find work. They cemented social bonds; guild members worshipped together and marched as a group in town pageants. They also offered loans and schooling, and if misfortune struck, provided an income for members' families.
Existing organizations perform some of these functions today. As much as 30 percent of the base pay of Screen Actors Guild members goes to the benefits fund; in return, members get health benefits, generous pensions and access to professional development programs.
Imagine an extended version of this where members paid a fraction of their income to the guild in the good times in return for a guaranteed minimum income in the bad times. This is a form of unemployment insurance, but with an important difference. Guild members would have an incentive to help their counterparts find work, assisting them to gain skills needed to be productive, exerting social pressure on members they felt weren't trying.
Guilds could also provide places, physical and electronic, for learning and socializing with colleagues. And membership might give people the sense of identity that many of us get today from positions in large organizations. Indeed, in many cases, guilds might replace the employer as the organization to which workers feel the strongest loyalty.
A variety of existing organizations already fill some of these roles and could form the seeds for more comprehensive guilds. For example, many professional societies already offer their members insurance plans, training and opportunities to socialize. And labor unions have long provided portable benefits for workers in industries, like construction and entertainment, where workers move frequently from one employer to the next.
Both unions and professional societies have significant opportunities to increase the range of services they provide and thus become even more important in the future than they are today. Unlike today's unions, however, the guilds of the future need not hold monopoly control over a profession or occupational group. Instead, multiple guilds may often compete to provide the best services at the best price for the same group of workers.
Another promising source for guilds of the future are temporary staffing firms, which offer benefits to temporary workers that resemble those provided by traditional employers: vacation and sick pay, health insurance and pensions, training, career assistance, even stock options.
New organizations could also grow into guilds of the future. For example, Working Today, a New York-based nonprofit, provides low-cost health insurance and a variety of other services to freelance technology workers in Manhattan's Silicon Alley. Today's flexible economy is far more productive and innovative than its plodding counterpart of a generation ago. For workers to enjoy fully the opportunities this new economy presents, they will require institutions to help blunt the greater risks they face.
Guilds represent a promising approach -- applicable today, adaptable for the future -- to meet workers' needs in an increasingly dynamic American economy.
A version of this article appeared in MIT Tech Talk on October 4, 2000.