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Working nine to five is the way how a considerable amount of the workforce makes a living. Yet, there is an increasing number of people who choose to work independently with multiple income sources over structured paychecks. As per surveys, the new workers prefer independent work to full-time salaried employment by more than 2:1. Consequently, half of the workforce will comprise gig workers by 2020 and as much as 80% by 2030.
As more and more individuals opt to avoid the everyday routine, future-ready companies come down in favor of the Gig Model of Economy. In this piece, you’ll learn how companies are adopting the gig model of the economy, what are the challenges faced during this shift, and the practical solutions to it.
Let’s start with understanding what the Gig Model is and who possibly are the gig workers.
You want a vehicle: Ola and Uber are the options. An extra room: Airbnb. Some good food: Zomato or Swiggy. Do you know what do these giants have in common? Well, these are the companies with an on-demand component to their business model. Popularized around the peak of the 2008 financial crisis, this model has evolved to a significant factor in the overall economy.
Yes. We are talking about the gig economy!
The Gig Economy is a free market system where temporary positions are common and companies tend to contract with independent workers for short-term engagements.
The upsurge in the economy is changing how organizations maintain their business and deal with their workers. The gig economy model –where workers take on short work to perform specific assignments or projects – resembles a win-win for the company as well as for the employees.
Talking about organizations, the gig model offers more flexibility, decreased fixed costs, and the ability to respond a lot quicker to market changes. Also, it’s a chance to tap into a fresh talent pool (specialists who probably won’t wish to join the organization on a perpetual long haul contract) and access the expertise on demand.
From the employee standpoint, the gig model offers relatively more flexible work hours, a superior life balance, and more self-governance. It provides higher quality and varied options for stop-gap employment that might convert into a long-term.
If we talk about gig work, it consists of income-earning activities apart from traditional, long-term employee-employer relationships. It’s the contract between workers and the company (or maybe an individual) who pays them for a specific project. With an increasing number of on-demand businesses (think of at-home pet care, electricians, maid services, or salon at home), gig workers get to choose when, where, and what to work.
The term “gig worker” covers two very different types of the workforce:
Changing business and societal norms, a change in perspectives, and changes in career goals coupled with a shift in generational work ethics have combined to make work a part of a lifestyle as opposed to a distraction from it. The gig economy is on the brink of changing it all, writes Thomas Oppong, author of ‘Working in the Gig Economy’
What it means is that the work today is far more different than what it used to be a decade ago and the pattern will continue. The perception of employment, earlier, was to put money in the bank, food on the table, a secure job with some retirement income. Thanks to the shift in mindset, a career is no more about a job but a sense of accomplishment. With the ease of entry, affordability, and digital technology coming in, more men and women of all ages and independent workers from most of the fields tend to shift to the gig model of the economy.
What does this mean for businesses is the question-of-the-hour. With the ease in finding the giggers (thanks to several online platforms!), a cost-effective and efficient substitute for sudden vacancies, and more; the gig economy is a piece of great news to the businesses. Here are some of the supporting reasons:
Companies get to outsource errands to already-trained workers and individuals, in turn, get an opportunity to work for numerous businesses in temporary positions. Well, this win-win deal is something that triggers the gig model for the future of work.
You see e-commerce giants like Amazon, Flipkart, Alibaba, and others. They enable anyone to join the league of merchants. Some businesses provide a chance to people with specialized skills by connecting them with clients that have such needs. Organizations will not just have to build (train) or buy (hire) talent; they will need to learn how to borrow expertise effectively.
Well, the requirement of gig workers is not just limited to these; it’s widespread in most of the sectors. For instance, photography as a job role, to a great extent, has always been into the gig model of the economy. Any organization (unless it’s a photography business) tend to hire photographers temporarily only when they need them, be it for any fest or hackathons or anything of that sort. What it means is that the role of the gig workforce comes into existence only when there is clearly defined work requirement and there are people with great expertise.
In this fast-moving world, new skills are getting introduced regularly. And the organizational structure is progressively moving towards having much more defined job roles. The mixture of both is the reason why the economy is increasingly shifting towards the gig model.
Here’s a framework that clearly describes the region of presence and growth of the gig workforce. The framework constitutes two essential parameters, which are the backbone of a contingent workforce. A higher magnitude of these parameters clearly depicts that the massive chunk of gig workers lies in this region and will continue to propel, going forward.
Millions of people choose temporary work to supplement their income by choice, though it’s not a necessity. It might be surprising to know that employers as much drive the gig economy as it is by the individuals who choose to have an alternate work life. It’s on the employers to pick a suitable candidate to perform particular tasks temporarily.
While companies are hooking onto this model as it causes them to get an agile workforce, diminish cost, and develop faster. In addition to this, this also aids them to avoid inevitable hassles like promotions, management, infrastructure, etc. With all these benefits at the disposal, there are several challenges that businesses deal with while working with the contingent workforce.
Advantages aside, there are some of the significant challenges that come along with this model. The areas that organizations find a bit challenging while dealing with giggers constitute talent management, quality of supply, performance management, and on their training front. Let’s understand them:
While individuals with expertise in the skills are relatively easy to find, companies find it challenging to onboard someone who is culturally fit with the right set of behavioral attributes. There are relatively higher turnover rates associated with gig workers. It could be due to the reason that most of the gig assignments are not the dream job of candidates. Or, it could be for some extra earning money quickly. Also, there are times when you’d have to share some official data with them. Now, how to believe if they could be trusted! Knowing that they are less likely to continue for long haul within a company, they are less concerned about losing their job when they violate company rules and regulations. In short, it becomes challenging for HR and other decision-making bodies within an organization to pick a fit and perfect match for their job role.
Additionally, frequent gig departures result in continuously losing company secrets, which is a threat to a business. This leads to difficulties for the company to retain its acquired knowledge. Another challenge that businesses face lies in engaging the contingent workforce to stay in the company for long. The bottom line is, hard to connect, but the ROI of a gig workforce may not be positive. And this is problematic for a business.
Apart from these organizational risks, there come several potential risks related to employment laws and regulatory compliance. There are challenges aligned to the security of the information, intellectual property, and cybersecurity when it comes to dealing with the contingent workforce.
Well, you won’t come across any business publication without a mention of the gig economy and how it helps businesses. However, the concept brings along with it, a large number of hidden management problems. The question is, what are the possible solutions to this?
The question is, what are the possible solutions to this?
Contingent workers, freelance economy, independent workforce, third-party consultants- whatever you call the contributors, the “Gig Economy” is thriving and will continue to perpetuate. Actually, a more significant number of organizations than you might suspect, are influenced by alternate work system in a complex, however, shrouded ways. And it’s high time for HR leaders to start pondering on practical strategies to incorporate the liquid workforce strategy. Here are some of the possible solutions:
Your business must invest in an active Learning Management System (LMS) that could propagate your objectives clearly, for gig workers are more often remote, transient, and busy. The training should include leaders communicating mission and values concisely. Try to implement gamification that resonates with your freelance workers as a way to significantly boost employees’ ability to learn.
Talking about the training and development interventions, be mindful of some pointers. The training needs to be delivered in a smaller section and that too, frequently. Your company must leverage the strength and benefits of live, online training for the best learning experience in the shortest possible time and reasonable cost.
With our vision to empower organizations to build winning teams by making better people decisions, we provide a suite of tools based on job, seniority, and organization-level to empower your hiring, training and engagement strategies-
You may also want to read: Top 12 Learning and Development Trends to Look Out for in 2020
Originally published July 3 2019, Updated June 18 2020
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