November 10, 2020

Luca Naccarato, Advisor at SGS & Co, on the Evolving Future of Work

Liquid CEO Saujin Yi interviews Luca Naccarato about the evolving future of work and working with freelancers.

Liquid Interviews: Luca Naccarato, advisor at Sgsco

Spotlights Leadership Interviews Industry Trends

At Liquid, we’re always thinking about how the workforce is evolving. Our CEO Saujin Yi talked with Luca Naccarato about the changing and evolving workforce. Luca is an advisor with SGS & Co, one of the world’s largest graphics commercialization companies. Listen now or read the interview below.

Listen to Luca Naccarato, Advisor at Sgsco, on the Evolving Global Workforce

Tell us a little bit about yourself.

I’ve been an executive with SGS. In the packaging graphics area we deal with many large customers, such as Procter and Gamble, Unilever, Nestle, and many of the large CPG food and beverage companies in the world. We’re involved in pet care, beauty care, household care, along with many of the items you see on grocery store shelves. I’ve held various positions – general manager, executive vice president, and then recently chief operating officer. I currently work as an advisor to the company. And I’ve been with them since 1993 – so a long history.

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In the recent challenges that we’ve had, I’ve been involved in many of the discussions around how we change as an organization, how this impacts us long term, and how we learn from it to become a better organization. 

So let me start by telling you a little bit about the company because I think there are two unique areas that I think many others can relate to. First, those that can work remotely and the challenges around that and then those that can’t and how do you overcome the challenges in a COVID environment.

Let’s talk about what you have been experiencing with workforce environment changes.

We’re basically a service and manufacturing organization. We create and produce packaging graphic images for the CPG industry, and we manufacture printing tools for the printers that make the packaging and the packaging structures. So when the pandemic hit, we had to react quickly, just like anyone else did. The majority of our management, our administration staff, customer service project managers, and our graphics operators were identified as those capable of working at home. The majority of their work is in front of computers, interacting with people through mail or web conferencing, and interacting with their back-office systems. So it kind of makes sense if you’re on a computer in an office. You can be on a computer at home. So from a theoretical standpoint, it makes sense.

However, with the manufacturing personnel, they are deemed essential services, since we need to continue to provide the printing tools for our clients. But we had to engage certain COVID protocol distancing, giving our workers space shields, staggered shifts, separate eating areas, separate change areas, etc. Everything to keep the employees safe – sanitization protocol, cleanliness, things of that nature. 

What are some of the challenges you have faced?

Some of the challenges with getting the infrastructure in place for the people working at home and keeping them productive. The obvious things – internet connections. In Asia, this was more of a problem. All have phones in Asia, but not all have reliable Wi-Fi connections, and some try to pull it from their neighbors. Some tried to hotspot off the phone. But you require adequate bandwidth because we deal with large graphic files that are huge multi-gigabyte files. So that was a bit of a challenge. Training on conferencing and conferencing methods was a challenge, making sure people have trained appropriately on getting a lot of people together. It’s not always seamless.

There always seem to be problems with technology. Some people don’t know how to connect through these new mediums.

Another challenge – scheduling and tracking on a remote basis in a physical environment. You can sometimes see who’s busy or not in the physical environment. Those that are in the office, once they’re done, they’ll ask for the next job, or an employee will signal to pull the next job from a queue. In a remote environment, you have to be aware of who’s next, ready to pull a job, who you need to give the next assignment. So those kinds of things became challenging. It was a big adjustment for middle management and production managers who are used to walking the hallways and peeking with employees. You know they were often used to having team meetings in a conference room, regularly scheduled, and so this created a whole new challenge in a whole new different environment.

Employee communications, employee updates, and postings were always around in an office. There’s always a central location where legal information, labor information, safety information, and new items to communicate to employees is. So, this needed to be facilitated differently. And it raises the question around safety as well. We knew who was responsible for safety in the office. Who was responsible for safety at home if I got hurt? That raises a new dilemma, and will an employee say I was working, and therefore, I deserve to have my medical bill paid because even though it was in my home office, I was still working. And client interaction from sales – a lot of people like their salespeople that show up regularly.

What were the impacts of the changing environment?

So what did we find? We found that productivity suffered, but was not fatal, since our customers’ productivity suffered as well. And so it was kind of meeting the same challenges at the same time as our customers did. Also, volumes dropped at the same time; many projects were canceled, things were put on hold. People were trying to get climatized to the new way of working, and they were all really trying to figure out how they were going to work. Volumes dropped, revenue dropped, and cost reductions took place. Morale was hard to gauge. 

People had to adjust to being at home 24X7. Many parents had their kids at home because kids were not going to school, and they had to help their kids with online learning or daycare requirements. So they’re juggling family while at home and trying to work. So you had very interesting dynamics going on.

Tell me more about the technology challenges and how SGS overcame these.

IT had to work hard to deal with the technology requirements. We had to overcome the constraints and work with vendors. In some cases, we learned how to move large files, without the data bulk – holders and tagging and letting computers do the talking behind the scenes. 

We actually made some strides and improvements in efficiency that we learned that, even if eventually we go back to the offices that have the big servers, we’ll be able to do it much more efficiently. You know the old saying, ‘necessity is the mother of invention.’

Are all the people that you’re talking about employees of your company?

All employees. In some cases, on the creative side of our business, some may be freelancers.

So as projects come up, especially on the non-manufacturing side, so with your design sales or your “remotable” workforce, how do they get put on client projects? What’s the workflow?

With each client, and obviously it depends on the client’s size, we’ll have a team of people that will service that particular client. You’ll have what we call a client-facing project manager that interacts with the clients, sees their schedules, and will receive the work once it’s released from the client. The project manager will then assess the job and get it over to a customer service rep, who will then put the instructions together for a graphic artist or a graphic assembly person to start on the production of the work. We then produce a color-proof facsimile, if you will, that gets sent to the client for review and approval. So that’s a high-level, typical workflow.

I have this personal thesis that, as things get more remote, partially accelerated by COVID, everybody works at home at different times for these projects. And as you’re doing project-based work, you could start to use non-employees, like freelancers or contractors. It doesn’t always have to be permanent people – you can bring knowledge-level workers on to do these projects and assemble it since they’re already remote and don’t need to be in a corporate setting. What do you think about that thesis?

Well, yeah, that’s been that concept that’s been around for a very long time. We call it crowdsourcing, and we do crowdsource, if you will, meaning if there are people with the skill set that we require. And we know where they are, and they know where we are. We collaborate with them. We give them projects. But, you know, currently, I’m talking about our existing employees. But to your point, since people are working remotely, there could be someone and quite frankly, when we do this all the time, someone on the other side of the world. It doesn’t matter what time frame it is; you don’t need to be in a physical location or any one physical location from a digital perspective. You just need to understand the work. 

The trick is ensuring confidentiality and security when you’re working with people outside of your network because we’re dealing with a lot of sensitive information. Imagine working on a brand new Coca-Cola job that no one has seen, and you’re giving this project to someone in India, and you throw the work over the firewall. And all of a sudden, this person in India’s working on a brand new Coca-Cola job that no one has seen. And he might not know better. He’s not bound by our confidentiality rules or constrained to the same stringent protocols and covenants that an employee has. So he might just inadvertently send screenshots of this new project to his friends and say, “Look, what I’m working on.” So, and then someone at Pepsi says, “Hey, look at what Coke’s working on.” Right, so we’ve been in those situations. So I can tell you, it can be done, but there are challenges.

And so one of the biggest things is, even if you have the right contractual relationship with these freelancers and consultants, it doesn’t seem as secure as working with an employee because of the other things that are bound to a job.

Yeah, if you’re working with freelancers, you have to ensure the mechanisms to be in a confidential environment with our regular freelancers. They can tap into our network securely. It’s a little different in a crowdsourcing environment; you have to establish that there’s a cost to it. You don’t know if you’re going to use that individual again. So we try to establish a consistent connection with a certain network.

How do you feel about working with freelancers? When do you decide to work with a freelancer or when does the company decide to do work with a freelancer versus an employee?

It’s usually based on volume. If we over tap the capacity we have with our personnel, then we reach out to our freelance network.

Do you think of your freelancer network as high of a quality as your employee network? Or do you think of them as a level below? What do you think about that group versus your core team?  

Yeah, we go after the top talent. We don’t consider them any less capable than some of our own people. In some cases, some of them are a lot better, but they just don’t want to be an employee. They just want to be their own business and be able to work for anyone. They don’t want to be tied with any one customer. So there are freelancers out there that are highly qualified and maybe even more qualified than some of our employees.

“There are freelancers out there that are highly qualified and maybe even more qualified than some of our employees.”
Luca Naccarato, Advisor at SGS & CO

And do you think that there might be more and more of those types of highly qualified, “I want to work for myself,” freelancers that would want to plug into companies like yours? Do you think that’s a growing trend? 

I haven’t seen the statistics on it. I can’t give you anything other than an opinion because I haven’t seen numbers on it. I think I’ve seen it go both ways. I think some people. It depends on the individual. Some want freedom, you know, and some want security. So it’s based on the individual. I can’t say it’s a trend going in one direction or the other because I haven’t seen any numbers indicate that there’s a trend in that area, but I think my description of those who want freedom versus those who want security is the right description.

Now that’s really interesting that it’s driven by that talent and less about what the company was like, because a smaller company, they have to almost work with these freelancers because they can’t afford actual employees and they need to be a lot more nimble. But from your point of view, it’s a talent-based driven approach, which is really interesting to me.

What kind of leaders do you think are better capable of dealing with this group [freelancers and remote workers]? What cultures do you have to set if COVID goes on for a while? Or if you stay more remote than not, versus pre-COVID? What are the characteristics that make it so certain people are better at managing groups like this?

Yeah, some are better at communicating with people remotely. Some need the physical environment and need interaction with employees or different management styles. You’ve got to be very organized and disciplined when you’re keeping track of many people who are working in a remote environment and understanding what they’re getting done and measuring the quality of their work. You need to be confident that the staff you have out there doesn’t require constant interaction with you. And in those remote environments, it’s much more important to have complete and concise inaccurate information. You’re not in an office setting where if there’s a question, you can put your hand up and then maybe quickly get an answer, where this might not be the same in a remote environment.

It sounded like technology is an important factor in being able to work with this group of people who are remote or not plugged in all the time. You were talking about big files, communications, and other things that you have implemented. Are there other technologies that you think are critical to the transition you’ve made in the last six months or so?

Well, I think the main technologies are the conferencing tools. Of course, they need to be simple and seamless. And for the most part they are, but there are still at times some glitches. People have to have connections, obviously.

And then people have to have the right tools – meaning hardware. It’s not all just behind the scenes software – they need the proper equipment, at least in our industry, to do the work. So if those things are in place, then we can still maintain production. 

Managing Freelancers and Vendors?

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    The biggest findings we found after six months weren’t so much what we encountered in the beginning as the restrictions of technology. We found that the production of our graphics people in North America is on a trend line to achieve 10% improvement in productivity. Now we need to get some better tracking tools for this virtual environment; they’re still in development, but it’ll validate that production with our graphics people in India, China, Manila. This is where we had a great surprise, where we are on our trendline seeing over 20 to 25% improvement in productivity, which is surprising.

    Now, I believe, and this is based on our senior management and the conversations that I’ve had because they’re as amazed as anyone else, of course, because they’re dealing with it on a daily basis. We believe the reason for this is due to fewer distractions from the confines of the office. I’ve managed Asian locations for over ten years and love the region, the people, the peoples’ cultures. Asians love to interact with the community and communicate with each other. They love to take breaks to eat and chat frequently. Mealtime is a sacred and cherished part of the day. And many of our offshore offices even provide food, but now they eat at home and when they desire. Many, many Asians have to travel long distances to get to the office. The commutes for many can be as high as two hours each way. That’s four hours lost to the employees, and it’s unproductive time. 

    By working from home, they gain several hours of time which, oddly enough, they keep working. So you’re getting more hours out of them, and they are with their families more. This is very important to many cultures and religions, and they’re not distracted from their co-workers, there’s less visibility. And less politics. Many of the challenges we had in Manila were that workers were always looking at their co-workers and what they’re doing. And if they felt there was disparity, they would go to their manager and say, “I work harder than that person. I hope I get paid more.” That’s all gone now.

    If it really is sustainable, to be 10-20-25% more productive, I assume it’s something you are thinking about trying to keep going regardless of COVID. Is that true?

    Yeah, so here’s how we’re looking at it. We believe many of these positions will become permanent work at home. Some will become hybrid. And some will be in the office on a regular schedule, maybe two times a week, maybe three times with some consistency, in some cases, it will be random to go in the office as required. 

    For example, one of the concerns we have is onboarding and training new staff, especially junior staff. You hire someone; you keep them at home. We believe a hybrid solution will be desired. In this particular case, intimate one on one training with proper COVID practices will I think will be the right solution.

    The other challenge is maintaining the company culture. It’s hard when everybody’s dispersed around the world, and large companies like and are proud of their cultures that they’ve created because they believe it gets them a competitive advantage. And so, then creating and maintaining relationships, one-on-one physical interactions are important to build trust and companionship. It’s part of those psychological aspects of human intervention and behavior.

    I was fascinated by how you were talking earlier about how freelancers might actually be sort of all-star talent that wants to work in a certain way. So who makes a decision to tap a freelancer versus not? How often are they just sort of on the bench and you’re working with them consistently?

    Part of your question was, are they considered less talented than your full-time employees and I’m saying, not always. In some cases, some are very, very talented, as good as some of our top people,  maybe better than some of our top people. Not all the freelancers out there are good. That’s why they don’t have a full-time job. So I think there’s a cross-section.

    Usually, production management makes the decision. They see the projects coming in. Certain projects require a certain skill set and if we don’t have enough of that skill set, internally, whether that may be color retouching or color manipulation or copy or translation or building guidelines and structures for packaging, then we tap into the network that we know and we see who’s available. You don’t always get who you want. You’re stuck with what you can get. And you learn to deal with it.

    Paying Freelancers and Vendors?

    Our customers report that using Liquid allows them to put off hiring an Operations Manager and/or Bookkeeper.

      So that’s probably another con of having freelancers, even if they’re good. If they are an employee, you know they’re always available. And if they’re a freelancer, you don’t know if they’ll be available, in addition to some of the other things you touched on. Are there other pros and cons related to this? My thesis or hypothesis is that as people go more remote that the trend towards working as a freelancer or your own company that can plug into various projects will increase. I’m wondering if the more you are remote, the idea of working with freelancers would increase. What are the pros and cons beyond what we already talked about working with a more non-permanent workforce? I ran a consulting company, and I used women who became moms and dropped out of the workforce and wanted to work this way. That’s what I was able to tap, and they’re all freelancers or their own companies. And in some ways, I felt like I was getting the better talent and the only way to make it work was me embracing the fact there are freelancers in there to work remotely. And now we’re sort of solving this remote issue because of COVID and I wonder if it opens things up more to freelancers?

      You know, we found the same thing when we had locations where we either consolidated offices or operations and had to let some talent go, but in some cases, we maintain the relationship on a freelance basis. So they knew the company. They knew the work. And so in those particular cases, we maintain them in what we call a crowdsource environment, so it’s the key to managing this. It’s like knowing who’s out there in your crowd and who’s available. And so you have to have a tracking mechanism that says, I got this need. You go into the crowd, and then you request the need and the people in the crowd apply to that particular job. So, you go out and say, “I need a graphic artist to produce six labels. Here is the design brief.” So people get to see what’s required and then you see who applies. And then you can pick and they’ll each one will have a rating. They’ll say, you know, this one will be five stars. This will be four stars. This one has 10 years of experience. This one has five years of experience. And then this is my fee. This is my fee so it’s somewhat prescribed. It’s not the Wild West. And you take your chances on who you get. You’re gonna need to build some predictability to it.

      It could be similar to how in the manufacturing world you have suppliers that you trust that can make certain parts. It’s almost a vetted supplier network of crowdsourcing. Like you said, a Wild West, but there’s always a trusted group of people that you’ve either vetted or worked with before that are coming back in and answering the briefs. 

      In terms of this evolving workforce, how are things changing? Do you think the different countries are thinking about this workforce changing in a different way, not just remotely, but also just fundamentally being able to tap, like you said, the crowds, or freelancers or remote or employees. Do you think in a global setting, are people thinking about things in a different way?  

      I can only tell you what we’re doing in the regions that I’m aware of. So, the majority of our people in Asia. That’s India, China, and Manila. And we have a location in Mauritius just off the coast of Africa. A lot of them are working remotely. So we’ve seen that trend which is going to change how our offices are going to look in the future because many of them are going to stay at home because of what we found. So we’re encouraging a new model, especially in that region. Europe, not as much, but still, like North America, those that can work home will. There is still a need for some to come into the office when you’re dealing with physical proofs and things that need to get out to clients that are digitally printed. You can’t have digital printers in everybody’s home. So those things are a requirement.

      In Latin America, it’s a little different. People started working at home, they’re starting to be introduced back into the office, at a certain density. So, project managers and customer service reps can easily work at home, but some graphics person professionals do require to be in the office. So we try to practice proper COVID standards, just like in our manufacturing areas.

      Learn more about SGS & CO or follow on LinkedIn, Facebook, or Twitter

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      Category: Spotlights Leadership Interviews Industry Trends

      Updated: November 10, 2020

      Quick note: This is not to be taken as tax advice or legal advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.

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