Attracting and engaging top talent has been one of the top priorities for organizations for the better part of the last decade. The bad news is that the challenge of managing talent is about to get tougher; but, the good news is that employers and leaders have an opportunity to update obsolete management models and rewrite the conventional employee-employer relationship. The one labor trend that can single-handedly change the way the masses work is the advent of the gig economy.
The rise of the gig economy refers to the growing contingent workforce that participates in organizations on project-basis, much like on-demand workers appointed to achieve specific results. These associations might last from as short as a few days, to several years, depending on the nature of the job. One McKinsey estimate puts the involvement of contingent workers as high as 40%, particularly in the USA and European nations. Let’s take a quick look at what this means for the HR, how organizations are adapting to these changes, the present challenges in the gig economy and the journey ahead.
The Gig Economy and HR
Interestingly, hiring a gig worker is no longer just about bringing down costs or fast-tracking processes. Experts believe that in order to retain organizational agility and recruit the best talent, employers have no option but to actively participate in the gig economy, or risk losing out on professionals with niche skills and expertise. In other words, organizations have no choice but to get on board with the current workforce trends. For HR, this means updating traditional job roles and recruitment processes to suit the need of the hour.
It is important to note that contingent workers are not just being employed in small firms or start-ups. As a matter of fact, several multi-national large-scale organizations have already been actively engaging with the contingent workforce. For instance, EY has a popular platform called ‘GigNow’ which dedicatedly recruits contingent workers for their projects. In order to attract the top talent, EY grants all freelances access to their vast learning platform as well. Other leading names like Samsung, Unilever, and P&G have also been increasingly turning to freelancers and gig workers. As per one report Oxford Internet Institute, as many as 20% of the Fortune 500 companies are working with Upwork, a leading online platform to hire gig workers and find the best talent. McKinsey suggests that using online talent platforms reduces the cost of hiring by as much as 7% and boosts the output by 9%. The report adds that such platforms are also being used for onboarding, engagement, feedback, and compensation, thus, providing comprehensive solutions to recruit, manage, and engage gig works.
Several start-ups and young organizations that have gig workers as an indispensable part of their business model (think Uber, Lyft, Deliveroo, and Amazon) often employ large numbers of contingent workers as independent ‘contractors’, thereby denying them the same rights as their full-time employees. This has set an unhealthy precedent, according to a report by The Guardian, in the business world, wherein the gig worker is often paid lower wages, has no job security, and is offered no benefits. Since the gig economy is still evolving, there aren’t enough safeguards – legal or otherwise – to prevent labor exploitation in the industry. Lack of objective compensation structures or benefit results in income instability, the risk of exploitation, and a high degree of vulnerability for the workers. Thus, the absence of a universally-acceptable rulebook on how to manage the gig economy and how to do so while complying with the law is the fundamental challenge that many employers and HR leaders face today.
Furthermore, organizations also struggle with regular talent challenges, like vetting the candidates and managing payroll and benefits for their gig workers. All people challenges like availability of talent, ensuring a cultural fit, measuring performance, and recognizing success are compounded in the gig economy by the virtue of the work arrangement that has lesser direct interaction and minimal on-boarding.
The roadmap ahead
The rapid expansion of the gig economy in the past few years will inevitably and permanently alter the conventional employee-employer dynamic in the business world. It is then imperative for employers, leaders, and HR personnel to actively focus on attracting and retaining the best talent. This involves suitably changing the employer branding strategy to cater to the contingent worker and create a unique Employer Value Proposition (EVP) to ensure compatibility with the changing labor trends.
The big question is, how do you engage workers that work remotely and assimilate them seamlessly in your organization? For starters, it would help if leaders and employers make an earnest attempt to understand the motivations and priorities of their contingent workers. Next, setting the right expectation is important; in other words, formalizing the role and responsibility with clearly-defined objectives, with measurable results is critical.
The fact that there are no set rules and models to engage the gig worker can be used to its advantage. HR leaders and employers should create a fair and performance-driven compensation model for contingent workers and design management practices that are flexible and inclusive. Depending on the nature of the work, a simple and effective communication channel should be used to stay connected with workers. Last, but far from least, cultivating a mutually respectful relationship and reaffirming the value they bring to the team or the project is important. Recognize their work and efforts, seek and provide feedback, and keep them apprised of the developments in the team and the company at large. The bottom line is that they should be visible and accessible like any other employee in the team.
At the end of the day, organizations will have to embrace the gig economy, alongside the benefits and challenges that come with it. In the near future, one can expect more companies to hire contingent workers, recognize their rights, and create specific roles for them in business-critical objectives. As companies look at gig workers to take over roles staffed by full-time resources and work rigorously towards hiring and retaining them, a significant restructuring of the current workforce management strategies and practices is inevitable. Rest assured, as we step into a new age of work, the journey for talent managers and HR leaders promises to be exciting and challenging in equal parts.