Gig Economy And its HR Implications

The gig economy means different things to different people. For some, it is the ever-growing number of individuals who make use of the emergent online platforms for service brokering as witnessed in Uber, Upwork and Airbnb among others. For others, the economy refers to individuals who work within the contingent, diversified, temporary capacity or on a freelance basis. Put simpler, it could mean those without full time or part-time employment.

How big is the gig economy?

It is no doubt that insufficient clarity that surrounds the gig economy points to, unsurprisingly, to the ambiguity that defines how big the gig economy actually is- that is, the percentage of the workforce it commands, though available literature points to an estimated 35%. If we look at the smaller end of the scale, that is, people who earn a living through the internet, then it certainly is on the upward trajectory.

According to Time Study on virtually all contingent workforce that includes online platform workforce, 44% of the US populace of the working age are individuals engaged in non-traditional forms of employment.

So, does this Trend mean a Thing?

From the available literature, it is obvious that most people have taken advantage of the emergent online platforms for their hustle to make supplement their income. But is that all?

The dominant belief points to the fact that most people will definitely turn to online gigs in the coming years. 32% of the millennials believe that the online gig is the best thing of their time and that they will be embracing the flexible work hours in the future. PWC holds that 46% of the human resource professionals are prepared to the inevitable mass exodus with a projection of about 20% of them falling under the temporary and contract workforce by 2020.

What’s the Implication on HR?

As expected, there are variants when it comes to the impacts the freelance gigs would have on human resources. Nonetheless, when combined coupled with such factors as increased workforce flexibility, distributed workforce, cognitive technologies, globalization and advances in the application of robotics-which is largely associated to the future revolution of the workforce, there are a range of considerations that the HR needs to account for in term of the future work prospects in terms of strategies.

A study conducted by Deloitte notes that most of the HR executives believe that their organizations can manage the contingent workers with the key challenges being:

·       The regulatory or legal uncertainty

·       The culture being unreceptive

·       And lack of understanding among some leaders

The same study points to the fact that real problems could possibly arise if the contingent workforce is recruited through the procurement department other than through the human resources department.

The HR will, therefore, have to change a few things which include recruitment where people must be able to complete their gigs on time, change the HR systems to include automation, and streamline the non-disclosure agreements as the gig workers may as well be working for competitors. 

References

Axiomatic Consultants. (2019). GIG ECONOMY AND THE IMPACT ON HR | Axiomatic Consultants. [online] Available at: http://www.axiomatic.co.za/news/gig-economy-impact-hr-2/ [Accessed 15 May 2019].

Deloitte Australia. (2019). Deloitte Global Human Capital Trends 2019 | Deloitte Australia | Human Capital, Consulting. [online] Available at: https://www2.deloitte.com/au/en/pages/human-capital/articles/human-capital-trends.html [Accessed 15 May 2019].

Pwc.com. (2019). [online] Available at: https://www.pwc.com/gx/en/services/people-organisation/workforce-of-the-future/workforce-of-the-future-the-competing-forces-shaping-2030-pwc.pdf [Accessed 15 May 2019].

Employee retention in the Gig Economy

The gig economy has unequivocally become increasingly popular. It is a free market system marked by freelance gigs where workers engage in temporary contracts on a freelance basis. The increased digitization has played a great deal in furthering this gig trend. As a result, the gig economy is estimated to account for the 35% of the present workforce globally, a fact projected to surpass 45% by 2020.

While at it, retaining the workforce in the gig economy is increasingly becoming a challenge. Be that as it may, this article outlines some of the best practices that would ensure retention of the best talents within the gig economy.

Offer Flexibility and Focus on Life/Work Balance

The main attraction that the gig economy has for the workforce is the fact that it offers a flexible balance in terms of work and lifestyle. The skilled and talented workforce such as the website and software developers opt for such gigs as opposed to the traditional roles that characterize most organizations. Besides, it makes perfect sense finance-wise, for the organizations that look up to the services of this workforce as they are often reasonable in their prices, compared to a company or the in-house workforce.

By providing similar flexibility to the workforce, one can significantly increase the chances of talent retention within an organization. There must be a balance between one’s work time and their lifestyle as it forms one of the most critical considerations within the gig economy as it does in the traditional work-settings. It is also important to make remote work something a reality to the employees, where some could carry work home without necessarily making physical appearances in the office.  If the remote option is not practical for your employees, then it would probably be best if the workforce is encouraged to separate their personal life and work life.

Offer Competitive Benefits

The main advantage of having a traditional job market offered on a permanent basis is retirement benefits and allowances. Freelancing, or the gig economy on the other hand, for the flexibility it offers, cannot compare with the match up to the full-time job in terms of job security, stability and the additional benefits that come with the job. Of all these perks, health insurance is probably the most crucial. On the same breath, the employer health insurance is significantly cheaper compared to the individual health insurance and therefore, would serve best if the employers provided better cover in terms of perks and benefits to prevent a switch to the gig economy.

Tailor a productive work environment for the workforce

The gig economy is known for its frequent need to juggle about different roles. This is not true in the traditional setup, as the employees are just but valued members of the organization as opposed to being a means to an end. It is therefore vital for organizations to offer the workforce with new challenges and offerings on a temporary arrangement.

References

Kuhn, K. M. (2016). The rise of the “gig economy” and implications for understanding work and workers. Industrial and Organizational Psychology, 9(1), 157-162.

Ko, J., & Hur, S. (2014). The impacts of employee benefits, procedural justice, and managerial trustworthiness on work attitudes: Integrated understanding based on social exchange theory. Public Administration Review, 74(2), 176-187.

Leighton, P. (2016). Professional self-employment, new power and the sharing economy: Some cautionary tales from Uber. Journal of Management & Organization, 22(6), 859-874.

Employee Welfare in a blended workforce

www.tuition.io

From a human resource management perspective, a blended workforce refers to a combined variety of employees subjected to different contracts that include permanent full-time employment, part-time, contract jobs, and temporary ones. The “term Gig Economy” defines independent and freelance works that are either technologically or momentary influenced. Examples of Gig Economy include working on a freelance basis from a remote location as an independent recruiter, Uber driver, or collecting money from AirBnB spaces.

One characterization of the gig economy is an environment where people buy and sell services through online brokering platforms such as the PeoplePerHour and TaskRabbit sites that are tech-enabled to market services for and by the freelancers. From this angle, one can characterize the workforce in this kind of business model like the hourglass. That is, people at the top can be highly skilled, with sought-after talents and who are well paid and very flexible with ideas. The ones on the bottom end are likely to be less skilled and temporary.

From the global fronts, it is increasingly becoming common for firms to hire workers on a temporary basis for short term projects. As this increasingly becomes popular, firms must now consider the impacts of the gig economy in the overall business and HR operations. As employees increasingly monetize their lives, the business skills and top talents are also up for grabs. Such websites as Toptal, PeoplePerHour, and Upwork convene temporary workers who are always more than willing to showcase their skills and talents on the market for short terms projects.

As the gig economy takes shape, more people get absorbed in and take up the same as side jobs. Notably, the common side jobs such as Uber driving and Lyft have taken shape at a rate worth paying attention to. More than 36 percent of the world’s employees are currently engaged in one or more side gig. For these workers, taking part in a side gig is a cushion against unemployment or losing a job in case they are in one. Besides, the employees on the gig economy use the same to supplement for their income which is sometimes so meager to sustain their demands. They stick to this arrangement as it informs the biggest opportunity to earn more money and have extra income. As a matter of fact, about 69 percent of employees are motivated by the primary call to earn more money through the gig economy.

Some of the biggest corporations around the world may soon realize that adopting a liberal policy governing the side jobs can result in an enhanced workforce due to the kind of talent the economy attracts. With the threats of losing out on the best workforce, employers have turned their focus on employee retention, thanks to the gig economy. With this approach, the gig economy has not only disrupted the workforce models but also redefined it. The gig economy has also necessitated the need to have a customized need of the employees as companies must now understand what works for them and what doesn’t.

References

Dokko, J., Mumford, M., & Schanzenbach, D. W. (2015). Workers and the online gig economy. The Hamilton Project.

Lobel, O. (2017). The gig economy & the future of employment and labor law. USFL Rev., 51, 51.

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.

The Gig Economy and its effect on Employee Value Preposition

The video below pretty much covers the idea of employee value preposition. In today's work environment when we seek the best talent we must promote an attractive EVP. Due to the recession and technological advancement the world of work is changing rapidly, a disruptive work environment is in place where employee's no longer rely on employer. They've become self earners and they decide what, when and how they work. over the decade many of the jobs has been taken over by the contingent workforce. Many researches and studies conclude many more traditional nine to five jobs will be replaced in no time. The change has benefited both employer and employee.

Source: www.talentlyft.com/

In recent years Employee Value Preposition has caught notable attraction and given due importance in acquiring competitive talents. The question is what does the gig economy adds to EVP? Employment rights of the gig workers are played out in courts across the globe. Limitations by laws are exploited by many employers. Few cases have been concluded that gig workers are entitled to basic employment rights such as protection from discrimination, minimum wage, paid holidays etc. 

Talent sourcing can be done through technological means on a fast pace, but there may still be need for improvement in identifying skill suitability and cultural fit for the company. Employers and HR directors are now with the task from "need to hire an employee" to "need to complete a task". To accumulate from these talents while committing to keep up with the competition and finding the edge is critical to organization's success. There is a huge difference in reward and benefits given to permanent and contingent workers (Malin, 2018). with the growing diversity of the workforce and the need to leverage different types of talent, we must broaden our approaches to rewards to think about engaging and attracting these different types of employees. It's time to do away with a one-size-fits-all model of rewards and, instead bring increased professionalization to the rewards element of the EVP. 

Economists, politicians and business leaders all recognize that the successful growth of the gig economy could have many tangible economic benefits, including raising labor force participation, providing opportunities for the unemployed and potentially even a much-needed boost to labor productivity.Managing a talent pool and developing an employee value proposition that works across a blend of permanent and portfolio workers requires all people management processes to adapt. Messages and policies must be defined for specific groups through audience segmentation delivered alongside, overall brand messaging.

References:

Malin, M. (2018). Protecting Platform Workers in the Gig Economy. Indiana Law Review, 51(2), pp.377-411.

Wald, J. (2019). It's Time for Your Company to Develop an Employer Value Proposition for Freelancers. [online] Forbes.com. Available at: https://www.forbes.com/sites/waldleventhal/2019/02/26/its-time-your-company-develop-employer-value-proposition-freelancers/#6e345d1934d6 [Accessed 7 May 2019].

Recruiting and Hiring Resources. (2019). What is Employee Value Proposition (EVP)?. [online] Available at: https://www.talentlyft.com/en/resources/what-is-employee-value-proposition-evp [Accessed 6 May 2019].

Does HR need to worry over motivating on-demand workers?

Source: dispatches europe

Technology has made it possible and much easier to connect available talent with prospective work, gig economy provides benefits to both organizations and workers. the on-demand workers gives a flexible workforce that there is only when you need it, without the longer term responsibility and challenges associated with permanent employees. keeping skills up-to-date becomes the responsibility of the worker and organization's becomes brands that manages the services of others. for workers it is working on your own schedule, be accountable for own performance and development and avoid potential miseries of being stick to the same company. The question for this week'e post is Does HR need to worry over motivating on-demand workers?

The way we look into motivation needs a change as well. Organization's must not solely take the responsibility for motivating its workforce. And factors affecting to compromise morale of an employee might account to many. It must be hard to getting up Monday through Friday, making breakfast and lunch, getting the kids off to to school, socialize and entertain and maintain healthy lifestyle and then commuting to job (Pofeldt, 2018). In the gig economy the worker becomes a business. worker decides when and how to work, more freedom and flexibility but with a cost. Social Security and other mandatory benefits associated in a typical employee-employer relationship is not existed (Malin, 2018). This might be a driving force to motivate gig workers to excel in their area of skill and attract more clients inward. doing it own means feed yourself on your own. 

By its nature, the gig economy is all about change. companies need to build agility in their workforce through empowering employees to problem solving and decision making (McGovern, 2017). implementing a flexible reward for flexible system is needed. This means the first step in creating a flexible reward scheme is understanding the scope of workforce's needs, always with understanding that fairness is essential. According to Maslow's Needs theory the highest level an individual can reach is the level where they self-actualize (Maslow et al., 1998). Most workers in the contingent workforce are experts in their relative field, meaning they are on the level of self actualization and the good news is they need less convincing or motivation for efficient performance. However companies can provide extra incentives on completion of work before the contract period and allow them to take frequent jobs with the company to create a synergy effect.

References
Malin, M. (2018). Protecting Platform Workers in the Gig Economy. Indiana Law Review, 51(2), pp.377-411.
Maslow, A., Stephens, D., Heil, G. and Maslow, A. (1998). Maslow on management. New York: John Wiley.
McGovern, M. (2017). Thriving in the gig economy. The Career Press Inc.
Pofeldt, E. (2018). The million-dollar, one-person business. New York: Lorena Jones Books.

Performance Management in the Gig Economy

Performance management is the process or system by which an organization measures and improves performance within its workforce. an organization may measure its performance at a different level at the organization level, at the departmental level, at the team level or at an individual level. most used elements of performance management are performance reviews, manager one-on-one, feedback, goal setting and tracking, reward and recognition and many more. Over time how leaders and organizations view performance management has been drastically changed. The video below summarizes it all (Marr, 2006). 

Source: CIPD

Businesses really need to get grips with the changing nature of work and employment. Twenty years ago the move to deploy independent workers was largely a cost play. Now it is talent play (Mizrahi, 2018). Contractors or the gig economy workers performance must not be reviewed purely on monetary forms such as costs and quality but also on soft factors like cultural fits. According to Deloitte contract workers may occupy 90% or more of an organization's true workforce.  Freelancers Union reports that as much as 40% of the US Workforce views themselves as freelancers. According to the Harvard Business Review over 50% of leaders fully expect agile talents to increase compared to the percentage of employees. Reasons for rising of the gig economy are speed, flexibility and innovation. However, most companies are yet to adapt to the changing work environment. Research by PMI shows that alignment issues, a key to the success of project deliverables. And the alignment gap is huge at performance management. So, the big challenge for HR executives and leaders is to how to tackle performance management in an environment where temporary and permenant workers are engaged in performing.

To start with encourage agile talents to communicate concerns before problems escalate. misunderstandings and poor communication may demoralise and affect performance. Making the gig workers feel they are welcomed and the service they render valued might lift their spirit and open door for more projects together. employing the same highly skilled workers for temporary jobs may ease the process of onboarding. Involving them in the decision-making process and assigning the right manager to supervise contract workers is critical in achieving higher performance from agile talent. Managers who are performance oriented might be a problem. there must be a focus on performance as well as development.

References:

Beashel, A. (2019). How to convince a potential client to sign off on your proposal. [online] Freelancers Union Blog. Available at: https://blog.freelancersunion.org/ [Accessed 30 Apr. 2019].

Disselkamp, L., Parent, D. and Nieuwoudt, W. (2019). Workforce on demand. [online] Deloitte Insights. Available at: https://www2.deloitte.com/insights/us/en/focus/human-capital-trends/2015/on-demand-workforce-human-capital-trends-2015.html [Accessed 30 Apr. 2019].

Marr, B. (2006). Strategic performance management. Amsterdam: Elsevier.

Mizrahi, O. (2018). The gig is up. Greenleaf Book Group Press.

Project Management Institute. (2014). The High Cost of Low Performance. [online] Available at: https://www.pmi.org/-/media/pmi/documents/public/pdf/learning/thought-leadership/pulse/pulse-of-the-profession-2014.pdf [Accessed 29 Apr. 2019].

Younger, J., Smallwood, N. and Goldsmith, M. (2016). Agile Talent: How to Source and Manage Outside Experts. Harvard Business Review Press.