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HR Leaders - Are You at Peace with the Gig Economy?

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November 7th, 2019

- Updated on

November 12, 2019 - 2:52pm
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.
The Gig Economy - HR Weighs In

What are the Concerns of Companies and Workers?

When it comes to the integration of gig workers to the workforce, employers are concerned about cultural impacts, workforce productivity, and the financial bottom line.
These topics were clearly on the minds of all the meeting participants as they commented:
  • 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. 
The Gig Economy USA Today on September 6, 2019, cited a survey by Intuit in 2016, that “found more than 90% of polled on-demand workers prefer the flexibility and personal control they have, made possible by independent contract jobs.”
“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

Human Resources“Will regulation reverse the gig trend? Will it complicate company guidelines for gig employees and policies for regular employees? And what about HR professionals?” asked Bill. “Should we be more proactive or let regulation dictate our efforts?”
The group weighed in with many thoughtful issues:
  • 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?

More and more, companies need to address challenges that were not common with a homogenous employee workforce. For example, determining benefits and managing employee relations programs will need a less traditional and more innovative review.

“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.”
Organizations that have embraced the gig economy may be reaping the benefits too. They can offer their clients a strong bench of consultants that fit a specific project, have geographic diversity and provide managers who can’t or don’t want to hire a permanent employee with a specific skill set.
“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.”

Engagement and Culture - Considerations for Gig Worker Employment

Gig worker integrationThere is also the challenge of engagement. How do you encourage teamwork, leadership, and commitment with people who only expect to work for a short period of time? Or, with the employees who work with the contractors for a year only to discover one day they are left alone on a project and there has been no cross-training or knowledge transfer?
Participants brought up many cultural factors that they are seeing already.
  • 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.

The Future of HR and Strategic Workforce Planning in the Gig Economy

“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?”
Few companies seem to have a Best-in-Class approach to sourcing and managing their alternative workforce according to a Deloitte survey in 2019. Although, many companies are experiencing better business performance through the use of independent, gig and managed services workers.
Bill asked the group what do they need to do differently in HR to support the use of gig workers and what challenges or successes can they share. There was no shortage of conversation among attendees. Many thoughts flowed as the discussion got more lively.

Hiring and the Gig Economy

  • 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  

Attendees shared some of the initiatives at their companies that have helped manage the gig experience.
  • 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.

No Gig Economy Challenge Left Unsolved

Bill raised related topics for consideration including:

Gig workers

  • 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.”

Recommended Reading and References

HRLE LogoAbout the HR Leader Exchange (HRLE)
Senior HR leaders from diverse companies in the NJ and tristate area meet quarterly to share best practices and current and future trends. In this meeting, the group included representatives from Merck, Nice-Pak/PDI, Wyndham, Nestle, Hunter Douglas, BG Foods, Demant and AJO executives. Senior HR leaders are welcome to attend. Click here to learn more.

Gail Petersen - AJO BloggerGail 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.