Since the start of the pan­dem­ic, the gig econ­o­my has become more ubiq­ui­tous. Human Resources lead­ers need to under­stand the new kind of work­er attract­ed to the world of gigs, and learn how to make that kind of non-tra­di­tion­al work­er fit into their teams.

Some mis­tak­en­ly believe that the gig econ­o­my, also known as the shared econ­o­my, only refers to on-demand jobs like dri­ving for Uber or Lyft or mak­ing Ama­zon deliv­er­ies. How­ev­er, it is also applic­a­ble to white-col­lar jobs. It’s becom­ing a solu­tion for employ­ees, who need more flex­i­bil­i­ty, and employ­ers, who need tal­ent dur­ing a his­toric labor short­age. The HR Exchange Net­work’s State of HR Report revealed that HR lead­ers hold flex­i­ble work cul­ture as a top pri­or­i­ty, sec­ond only to employ­ee engage­ment and expe­ri­ence. Buy­ing into gig work might be a way to address both those priorities.

What Is the Gig Economy?

“The gig econ­o­my is a free mar­ket sys­tem in which tem­po­rary, flex­i­ble jobs are com­mon­place and com­pa­nies bring on inde­pen­dent con­trac­tors and free­lancers instead of full-time employ­ees, and in many cas­es, for short-term engage­ments,” accord­ing to Embro­ker.

A look at the num­bers demon­strates how impor­tant it is for HR lead­ers to pay atten­tion and get up to speed on how this new kind of work arrange­ment could influ­ence their busi­ness. By 2023, the glob­al gig econ­o­my is expect­ed to be a $455 bil­lion indus­try, accord­ing to Har­vard Busi­ness Review. Two mil­lion new work­ers joined the U.S. free­lance work­force in 2020. In fact, one in three work­ing Amer­i­cans rely on free­lanc­ing for all or part of their income. Gallup esti­mates rough­ly 57 mil­lion Amer­i­cans are gig work­ers, accord­ing to Forbes.

“The rapid­ly accel­er­at­ing growth of the gig econ­o­my rep­re­sents one of the most sig­nif­i­cant and all-encom­pass­ing chal­lenges faced by Human Resources pro­fes­sion­als,” accord­ing to SHRM. “The fun­da­men­tal ques­tion is whether Human Resources can demon­strate the agili­ty to lead the change in cul­ture, pro­grams, process­es, and poli­cies orig­i­nal­ly designed for work com­plet­ed by full-time employ­ees to a new era when more of the work is being com­plet­ed by a tal­ent port­fo­lio increas­ing­ly rep­re­sent­ed by con­tin­gent work­ers (also referred to as gig­sters, free agents, tem­po­rary help, agency work­ers, on-call work­ers, con­tract work­ers, inde­pen­dent con­trac­tors, or freelancers).”

Pros of the Gig Economy

Affordable Labor

A full-time employ­ee requires a salary and ben­e­fits. You have to make hefty invest­ments in train­ing and career pro­gres­sion. Hir­ing an on-demand work­er elim­i­nates the need for all that. You pay them per project or on an hourly basis for as long as you need them. They usu­al­ly can work remote­ly or only need to come into an office or place of busi­ness on a lim­it­ed basis.

Specific Skills or Talents

Some­times, you need an expert in an area for one or two projects and not on a reg­u­lar basis. Being able to hire con­tract work­ers as you need them means you can look for exact­ly what you need at that moment. You don’t nec­es­sar­i­ly have to wor­ry about well-round­ed skills like you might with a full-time hire.

Flexibility

Free­lancers and on-demand hires offer flex­i­bil­i­ty. Even if you’re renew­ing a con­tract with one of them on a reg­u­lar basis, you only have to pay them for the work they actu­al­ly do. You can turn to them when the work demands more help or when their par­tic­u­lar ser­vice will enhance outcomes.

Cons of the Gig Economy

Carousel of Workers

Team dynam­ics can be hard to pin down when you are always work­ing with dif­fer­ent peo­ple. Even if you con­sis­tent­ly work with the same free­lancers, they are not bound by the same par­tic­i­pa­tion expec­ta­tions as full-time work­ers. This can make it even more chal­leng­ing to define a cul­ture or help teams bet­ter collaborate.

Different Kind of Relationships

There’s more of a hier­ar­chy when you are work­ing with full-time employ­ees. Man­agers and super­vi­sors over­see their work and usu­al­ly pro­vide some sort of per­for­mance mea­sure­ments to track their progress. With free­lancers, you are their client. They are still work­ing for you, but it changes the dynam­ic of the relationship.

This becomes most com­pli­cat­ed with con­tin­gent work­ers, who work con­sis­tent­ly for a com­pa­ny but with­out job secu­ri­ty or tra­di­tion­al ben­e­fits. They do this for a num­ber of rea­sons, includ­ing hav­ing more free­dom over their sched­ules, being able to work for oth­ers, and being their own boss. As a result, the con­tract dic­tates their work more than the man­ag­er does. How­ev­er, the man­ag­er or com­pa­ny could end up being a dis­sat­is­fied cus­tomer, and con­tin­gent work­ers can be let go at any time and you don’t have to prove they deserved to be fired.

Lack of Routine

If you’re work­ing with a blend­ed team – full-time employ­ees and free­lancers or con­tin­gent work­ers – you might have a hard time cre­at­ing a sol­id sched­ule or rou­tine for the group. Poten­tial­ly you could still get the job done, but full-time employ­ees might feel incon­ve­nienced or maybe even a bit resent­ful. They have to be in one place for a cer­tain amount of time, where­as their free­lance coun­ter­parts are free to work on their own clock.

Obvi­ous­ly, there are pros and cons to the gig econ­o­my. But HR lead­ers can’t afford to ignore the fact that there is a soci­etal shift toward this kind of work­place, where peo­ple have more free­dom over their sched­ules, the kind of work they do, and even the rela­tion­ship they have with employ­ers. There’s still so much we have to fig­ure out when it comes to the gig economy.

“Online gig work has grown increas­ing­ly com­mon in recent years – and yet there’s still lim­it­ed under­stand­ing of how to effec­tive­ly sup­port these non-tra­di­tion­al work­ers,” accord­ing to Har­vard Busi­ness Review. “While gig work­ers can ben­e­fit from greater flex­i­bil­i­ty and auton­o­my than tra­di­tion­al employ­ees, they also face unique chal­lenges: less job secu­ri­ty, few­er resources for career devel­op­ment, and often, a strong sense of alien­ation and dif­fi­cul­ty find­ing mean­ing in their work.”

In fact, many reports have sug­gest­ed that HR lead­ers in the future will pro­vide access to resources regard­ing ben­e­fits like med­ical insur­ance instead of pay­ing for it as they would for a full-time employ­ee. Com­pa­nies may begin to sup­port co-work­ing spaces to pre­vent iso­la­tion of their con­tin­gent or free­lance work­ers. The point is that change is afoot, and HR lead­ers are paving the way for this new work paradigm.

By Francesca Di Meglio

Orig­i­nal­ly post­ed on HR Exchange Network