Tomorrow's workers face a choice at the cafeteria

Hamish McRae: More cash, less holiday? Less cash, bigger pension? We're a click away
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The Independent Online

Last week I came across what was for me a new phrase in the lexicon of human resources' English, "cafeteria benefits". This is not, as you might think, offering everyone free Starbucks coffee in the office canteen. Rather it is the use of the new communications technologies to offer staff a wider range of choice in the balance between pay and benefits, so people could tailor their reward package to their particular needs.

Last week I came across what was for me a new phrase in the lexicon of human resources' English, "cafeteria benefits". This is not, as you might think, offering everyone free Starbucks coffee in the office canteen. Rather it is the use of the new communications technologies to offer staff a wider range of choice in the balance between pay and benefits, so people could tailor their reward package to their particular needs.

For example - and remember this is an American innovation - staff could choose different levels of health care insurance, maybe choosing a lower level of care but taking a higher salary. Of course, you could do this without the new technologies, but the advantage is that each employee can see on-screen precisely what he or she is entitled to, and play around with the options.

Staff can also change their contracts. More money but less holiday? Click the mouse. Less money but a higher pension contribution? Click again. Bigger car, smaller salary? And so on.

The system has at least three immediate advantages. It gives individual information to each employee, rather than a wodge of general information, much of which is irrelevant. It allows employees to change their choice of benefits swiftly, privately and without fuss. And it gives an HR department an immediate feed-back on staff attitudes, for example how they rate the different elements of their contracts, what benefits are popular and vice versa.

But this is simply applying a new technology to make an existing set of institutional arrangements work more flexibly and better. The interesting innovation will be when the technology starts to change the institution, which in this case is the job contract.

Start with a simple example. At present, companies pay their employees different amounts. There may, as in the public sector, still be salary scales but even these are being modified with a range of incentive and other payments. In the private sector, financial rewards vary enormously. By contrast, things such as holiday entitlement and health care benefits are rigid. Most people get pretty much the same, certainly in the broad middle band of management. But if people were able to choose how long they worked and what benefits they received within wide limits (rather than today's narrow ones) the job contract would change to something almost unrecognisable.

For example, people could choose their level of job security. At one extreme, people could choose a job for life. That would be specified in their contract. Of course, no company can offer that on its own surety, nor would any employee accept it: you never know whether your employer is going to be taken over or indeed go under.

But it would be possible to ensure, if not a job for life, certainly a guaranteed income until normal retirement age in the event of the employer having to downsize. The salary would be much lower, but people who said they wanted security above all would at least have a choice.

At the other extreme, some people do not want a job but might be perfectly happy working as a day labourer, rather like the dock workers of a generation ago. The dockers were forced into that form of employment and no one would wish anything like that. But for many people, a loose association with a company - say with a guarantee of between one and four weeks' work a month - might be preferable to a formal job. And the pay on an hourly basis would be much higher.

Now take this a stage further. One of the remarkable features of the internet is the ability to generate an online auction. Companies are using this to crunch down costs of supplies. Thus the car companies are inviting tenders for components from a wide range of suppliers, rather than sticking to known firms with which they have annual price negotiations. Why should they not apply the same technique to getting jobs done?

The obvious area to start would be tasks that could be standardised and performed over the wires. There would have to be screening of applicants to ensure quality control, then a company could auction tasks to anyone on the list who wanted to bid for them. A market would emerge with different prices for different tasks at different times.

You might say this is just outsourcing carried a stage further and, in a sense, it is. But from a worker's point of view, this fluid relationship would give an abundance of choice to exploit his or her skills. It would, for many people, make self-employment more attractive vis-à-vis having a job, but it would also blur the boundary between the employed and the self-employed.

This blurring of boundaries is more fitted to a world where demographic pressures will ensure a large proportion of the work-force will inevitably be either part-time or semi-retired.

So the cafeteria style of benefits would become a cafeteria style of work. People would select the bits of work they wanted to do at the price the companies were prepared to offer, stick them on their tray and collect the payment from the company at the till.

Some people, probably most of the workforce, would remain, in the author Charles Handy's phrase, core workers rather than portfolio ones. They would negotiate their benefits rather than their work. But as the capacity of the new technologies bounds up and our own ability to figure out better ways of using it also climbs, expect more and more people to choose freedom rather than security and bid for work rather than choose contractual employment.

Freedom or a new form of slavery? Might the employed become non-wage slaves instead of wage slaves? It might appear to be freedom only for the winners, the people with the skills in demand; and it would only be freedom in a world of strong demand for labour in general. But surely more choice must be better than less choice, in work, as in so many other aspects of life.

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