Did you know that there is an organisation that has been set up to use behavioural insights to stimulate recruitment and growth among the self-employed? Well, there is, and its name is the RSA. RSA stands for Royal Society for the encouragement of Arts, Manufacturers and Commerce. It has a belief that anyone should be able to have the liberty and power to be able to transform ideas into reality, or as they put it, the “Power to Create”. The organisation sports a 27,000 Fellowship and carries out research with a view to developing a society where creative power is distributed, where concentrations of power are confronted and where creative values are nurtured. Aside from solid research it also uses practical experimentation to realise its targets.
Benedict Dellot (2014) explains that self-employment has been increasing in the UK since the millennium. He explains that figures show that there has been a 30% increase in the numbers of the self-employed and that one in seven of the workforce is now self-employed. It is projected that if the figures continue to rise in this way then the self-employed could outnumber the public sector workforce. That’s good news in many respects but the problem is that only 3% of those people hire anyone. And that’s a problem because the economy needs small businesses to prop it up, by creating jobs. Dellot argues that this is even more important to help those in the margins of society like those that do not have many qualifications, recently unemployed people and migrants. According to Dellot, all of this means that we need to take a different approach to the situation in order to boost employment in these small businesses and by sole traders.
Dellot advocates using behavioural insights to go about this. Behavioural interventions could help businesses take on employees, assuming they have the money to do so. This requires dealing with some of the barriers. Reducing risk by pooling that risk is one approach so that employers can hire employees collectively. Being able to access workers in this way and allow sharing of employees also cuts back on this risk. Dellot also believes there is a need to move from a position of stimulating demand to boosting supply by encouraging talent to get involved in these small businesses and helping them to understand the options to do so.
These barriers are more tangible than the barriers that Dellot argues exist in the mindset of business owners. Dellot believes that it is this mindset that leads business owners to believe that the risk of taking on employees is higher than it actually is. These fears are believed by Dellot to be based on inaccurate assumptions, but nonetheless they hamper growth. There is also the problem of a lack of self-efficacy among business owners, argues Dellot. The way that this works is that employers feel reluctant to take an employee on because they do not feel confident in being able to grow their business sufficiently to support that employee. Mindsets can be tricky to change but by changing the messages and stories that are associated with these factors, Dellot believes it is possible to achieve. Cognitive biases also create barriers. One such issue here is short termism which is thought to be created by myopia. Another is social proof – for example, Dellot explains that business owners may be more likely to take on staff if they regularly met business owners that have ambitions of growth.The six tribes of self employment Image source: RSA report – The self employers
Recommendations for Self Employment
The RSA has made a number of recommendations that can be put in place to improve the situation of a lack of employment in these small businesses, or by sole traders. One is that employee sharing is put in place where businesses can share employees. Another is creating host employers such as housing associations, further education colleges and other local institutions. These would help business owners with areas like HR tasks. Another interesting recommendation is to introduce freelance vouchers to help small, upcoming businesses be able to work with freelancers. Small business careers fairs could be run by universities and business groups to help bring to the attention of graduates the opportunities available. Randomised control trials could be carried out of business support interventions, and information curators could be appointed to frame messages for business owners. There are many recommendations and others include introducing an opt-in for wage subsidies that businesses would lose if they did not partake of it. Random meet ups could also be held between business support groups and local authorities to introduce new viewpoints to them.
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.