AJO Blog

 

AJO's Human Resources Leader Exchange (HRLE) met recently to discuss the benefits and challenges of today’s “Gig Economy,” the decades-long practice of hiring contractors, temporary workers, and consultants for short-term positions in an organization. They concluded with ideas and best practices for HR leaders.

 

AJO's Bill Accordino facilitated the meeting and introduced the group to the topic. “What is the gig economy to you?” he asked. Participants immediately spoke of freelance workers, consultants, temporary manufacturing workers, and project leaders.

 

The Bureau of Labor Statistics reported in May of 2017 that business services (notably the IT function), construction, education and health, and finance were the largest industries with alternative or “gig” workers. Retail, manufacturing, hospitality, and transportation fell into the second level.
 

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What are the Concerns of Companies and Workers?

• Companies want the best experts for the best job;
• Innovative people should be able to come and go as needed;
• What is the true cost of alternative employees; and
• Gig workers want more than work-life balance –they want freedom and autonomy. 

“Lyft and Uber are experiencing issues in California because the State is pushing for their people to be made employees,” said Bill. “USA Today also reported that Uber’s SEC-filing indicated that employing its workforce would affect its aim of achieving profitability. This is going to cause significant market disruption as companies want a mix of employees and contractors and many workers want the freedom of being independent contractors.”

 

“Gig employees don’t want to do goals and objectives,” said one meeting attendee. “They want to drive for Uber so they can pick up their kids after school or supplement a second job.”

The Gig Economy - Implications for HR

• Seasonal business needs. In some industries, such as manufacturing, the work can be seasonal resulting in a higher hourly rate for gig workers, but minus benefits. There is a double standard that can work for or against the company.
   
• Onboarding and offboarding have become difficult and differ for every type of employee – e.g, manufacturing temp, manufacturing employee, office temp, and office employee.
   
• Business continuity. When gig workers arrive with the necessary knowledge, but can’t stay past a certain period as a contractor, what does this do to the business outcome that the manager or company wants?

“Gig workers putting in a 40-hour week want some benefit options,” said one attendee. “Going to a point system that allows them to apply their points to certain benefit options may be a solution.”

“The downside to that business model is that keeping track of all the consultants might be like herding cats,” says Bill. “Consultants often have multiple clients and varying needs, making the coordination of a gig worker frustrating and sometimes difficult.”

• Workers won’t be sitting next to the same person for years, which may erode the feeling of family some people enjoy at work.
   
• There’s a lack of trust as gig workers know they can be released from an assignment quickly without the process and paperwork required for employee terminations.
   
• Some managers prefer gig workers because they have time to evaluate their fit with the project and the team.
   
• Compensation conversations do occur, especially among temp and hourly workers. Gig workers who reveal that they make more than employees can impact morale.

“We are seeing gig workers in more functional areas than just IT and operations,” says Bill. “It is spreading to marketing, sales, customer service, as well as other areas. How does this impact strategic workforce planning?”

• Workforce planning. Planning needs to be long term and short term, as well as more tightly integrated with the organization's culture.
   
• Hiring. Part of planning for gig workers is knowing where to find them. HR needs to be more aware of the internal gig network as well as agencies that specialize in sourcing them.
   
• Training. Current training models don’t address the differences between employees and gig workers. Temporary workers often don’t have access to all the training systems or the modules are not completely appropriate for both types of workers.
   
• Legal. HR and legal teams must work together to ensure current laws are followed and legal trends considered in workforce planning. The US Department of Labor regulations for the treatment of contract workers are complex and broad.  
   
• Best practices. It is going to be important to establish best practices for employee relations incidents such as discrimination claims. Knowing who does the investigation and what the repercussions are for the gig worker must be clearly communicated.
   
• Technology. Looking outside the box to resources like artificial intelligence could help HR further embrace the gig economy.

Great Gig Worker Ideas and Best Practices  

• An intranet notice board posted gig opportunities for employees. The opportunities may require 20 percent or all of the employee’s time. Some projects are an additional responsibility to the employee’s current full-time job. It is another method to engage the workforce and develop internal employees. The idea bubbled up through their Next-Gen Network, an employee resource group comprised primarily of millennials. 

“Managers may have an issue with it,” commented the meeting participant. “But everyone is going to have to think differently about the development of our own employees. We are moving to a culture of new ways of working. More experimenting, more skills for employees. It helps us think differently about our internal challenges. If we want to keep the future workforce employed and engaged, that is where it is going.”

• A Talent Incubator. Another attendee described a talent incubator – like an internal version of the television program Shark Tank – where employees present their ideas to other innovative and experienced coworkers. Their ideas must support product innovation, revenue stream or other company goals. The employee who is given the green light on an idea must then find an executive sponsor and a funder before putting a plan together for launch. The employee’s managers must relieve them of their responsibilities for a period of time, which can impact the remaining department’s workload. But the payback can be substantial to the company both culturally and financially.

• Developing an employee value proposition that works for both permanent and portfolio workers;
   
• Integrating contract terms and conditions and benefit creation to attract gig workers;
   
• Ensuring the right technology is in place to minimize the HR administrative burden; and
   
• Working out governance and risk management ground rules.

“As more people, from all generations, seek more career autonomy, time flexibility, work-life balance, and varied life-experiences, companies and their HR departments will need to evolve to maintain productivity, engage their workforce and exceed financial expectations,” says Bill. “No challenge can be left unsolved as we venture into the next wave of managing corporate America.”

• The Alternative Workforce: It’s Now Mainstream, 2019 Global Human Capital Trends by Deloitte
• The Gig Economy: The Complete Guide by Diane Mulcahy 
• Upwork.com: Freelancing in America 2019  
• Boarding Pass by PWC: Six Secrets to Gig Worker Productivity 
• Forbes, How The Gig Economy Is Reshaping Careers For The Next Generation
• Human Resources Executive, What Should We Learn from the Gig Hype​​

Gail Petersen is an experienced communicator providing clients with strategic planning, writing and project implementation to engage and maximize the impact of messaging on target audiences. She practices and promotes quality written communications, mentoring and collaboration in all her projects. She lives in Easton, PA with her husband and two house rabbits; is on the Board of the Safe Haven Rabbit Rescue; is the grant writer for a dog and cat shelter and edits nonfiction books.  

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