Krannert experts weigh in on evolving relationships between employers and employees

To date, at least a half dozen billionaires have shared good-natured barbs with Stephen Colbert on his new late show. Whether they’re singing the praises of a new “shared economy,” defending themselves from critics, or simply basking in their own CEO celebrity, these 21st century tycoons leave little doubt as to the perks that come with business success. And though business models may be undergoing drastic changes — especially in an increasingly connected world — the give-and-take between employers and employees will forever have reverberating effects throughout society.

A pair of professors from Purdue’s Krannert School of Management are paying particular attention to the human relationships that drive bottom lines. Ellen Ernst Kossek, the Basil S. Turner Professor of Management and the research director of the Susan Bulkeley Butler Center for Leadership, examines human resources, as well as gender and diversity issues, within organizations. Her awarded research also seeks to shed light on work-life balance issues. Brian Dineen, associate professor of management, looks at the decisions of competitive job seekers, including issues that could lead candidates to commit resume fraud. He also investigates the ways companies promote themselves as good places to work.

The Bureau of Labor Statistics estimates that one in three American workers, more than 53 million people, make a living as freelancers or contractors. The rising freelance economy is not only tilting the traditional “nine to five” workplace model, but also changing the ways entrepreneurs are setting up shop.

“When it comes to the use of freelancers, the challenge for companies is to determine how far they should go,” Dineen says. “Should they use a handful of freelancers, or go all-in?”

With attention to organizations that make top-ranked lists for places to work, Dineen looks into best practices for attracting employees. Just as companies brand products to create emotional appeals with consumers, they try to make similar emotional connections about a desired workplace. Some of the best companies, Dineen says, may offer workers unlimited childcare or educational benefits. “The question becomes whether the business can create these connections as effectively if folks are coming and going as freelancers and are not very attached to the organization.”

Kossek says emerging organizational forms allow entrepreneurs flexibility in building a business without a building, at least initially, as well as a certain geographical distribution of workers. The downside, however — related to the very lack of bricks and mortar, as well as computer stations and cubicle spaces — is the missing investment in employees.

“The organization is transferring a lot of the risk onto the worker,” Kossek says. “In addition to the work resources they have to buy, like computers, the risk of the economic market is transferred to the freelancer. There’s also a risk of weakened social ties, where a company may not feel as much obligation to people working on contract.”

Still, Dineen believes that arrangement could be the precise way a company brands itself. “There’s a large underemployed segment of the market that would like to work but just cannot find the right arrangement,” he says. “Companies that allow people to fit jobs around their schedules offer a huge competitive advantage.”

Kossek sees too much at stake for the freelancer. Psychological and work-life issues can crop up in a home that doubles as a workspace with little boundary between the two. “Home workers can become very isolated,” she says. “It may look good on paper, but some people end up turning homes into electronic cottages.”

For now, Kossek says the so-called sharing economy is an imbalanced proposition. “I think there should be some incentive for these organizations to support workers, families, and communities. A business that does not have a longer-term investment in the employment relationship, may feel free to move jobs to the cheapest worker, creating a downward spiral of economic and social instability.”