MySQL is an interesting company by any measure, but one thing that sets it apart is how it has built its workforce. On the "Jobs@ MySQL" page on their website, you see some fairly conventional things such as listings for sales representatives in various countries, but you also see a section entitled "worldwide." In this section, MySQL is looking for software engineers. And MySQL doesn't care where they live or whether they will move to Sweden.
MySQL has built a virtual force of developers, selecting the best and the brightest software engineers from around the globe. Many of the most successful hires start by doing trial projects for the company and being paid only if such projects work. That is how Brian Aker, a top MySQL software engineer, described the process to NewsForge, an online publication geared toward computer engineers, in article posted on the MySQL website with tips on how to get a job at the company.
Aker says what gives overseas developers an edge is the willingness to "audition" for jobs, something not common practice in US labor markets. Although the salary MySQL pays is partly based on the standard of living, salary differential is not the crucial factor in selecting an employee, according to Aker. Aker himself lives in Seattle, Washington, USA, and oversees developers all over the world, most of whom work from their homes, relying on the Internet to stay connected.
MySQL's approach defies easy categorization. Is MySQL "outsourcing" jobs? Or were the jobs never "in Sweden" to begin with? What does this ambiguity tell us?
The ambiguity demonstrates an evolution in global labor markets. Increasingly liquid global talent markets will make it ever easier to match talent to opportunity and, in the process, create even more opportunity. Yet policy makers still tend to portray it as a zero sum game where one job in one place has been transferred to another place. Workers in developed nations are receptive to these arguments because they feel vulnerable.
Our social welfare and labor protection policies no longer respond to the challenges workers face. Below are some ways to understand the new world and some policy directions to help us make the most of it.
The globalization of talent is occurring when employment itself seems more precarious. Companies come and go. Expectations about lifetime company tenure are largely gone. This all may be a necessary consequence of innovation. New products and ideas tend to find homes in new companies or displace old product lines at established companies. As long as innovation evolves, the world of work is likely to get bumpier.
Because workers don't have lifetime careers with one company, traditional ideas about seniority and links between length of tenure and vesting of benefits no longer help the vast majority of workers. This means that benefits should start to vest immediately and should be as flexible as possible.
Moreover, governments need to do what they can to make benefits portable. Initial steps in the United States still have bizarre limitations. For example, Section 125 Cafeteria health benefit plans (named for the section of the US Internal Revenue Code) have use or lose provisions. An employee can set aside money on a pre-tax basis for health costs, but if the employee doesn't use the money, she forfeits what is not used.
Government also needs to do more with tax policy to encourage savings. Middle-class Americans can easily pay between 30% and 40% of their income in federal, state, and local taxes, making savings difficult. Programs such as Section 529 plans (US tax-advantaged college savings) and 401(k) plans (US tax-advantaged retirement plans) help, but need to be expanded so that workers can bank almost unlimited amounts of money on a tax-free basis. Workers need to be able to prepare for what are becoming inevitable periods of unemployment in even the most successful career.
Without policy changes, political pressure will build against market liquidity. Opponents of free labor markets already repeat many of the same wrong-headed anti-trade arguments. Former US Federal Reserve Chairman Alan Greenspan argued that one of the great benefits of free trade is the competitive pressure it brings to domestic industries and the resulting innovation and improvement in productivity. The productivity gains from innovation in knowledge work are even more dramatic. One of MySQL's chief corporate strategies is to gain a competitive advantage from its global idea exchange.
Along with preparing for more change, we also need to change the way we think about a job. We have to see the possibilities for innovation and change in everything we do. In some ways, all of us know this instinctively. Work is so much more than a way to make a living. It goes to the core of how we define ourselves. In this year's United States presidential campaign, there was much talk of $7-an-hour jobs, instead of the "good jobs" that paid more. But what really is a good job? The current debate—and much of recent US labor history—treats all jobs within certain classifications as the same and ignores individual contribution. Yet good managers know that the "same job" performed differently can mean dramatic differences in value for the enterprise.
In their book First, Break All the Rules, Marcus Buckingham and Curt Coffman of the Gallup Organization set out a different way of looking at careers. They challenge the notion that being a manager is necessarily "better" than being a line employee. Some have great management skills, and some have other skills. How a person does a job is more important than the title associated with the job. Buckingham and Coffman give the example of a hotel chambermaid. The best chambermaids don't just clean rooms, but actually enhance the guest experience by adding special touches, such as arranging children's toys in a particular way. The right way to reward that performance is not to change the job title or function, but find a way to recognize and foster excellence.
Supporters of labor need to advocate worker protections that promote rather than inhibit innovation and excellence. Management is not being abusive when "excellent workers" who do the same job in name are paid more than workers who just go through the motions. This notion is less surprising for knowledge workers, but it applies to all segments of the work force.
Inflexible thinking about labor productivity made it easy to pay all workers a certain level. In fact, the very best companies in their class, whether it is Nucor steel or Anderson Windows, found that if they paid more for excellence and for risk sharing in outcomes, they could increase productivity so that the investment paid off. Outsourcing simply because it is cheaper does not always provide a good answer. Productivity is the correct metric, which depends on both cost and performance.
The increase in flexibility and liquidity will help the economy overall but will not benefit everyone equally. Productivity levers, particularly those relating to information technology, will increase the division between those who are talented and those who are not. Paul Graham, an IT industry commentator, noted that if you could find a great software engineer, it made sense to pay her three times what her less talented peers made. That would still be a great deal, because a truly talented person would be orders of magnitude more productive.
Still, there is something unsettling about watching the spread widen between the wealthy and the rest. Equality feels like a noble goal. A change in perspective, however, might help. The question is not necessarily what the spread is, but rather whether in absolute terms the bottom quadrant is meeting necessities and living more well-off. Most would be comfortable with a system that allows the very rich to live very, very well if everyone else is living reasonably well.
There is a grave danger of addressing inequality by limiting the upside potential for the few. The greatest changes and innovations will give outsized rewards to the leaders, but will still provide enormous benefit to a large number of people. Given the very high chance of failure in innovation, the rewards should be great.
What role will geography and culture play? The United States is a leader in integrating new cultures and ideas. In Europe, there is a keen debate about immigration and culture, and what national identity means. Still, if you are visiting France or Germany and you need reliable and cheap telecom/Internet access, nothing beats the small businesses set up by immigrants. Established firms could learn a lot from their entrepreneurial hustle. Diversity in ecosystems leads to strength—and it does in economic systems, as well.
People will continue to have emotional and political attachment to where they live. Government will continue to provide certain services, whether it be safe streets or effective regulation. Yet large centralized bureaucracies, whether in Washington, DC, or Brussels will have to work hard to prove their value. Faced with a global revolution in productivity, governments will also have to do more with less. The war on terrorism and today's large deficits have made Bill Clinton's declaration that the "era of big government is over" seem a distant memory, but it again should be a political imperative, or innovation and growth will be at risk.
Ultimately, liquid talent markets do not mean that every smart person will move to the United States or Western Europe. Developers from Finland do not necessarily want to live in Sweden, and smart developers in India do not necessarily want to live in California. If opportunities are close to home, that is where people will happily stay. An affluent and productive class is the best assurance of human freedom. In one recent paper by Edward Glaeser and three co-authors ("Do institutions cause growth?," NBER Working Paper No. 10568), they reflect that the business of top-down political and economic reform remains a risky and uncertain business. Instead, once groups have gained some economic leverage, they have been able to press for political change.
All of this requires faith in the future and the unknown. No one knows what will lead the next revolution in value creation. Will it be genetic technology? Will it be a more widespread application of computer technology? Will it be something that we do not even have the words to describe? Where will the innovation come from? What nation? What institution? None of us know. None of us can know.
Public policy's core mission is to enable more human freedom and to let good ideas bloom and take root. Nothing has proven more effective at fostering that than the somewhat bruising business of market competition. Government's role must be to cushion the most jarring disruptions not through elaborate social welfare programs but through programs that facilitate the accumulation of personal wealth—the best and probably only insurance against the coming volatility in labor markets. Lower taxes—i.e., allowing individuals to keep as much of their income as possible—has to be a guiding goal of all government management, delivering the safety net at the cheapest possible price. Global competition can be intimidating, but it is also liberating and empowering. Sound policies will ensure that fear does not lead us away from embracing the future.
About the Author:
Since 2001, Morris Panner has been CEO of OpenAir, a next-generation business software company.
OpenAir was named one of the Fastest Growing Private Companies in New England in 2006 and 2007, a Deloitte & Touche Fast 500 Company, a finalist in the 2005 Software and Information Industry Association CODiE aware competition, and a Top 25 Global Service Provider by ASP News.
Panner was previously an attorney for the US Department of Justice in Washington, DC, and spent a year fighting narco-terrorism at the US Embassy in Bogotá, Columbia. Before that, he was a federal prosecutor in New York City, an M&A attorney and a banker at Lazard Frères & Co.
A graduate of Harvard Law School and Yale, he is on the board of the software division of the Software and Information Industry Association and on the board of the Washington Office on Latin America, a leading advocacy organization for human rights and social justice in Latin America. He is a frequent speaker and has been featured in the "boss column" of the the New York Times, Forbes and Fast Company.
