8 May 2017

Can you make the 'gig' economy work better for you?

Maybe the ideal business model is to have low fixed costs and high variable costs only associated when revenue streams arise?

The gig economy can be defined as an environment in which temporary positions are common and organisations contract with independent workers for short-term engagements. A recent report in People Management April 2017 suggests, almost a fifth (18%) of working-age people "would consider" some form of gig work in the future, which equates to almost eight million people across the UK. Chasing this though is a clamour for more employment rights called for to help ‘empower' gig workers. The report, by the Royal Society for the Encouragement of Arts, Manufactures and Commerce, revealed there are currently 1.1 million gig economy workers in the UK, a similar workforce size to NHS England.

How do you make it work for your business when looking to upscale without increasing fixed costs as you need to maintain flexibility as revenue streams vary?
A number of forces are driving the rise in short-term jobs, including office space and training. Also the digital age, the workforce is increasingly mobile and work can increasingly be done from anywhere, so that job and location are decoupled. That means that freelancers can improve work-life balance as they can select among temporary jobs and projects around the world, while employers can select the best individuals for specific projects from a larger pool than that available in any given area.

Digitization has also contributed directly to a decrease in jobs as software replaces some types of work and means that others take much less time. Other influences include financial pressures on businesses leading to further staff reductions and the entrance of the millennial generation into the workforce. The current reality is that people tend to change jobs several times throughout their working lives; the gig economy can be seen as an evolution of that trend.
The gig economy is part of a shifting cultural and business environment that also includes the sharing economy, the gift economy and the barter economy.

Why HR should embrace the gig economy
Rather than feel threatened by the gig economy, HR should tap into the opportunities it offers for harnessing talent and competitive advantage, says Acuity Coaching's Simon Coops. The gig economy has been heralded by a host of emerging online platforms that give access to work opportunities to freelance individuals and contractors.

Typical players include Lyft, Uber and Airbnb - essentially technology companies that have disrupted the traditional market by offering an improved service at lower cost. These innovations have created value and shaken up well-established service sectors largely to the benefit of consumers.

But is there something for the HR profession to learn here? Could some of this disruption and creativity be brought to bear on what we are being asked to deliver?

Threats and opportunities
The short answer is yes - despite claims that the gig economy is prospering at the moment because of lack of regulation and poor governance, there are signs that there are both threats and opportunities for HR and the organisations they serve.

The main threat is the disruption that comes from existing or new competitors tapping into the gig economy first; the opportunity is to beat them to it. The good news is that not everything about the gig economy is new. Chances are you are already tapping into it with contract workers at various levels - just as traditional taxi firms tended to use self-employed drivers.

The disruption, however, comes from a combination of:
• an organisational structure tailored to make the most out of the available resource;
• a proposition to the market that attracts and retains the right people;
• a different route to market for the skills you require; or
• the means to track and evaluate how individuals are used.

The existing ways employers exploit the gig economy are mostly tactical. They are a means to an end, and will not create competitive advantage because they only solve short-term problems and enable suppliers to take advantage of an unforeseen or unusual need.

Suppliers, meanwhile, take advantage of this by charging a hefty premium. At their worst, contractor workforces create discord and tension, because their lack of commitment and selfish behaviour are completely at odds with most corporate cultures.

Using gig economy workers properly creates a more flexible workforce and can:
• bring real expertise to bear in strategically important areas;
• enable downsized departments to function more effectively by flexing their resource levels;
• promote agility and creativity by bringing in exposure to individuals with different experiences;
• improve retention of key skills and experience by offering employment on an as needs basis;
• increase the number of ways talented people can engage with the organisation over their whole career;
• benefit the organisation's diversity goals by offering another flexible employment option.

Some more forward-thinking organisations are already launching channels to directly interact with the gig economy.

Making connections
PwC has launched "Talent Exchange", an online platform that directly connects independent professionals with PwC teams, for example. Freelancers register, upload their CVs, and then apply to work on the firm's client projects.

However technology on its own it will not work, unless it has been proven as a valuable channel to market. Just stuffing a database with individuals who would be interested in working on a slightly different basis is not enough.

Define the process
The answer probably lies in taking a recruitment project type approach where:
• leaders are canvassed for areas where they struggle to find resource, keen to find an alternative source and gain their commitment to try something new;
• a good specification for what a good candidate would look like is developed;
• an employment proposition is developed to communicate to the target audience which is attractive and deliverable;
• there is a screening process to select the best people;
• leaders are prompted on a regular basis to consider using the new resource; and
• there is a careful assessment of the performance of the individual and detailed feedback gained.

Once there is a track record, the information on the skills and performance can be made available online.

What will stop this happening is that it requires a big investment up front to deliver such a programme, and arguably there is no way that HR departments will be able to find the time to deliver something speculative.

However there will be a different type of supplier who will offer to deliver that whole process with no up-front cost, managing the whole service on a pay-as-you-go basis.

There is no doubt that new competitors in most markets will fuel their growth by making the best of the gig economy. Established organisations will need to make sure they don't get left behind.

Source: People Management