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How is the Gig Economy Affecting HR?
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By Aaron Green, Founder and CEO, Professional Staffing Group

As HR professionals, we have more than a passing interest in or curiosity about the gig economy. Defined broadly, when you “hire” a driver and car by using Uber or Lyft, you’ve accessed the gig economy. Said differently you’ve acquired talent for a specific period of time, paid for the service and provided a rating to help others. This is distinct from the “sharing economy” where someone may offer their apartment for rent on AirBnB but there is limited, or perhaps no, labor involved. While Uber and Lyft have made the hiring of a driver and a vehicle both commonplace and easy, the story is likely less clear as to how the gig economy will change the way we find work and the way we acquire talent and expertise within our organizations.

The software tools that enable the gig economy to run are referred to as Human Cloud Platforms. Many people use the term gig economy and the term human cloud platform interchangeably. And, more important than what we call them the state of readiness of the Human Cloud Platform or Gig Economy companies varies dramatically. Thus, as HR professionals, we are tasked with not only determining whether our organization should be accessing talent through the gig economy but also what offerings are mature enough that we should utilize them fully and what offerings are more experimental and should be treated as such.

When sizing the market of today, The Staffing Industry Analysts estimate that 45 million people participate in the gig economy with 5.5 million people employed as direct (ie. not through an agency) temporary employees, 23.5 million independent contractors, 9.7 million human cloud workers (note: these people may be a traditional employee at a company and may also run errands for others through Task Rabbit) and 9.5 million agency temporary employees. With some people being in more than one of the preceding categories at the same time, you’ll find the components add up to more than total. Looking to the future, PwC estimates that by 2020 the gig economy will be worth $63 billion globally. It’s a market that’s being driven by advances in technology, a desire to acquire some services through self-service means as well as the desire among workers to have flexibility in their careers.

This new dynamic poses obvious organizational challenges, but also provides the opportunity for HR to add value. For instance, traditional views on career development, reward and recognition, and talent and succession management could all be ripe for change. Some characterize the effect that the gig economy has on leadership culture as a shift from a “command-and-control” culture to one of collaboration, partnership and mentoring. Another effect is the change a performance-management approach based on formal appraisals to a performance culture based on individuals taking responsibility for their own output.

Alex Swarbrick of the U.K.-based organizational and workplace issues consultancy Roffey Park suggests that the key challenges for HR in the gig economy include:

• Managing a talent pool and developing an employee value proposition that works across a blend of permanent and portfolio workers.
• How to integrate contract terms and conditions into a cohesive, seamless whole and offer pertinent benefits and rewards – and become an employer of choice for “gig workers”.
• Ensuring that the right technology is in place to automate joining and leaving processes and ensure they are smooth and easy to manage so as not to increase the HR admin burden
• Working out what risk management and governance ground rules should be put in place for portfolio staff working for multiple employers, including rivals.
• Managing quality control and ensuring that contracts do not simply end up going to the cheapest rather than most reliable and/or best bidder.
• Line managers operating beneath the radar without being aware of working time, health and safety and minimum wage legislation.


As the CEO and founder of a business that provides staffing services to companies through New England, I’m excited by this change. Yes, it means our role as the proverbial “middle man” will evolve, but while this type of disruption can create risks, it also can create opportunities and it’s these opportunities to add value in new ways that is energizing our team. At present, we are exploring this new model and considering ways that we can provide qualified, vetted talent through an on-demand model.

My management team is also considering ways that we can use these technologies and apps to make the staffing process more efficient and effective. For example, we’re thinking about how a star based (5 stars for example) rating system could enable our clients to make more effective and efficient candidate selections by exposing them to ratings left by their peers on our platform rather than simply providing them with our opinion of the candidate.

Whatever your thoughts are on its other aspects, the on-demand model is proving to be a good way to attract talent. Last fall at the Staffing Industry Analysts’ first conference on Collaboration in the Gig Economy in Las Vegas, the CEO of Upwork Stephane Kasriel told attendees that 10,000 workers joined his site each day. That said, the number of openings being filled through these human cloud platforms can be a small fraction of the total number of people who are looking for

One of the ways that on-demand technology is being tested is among shift workers. Firms like Shift Gig and Jobble are creating marketplaces where workers can bid on workshifts. The human cloud platforms tend to do quite well with this job type where scheduling and basic vetting are critical factors but an indepth evaluation of expertise may be slightly less important. For example if you are hiring 10 bartenders for an event, finding 10 people who are reliable, available and good enough may be sufficient But, if I need a bar tender who will be creating their own signature cocktails on an ongoing basis, then a more traditional employer / employee relationship may be more appropriate. It also works well in industries – such as nursing – where candidates are highly vetted and licensed and where scheduling is critical.

How do these trends impact labor costs? Like any industry that has global reach, the gig economy exposes U.S. workers to competition from labor outside the country in a way that is still being fully understood but that is already reducing the compensation certain people can command. For example, if I am looking for a web designer, I may be comparing a designer from New York City with a designer who is located in eastern Europe with relatively similar skills but quite different compensation requirements. While it’s entirely separate topic, it’s critical that you ensure your human cloud platform partner follows all local labor laws where the employee is based so that you don’t inadvertently take on vicarious liability for your vendor’s negligence or disregard of local laws.

The gig economy sector is a bit like the wild west right now, but we can expect to see more regulations and worker protections in the near future.

Are you ready for the gig economy?

If you work at a larger organization, you may need a private talent cloud or other platform to integrate with your VMs, MSP and RPO technologies. These solutions can help deal with the paperwork, negotiate contract terms, manage a large number of external workers, automate pay and ensure labor compliance.

You may also want to look at your recruiting and retention programs to gauge whether they’re “freelancer-friendly.” Does your employer brand resonate with independent consultants and freelancers?

Some HR managers and recruiters are building a network of freelance talent, organized by expertise and past experience with the company in order to shorten the on-boarding process.

HR managers must also examine office culture to gauge whether it can support flexible work arrangements and enable employees to work from remote locations effectively by accessing and sharing the information they need to get their work done. Security is important, but so is access.

Efforts to create an inclusive work culture where gig economy workers are engaged and motivated means including them in all employee communications, rewards programs, and performance reviews.

Here’s my challenge to you: experiment with the gig economy yourself. Try hiring someone or putting yourself out for hire. It’s actually easier than many people think and in my experience, it’s kind of fun too.



 

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