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Human Resource Management   | 4 Min Read

How are Organizations Gearing up for the Gig Economy?

Written By Ankur Tandon

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.

The Gig Economy

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.

“The gig economy is empowerment. This new business paradigm empowers individuals to better shape their own destiny and leverage their existing assets to their benefit.”

                                                                                 -John McAfee

Who are gig workers?

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 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:

  • Highly skilled professionals- They are all-in players who treat gigs like full-time employment. They make their primary living from independent work; specific work that they are highly skilled in. They include individuals with international experience, consultants, IT professionals, and other such contractors. Often, they make up a minority of the gig economy workforce.

  • Part-time workers- They are the side hustlers; temporary workers trying to skyrocket their incomes with part-time work or might be unable to find full-time employment. The gigs might not be their primary source of income but fulfill them- could be photography, event planning, administrative work, or personal training.

Why Are Organizations Shifting Towards Gig Economy?

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, 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:

  • Reduce fixed costs- You need not pay them for benefits, training costs, onboarding costs, medical, or other HR programs; a paycheck covering just the work they are hired for. In fact, sometimes you don’t have to provide work equipment for giggers.

  • Address seasonal demands- Think of Christmas time! With the bulk of orders coming in, companies like Amazon and Flipkart always need contingent workers for different domains (delivering, support, tech, etc.) 

  • Onboard effectively- Any organization that encounters turnover realizes that the onboarding procedure can be expensive and tedious. You don’t need to complete several HR programs that include inductions and other meetings. Onboarding freelancers is an easier way to lock in outside resources. 

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.

What are the Most Affected Job Roles by the Gig Economy

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 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 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 gig workforce. The framework constitutes two essential parameters, which are the backbone of a contingent workforce. Higher magnitude of these parameters clearly depicts that the massive chunk of gig workers lie in this region and will continue to propel, going forward.

  1. Defined Work Requirement- Most of the organizations, be it small or large, opt for the contingent workforce when they have a clearly defined job role and responsibilities. For instance, companies generally go for hiring a full-time content writer, but if they need some content on a specific domain or product line quickly, they will prefer getting it done temporarily. Full job role definition also covers clearly defined financial aspects and incentive structure as well.
  2. Skill Expertise- If a company is hiring someone on an urgent basis to get a particular job done in a specific time, the level of expertise in that specific skill counts as a severe deciding factor. You can’t just get work done quickly without assuring that the candidate is actually capable of doing it within the given time framework. 

infographic for gig economy-29 (1)

 

Challenges faced by Organizations while working with Alternate Workers

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 which 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:  

  • Recruiting the Right One- Hiring gig workers might not be challenging for most of the organizations, but making sure the candidate hired is the perfect- is a big one. As most of the contingent workforce isn’t physically present in the offices,several questions arise when dealing with them- 
    Are they accountable?
    Will they have a long term association with the business?
    What if they leave without completing the work?

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.

  • Training & Engaging them- Employee turnover is indeed an alarming situation for any business, be it traditional employees or the freelancers. And when it’s high in case of gig workers, whatever training you put in may soon walk out the door as and when the gigger leaves. Although, neglecting to train them on essential business fronts may cost more due to higher hands-on operational blunders and mishap rates. This might lead to an organization with under-talented gig workers since they generally unite with less understanding and training than the permanent workers have. With all these confusions, the challenge that comes before an organization is- Is it worth investing in training and development of gig employees? 

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.

  • Managing the gig workers- Since they work relatively fewer hours, the quantity of alternate workers required to cover your work might be huge. What’s more, with a lot of workers, singular accountability becomes quite troublesome. And since they have comparatively lower levels of responsibility and commitment, unlike permanent workers, chances are that managing a chunk of gig workers becomes harder to oversee on an everyday premise. With regards to dealing and managing the contingent workforce, many businesses at present experience the ill effects of fragmented governance models, and manual frameworks and procedures. When it comes to measuring performance, in many cases, companies are using basic tools rather than data analytics, which again creates a problem for companies to manage their work. The fact that gig workers accompany encounters from various organizations, their vast and different point of views may add to the weakening of your current corporate culture.

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?

Possible Solutions to Capitalize on the Gig Economy

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:

  • Invest in Competency-based hiring- Clearly, the major challenge that businesses face is in hiring fit & perfect gig workers. And assessing them correctly is the only way out. Be aware of the actual job requirements and understand what you need to be looking for. There must be a unique competency framework aligned with business objectives for hiring contingent workforce. Your company must create a highly targeted competency-based technical assessments to assess the level of expertise the candidate possess for a particular job role. In addition to this, as the majority of them aren’t physically present, it becomes crucial to check the behavioral element as well. This is where behavioral assessments come into the picture. For better hiring, your company must leverage innovative and evidence-based assessments that measure relevant personality traits. Get to know the hidden information about a candidate that is critical in influencing the employee’s behavior at work. For instance, a significant portion of gig workers constitutes coders. Your organization must target to assess a wide variety of technical skills (Java, Android, SQL, etc.) quickly along with the behavioral element to picking the best out of the vast talent pool.

  • Revamp the entire training model- To get rid off the high turnover rate associated with the gig workers, a highly targeted individual-focused L&D becomes a lot more critical now. Your organization must identify and map the skill gaps in your gig workforce to design an effective training program. This would instill a sense of empowerment among your gig workforce. After training, look out for effective ways to better evaluate the performance of each candidate. Set a proper technique to evaluate the ROI of training interventions by evaluating the impact of training programs incorporated.

  • Engage with them- As a matter of fact, alternate workers have a higher chance of leaving until they are appropriately engaged. Build a detailed wiki that documents how to perform tasks, including the minutes (rules & regulations, invoicing, etc.). Make them understand where and how your business derives its revenue. Additionally, provide them visibility into how their work impacts the overall business growth.

“Give contractors the same respect you show your full-time workers.”

                                       -Alyssa Merwin, Senior Director Sales, LinkedIn

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 smaller section and that too, frequently. Your company must leverage the strength and benefits of live, online training for the best learning experience in shortest possible time and reasonable cost.

How Mercer | Mettl Helps 

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-

Hiring Your Gig Workers

  • Personality Assessments- Measure workplace behavior with innovative, evidence-based assessments that measure relevant personality traits and ensure a cultural and team fit. 
  • Aptitude Tests- Measure cognitive ability at work with insights on the candidate’s ability to acquire, retain, organize, and apply information in work environments.
  • Technical assessments-  With over 20,000+ coding questions in 32 languages, measure technical skills with precision. Covering a wide range of technical skills, such as front-end development, java, android and more, our library of programming challenges has a sharp focus on analyzing the coding skills and producing the results as actionable insights.
  • Dark Personality Tests- Measure and identify the key negative traits that impact the safety of employees, customers, and work culture as a whole. 

Training Your Gig Workers

  • Training Needs Identification- Curate the right training program for your organization by identifying your employee’s skill gaps with the help of advanced psychometrics and data analytics.
  •  Skill Proximity Index- Find the nearest trainable skills for every employee, thus eliminating redundancy and achieving maximum efficiency within the workforce.
  • Training Effectiveness- Evaluate the effectiveness of your corporate training programs through scientifically validated techniques.

Engaging Your Gig Workers

  • 360 Feedback- Gather structured feedback of your gig workforce to achieve employee developmental goals in an engaging and employee-centric manner.
  • Hackathons- Engage, innovate and collaborate with your gig workforce with a seamless, secure and candidate-centric platform. 

    

Topics: Human Resource Management

Originally published August 09 2019,updated September 14 2019

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