2 April 2024

Meeting the challenge of transactional employment

Start the conversation
young man walking out of office building

Younger generations often prioritise flexibility over traditional, long-term employment. Photo: Michael Page.

Organisations and some workers are embracing the shift to transactional employment, but Dan Schawbel fears that taken to extremes, it neglects the long- term development and wellbeing of employees.

Over the past few decades, there has been a notable shift in work, moving towards a more transactional relationship between employers and employees.

This shift is characterised by several factors, including changes in employment structures, advances in technology, globalisation, and evolving workforce demographics.

One of the findings in our research was that 61 per cent of employees say they go to work to collect their pay, ”clock out”, and go home.

Work shouldn’t be purely transactional, because it undermines the value of human relationships, erodes job security and stability, and neglects the long-term development and wellbeing of employees.

A transactional approach to work often prioritises short-term gains over building meaningful connections and fostering a sense of community within the workplace. It can lead to decreased morale and satisfaction among employees.

READ ALSO Lost in time: remedies for forgotten learning

Relying solely on short-term contracts and freelance arrangements can result in insecurity and uncertainty for workers. Focusing solely on immediate tasks or projects neglects the holistic development and growth of employees, leading to stagnation and disengagement. Here are some reasons why the workplace has become more transactional.

Economic pressures and cost efficiency: In an increasingly competitive global economy, organisations face pressures to cut costs and increase efficiency. Adopting a transactional approach allows the reduction in overhead costs associated with traditional full-time employees.

By hiring workers on a project basis or as independent contractors, employers can save money and allocate resources more flexibly to meet fluctuating demand.

Rise of the gig economy: This has significantly contributed to the transactional nature of work. This shift away from traditional employment structures and towards freelance and gig work has blurred the lines between employers and workers, fostering a more transactional relationship based on project-based engagements.

Advancements in technology: Digital platforms and online marketplaces make it easier for employers to find and hire workers on a temporary or contract basis. Additionally, automation and artificial intelligence have led to the outsourcing or elimination of routine tasks, further reinforcing the transactional nature of work.

Flexibility and autonomy: Both employers and employees increasingly value flexibility and autonomy in the workplace. For employers, hiring workers on a project-by-project basis offers greater flexibility to scale their workforce up or down in response to changing needs.

Similarly, workers appreciate the freedom to choose when, where, and how they work, whether as freelancers, remote workers, or on flexible schedules.

Globalisation and outsourcing: Globalisation has expanded the pool of available talent and lowered barriers to outsourcing, making it easier to find skilled workers at lower costs. As organisations expand their operations across borders, they often outsource non-core functions or tasks to third-party vendors or contractors.

Shifting demographics and workforce preferences: The workforce is becoming increasingly diverse, with millennials and Gen Z making up a larger portion of the labour market.

These younger generations often prioritise flexibility, work-life balance, and purpose-driven work over traditional long-term employment. As a result, they are more likely to seek out freelance, gig, or short-term contract opportunities.

Rapid technological change and skills shortages: The pace of technological change is accelerating, creating demand for new skills and expertise.

Employers may opt for short-term contracts or freelance arrangements to access specialised talent for specific projects or initiatives, rather than investing in training or hiring full-time employees with the required skills.

Legal and regulatory frameworks: In some jurisdictions, there may be less-stringent regulations governing contract work or freelance arrangements compared with traditional employment relationships. This legal flexibility allows organisations to hire workers on a more ad hoc basis without incurring the same obligations and liabilities associated with full-time employees.

Cultural shifts and attitudinal changes: There has been a cultural shift towards valuing independence, entrepreneurship and self-reliance in many societies.

As attitudes towards work continue to evolve, the transactional nature of employment is likely to become even more prevalent as individuals seek greater control over their careers and work arrangements.

Demand for specialised expertise and innovation: In today’s knowledge-based economy, organisations often require specialised expertise and skills to drive innovation and remain competitive.

READ ALSO Prioritising your to-do list

Hiring workers on a project basis allows businesses to access the specific skills and knowledge needed for a particular project or initiative, without the long-term commitment associated with traditional employment.

While the shift to transactional employment offers greater flexibility and autonomy for both employers and workers, it also presents challenges in terms of job security, stability, and access to benefits and protections traditionally associated with full-time employment.

As the nature of work continues to evolve, it is essential for policymakers, employers and staff alike to adapt to these changes and ensure the future of work is both inclusive and sustainable.

Dan Schawbel is a bestselling author and managing partner of Workplace Intelligence, a research and advisory firm helping HR adapt to trends, drive performance and prepare for the future. This article is part of his Workplace Intelligence Weekly series.

Start the conversation

Be among the first to get all the Public Sector and Defence news and views that matter.

Subscribe now and receive the latest news, delivered free to your inbox.

By submitting your email address you are agreeing to Region Group's terms and conditions and privacy policy.