Permanent or Temporary Employees?
“Capability and constraints grow together.”
The Choice
Imagine you can choose to manage one of two organizations. They operate in the same field, face the same competition, and have access to the same technologies and markets, but differ in only one key way.
In Organization A, once people join, they can remain unless they choose to leave. Management cannot dismiss someone merely because a younger, more productive, or differently skilled person becomes available. If technology changes and the organization needs capabilities its current employees lack, management must respond without simply replacing them with people who already have those capabilities. Organization B gives management far greater freedom to change who occupies its roles. You can recruit people with whatever capabilities the organization needs now and replace existing employees whenever you believe someone else is better suited.
Which organization would you prefer to manage?
For many managers, especially as AI and other technologies rapidly reshape entire professions, Organization B will likely feel like the safer choice. If the future is uncertain, why give up the ability to adjust staffing to respond to it? If you cannot know which products, technologies, and capabilities will be required five or ten years from now, why commit today to people whose capabilities may no longer match what the organization needs tomorrow?
We can make the test for Organization B more demanding by removing the practical constraints that typically accompany such flexibility. Imagine it has unlimited financial resources and an advanced AI system with complete knowledge of the global labor market and of exactly what the organization needs to accomplish each day. The system identifies the best available person in the world for every role and task, while automatically handling recruitment, contracts, compensation, access, and administration. Those who remain the best choices continue, while anyone no longer needed is immediately replaced by someone better suited.
If an organization can always choose the best available people for what it needs to accomplish, what could possibly be wrong with that?
The Best
Now suppose Organization B is a high-tech company developing new technology. Whenever its needs change, it can immediately bring in people who already have the required capabilities. By the logic we have constructed, this should be an extraordinary competitive advantage. Yet imagine being its CEO, customer, or investor, knowing that tomorrow much of the team you worked with today may no longer be there. Would you really expect this to become an exceptionally capable high-tech company?
Most of us would hesitate, even though the reason is not immediately obvious. We cannot blame poor recruitment, inadequate talent, excessive cost, or slow administration, because we deliberately removed all of them. Nor does the company automatically replace everyone, since anyone who remains the best choice can stay indefinitely. The system merely exercises, without friction, the freedom that initially seemed so desirable: replacing people whenever someone better suited becomes available.
Something is therefore missing from how we framed the problem. Before explaining what is missing, consider an organization built around what seems to be the opposite principle.
Continuity
Imagine someone who spends an entire working life within the same organization while their work changes as the organization's needs and their own capabilities evolve. Rather than remaining in one role, this person moves between very different functions within the same organization and sometimes acquires entirely new skills; the person remains, while what they contribute changes.
The person I have in mind is my mother. Throughout her working life, she moved from the dairy farm to the orchards, then to a clothing warehouse, childcare, and dental care, and eventually practiced alternative medicine. All these roles were within the same kibbutz; the work changed, but her membership remained the same.
That distinction matters because kibbutz membership was not conventional employment. Membership was highly stable and did not normally depend on being the best available person for a particular job. My mother's standing within the community depended primarily on her membership rather than on the market value of the function she performed. Because her membership remained stable, her occupation could change dramatically without threatening her place in the larger organization.
Her broader relationship with the organization also remained relatively stable. Although her role changed, she stayed within the same community and continued to contribute to its broader needs from different positions. She did not have to join a new organization each time, learn a new history and culture, build new relationships, or discover a new purpose. That continuity did not guarantee commitment or alignment, but it meant that changing roles did not require rebuilding her relationship with the organization from the beginning.
This distinction makes it clearer that when people move between employers, professional skills and experience may transfer quickly, while financial terms can often be agreed upon before the first working day. Integration and alignment usually take longer. Trust and informal relationships must develop, people must learn how the organization actually works, and they must understand how their contribution aligns with the organization's goals.
My mother's story therefore reveals what our original distinction missed: we treated people's permanence as if it meant the permanence of their contributions. People can remain while what they contribute changes. Therefore, if people can remain while their contributions change, and replacing people does not automatically make an organization more capable, then permanence itself may not be the variable that matters.
Capability
The two organizations reveal an unexpected contrast. Organization B can continually replace people with individuals who seem better suited to its current needs, yet we hesitate to conclude that it would become exceptionally capable. Organization A severely limits management's ability to replace people, yet its members can develop, change functions, and respond to new needs. The distinction we began with therefore confused the continuity of people with the continuity of organizational capability.
An organization contains knowledge and skills within individual people, but some of what makes it capable develops between people and through the structures that connect them. As people work together, they build trust, learn how others think and respond, understand how their work affects one another, and develop ways of coordinating that do not need to be recreated from the beginning each time. Some of this accumulated capability becomes embedded in procedures, technologies, databases, roles, standards, and routines, while some remains in relationships and in practiced coordination. Over time, the organization develops Capability that cannot be understood simply by adding together the capabilities of the individuals occupying its positions.
This is where our imaginary AI system encounters a limit: even perfect selection cannot instantly recreate what has developed through prior interaction. It may know everything about every candidate and select someone individually more capable than yesterday's employee, but replacing one person also changes the relationships around that position. The newcomer enters an existing Structure, must form working relationships within it, and requires others to adapt as well. Even perfect information about those relationships would not instantly recreate the Integration that developed through working together.
Organizational capability depends not only on how people learn to work together but also on what they learn to pursue together. A newcomer can read the organization's mission and understand its strategy, but knowing the stated Direction is not necessarily the same as developing commitment to it. Through shared experience, people may come to understand why particular goals matter, how their own contribution relates to others', and what they are willing to give to pursue a shared future. Continuity does not guarantee such alignment, just as mobility does not prevent it. Both Integration and Alignment develop over time.
What these examples reveal is the same mechanism described by the Universal Law of Increasing Complexity; when differentiated components integrate, the larger system can develop Capability that none of its individual components possesses on its own.
Human organizations have an additional feature: their components can themselves develop. People can learn, specialize, change roles, build new relationships, and acquire capabilities that were not present when they first entered the organization. Because people can change, continuity is not merely the opposite of renewal; it can also be one of the mechanisms through which renewal occurs.
Renewal can also enter through the organization's broader interfaces. New knowledge and capabilities may come from customers, suppliers, consultants, universities, partnerships, technologies, and new employees. Conversely, people may leave, while some of what they helped create remains embedded in technologies, routines, relationships, Structure, and the people who remain. The movement of people and the movement of capability are therefore not the same thing.
Organizations therefore accumulate more than their employees' expertise. They accumulate knowledge, relationships, ways of working, shared Direction, and forms of Integration that enable differentiated contributions to be more capable together than they would be separately.
The question is no longer whether people should be permanent or temporary, but what needs enough continuity to accumulate and what must remain capable of change?
Accumulation
The question we discovered through employment is part of a larger organizational development problem. Any organization that becomes more capable over time must preserve what it has already created. New learning builds on existing knowledge, relationships deepen through continued interaction, technologies improve, people specialize, and ways of working develop through experience. If what has been accumulated repeatedly disappeared, much of the organization's effort would be spent rebuilding capabilities it had already developed. Sustained development therefore depends on accumulation.
Accumulation does more than preserve capability; it also gives form to the organization that future development inherits. What survives from yesterday becomes embedded in people, relationships, technologies, routines, expectations, and structure. These factors make some actions easier and others more difficult, shaping what the organization notices, what it considers reasonable, what its people know how to do together, and which possibilities they are prepared to pursue.
The same accumulated capability that enables an organization to build on what it has already developed also determines where it can go next. Emergence also has a temporal dimension: what emerges today can become part of the Structure inherited tomorrow. When differentiated components integrate and new Capability emerges, some aspect of the arrangement that made that Capability possible must persist if later development is to build on it. What persists may change form, shifting from individuals to relationships, technologies, routines, or Structure, but it becomes part of what the organization carries forward: yesterday's emergence becomes today's Structure.
This can be illustrated by three forms of farming. A small family farm may preserve deep local knowledge across generations while maintaining limited internal specialization and limited access to capabilities beyond the family. A professional farm can differentiate functions and continually bring in outside expertise, but must still preserve enough knowledge, relationships, and coordination as personnel change. A kibbutz farm can combine stable membership with internal mobility and external learning, while also preserving assumptions or structures that may no longer fit. None is inherently superior; each makes it easier to preserve certain forms of capability and offers different pathways for change.
The employment question with which we began was therefore part of a larger design problem. Permanent employment may preserve relationships, knowledge, integration, and alignment long enough for them to deepen, but it may also preserve arrangements that no longer fit. Greater mobility may introduce new knowledge and experience, but it can also disrupt capabilities that took years to develop. Continuity and renewal are not simple opposites because they can occur through different mechanisms within the same system, and sometimes even within the same people.
The original question has now changed; it is no longer whether permanent or temporary employees are better, but rather: What must remain long enough for Capability to accumulate, and what must remain open enough to change?
Development depends on accumulation, but what has been accumulated cannot become fixed. Organizations need to preserve the capabilities that allow them to keep building, while remaining able to change the people, relationships, technologies, roles, and structures through which those capabilities were created.
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* I strive to stay true to the facts and the reality they reveal. If you find an error or see a need for clarification, your insights are welcome.
See you soon,
Nimrod
Dr. Nimrod Israely writes on the structural foundations of prosperity and human systems, and is the CEO and Founder of Dream Valley and Biofeed.
P.S. Fresh-fruit exporters: We will be closing some of our most attractive 2027 EU retail programs in October. If you are interested in participating, contact me before then.
P.P.S. Previous column: “Designing for Emergence”
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