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The Gig Economy and How It’s Influencing Your Workforce [part 1]

Posted by Michael D. Haberman

gig economy 1

There is a growing movement in the United States, actually the world, of people working independently from traditional employment constraints. This “gig” economy, as it has come to be called, has its roots in the increasing use of freelance contractors and entrepreneurs. Although there have been some legal setbacks to the gig economy in the last couple of years, make no mistake—that train has left the station and there is no turning back. HR departments, their companies, governments, and employees themselves will have to adapt to this different way of working together.

A Definition

The term “gig economy” has been bandied about and most of us have heard it, but what is its official definition? According to the website WhatIs.com, “A gig economy is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements.” The concept in essence has been around for a long time. The recession of 2008 made working for yourself or on your own necessary for many people. Baby boomers losing jobs and Millennials unable to find work was the impetus for many people to go to work for themselves, today many people find it the most attractive way to work. It is estimated that nearly 40% of the working population is involved in the gig economy, either on a full-time or part-time basis.

Gig Economy Challenges

There are several sets of challenges for all parties dealing with a gig economy. Companies have challenges in finding workers. Workers have challenges in finding work that suits them and adapting to the process. And governments, both federal and state, have a hard time dealing with the legal aspects of a gig economy.

Challenges for HR

Companies are primarily used to hiring people to serve the role of full- or part-time employee, often referred to as W-2 employees. These companies have different benefit packages set up, depending on the classifications of employees and how many hours they work. Some companies have more experience dealing with contingent workers, often hired to fill temporary or special role positions. Of course, many companies have blurred those lines, often trying to avoid certain expenses associated with having employees. Thus we get temporary workers working for years at a time, and independent contractors who are anything but.

Imagine, however, that your business model has changed and now 40 to 50% or more of your workers are now working on a gig basis. This would change the structure of your recruitment function. It would have to be more agile. It would have to be more responsive. In order to handle the constant turnover of people and positions, it would have to be more tech-savvy and automated; that’s what skills assessment tools bring. Management would have to be in a constant evaluation mode in order to determine whether or not the work is being done, and done well, and whether or not that worker should be retained or rehired for another gig. The job of a manager would become almost constant job evaluation. Management hates doing that now, imagine how they would feel in this new world.

There would have to be a smoothly running system in place for hiring contract workers and insuring that you have the right people in the right place at the right time, and at the right cost. There would need to be much more coordination between HR and management than there is right now in many companies.

Stay tuned for the second part of this article, focusing on two more types of challenges the gig economy presents.
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About Michael D. Haberman

Author

Michael D. Haberman is Vice-President and co-founder of Omega HR Solutions, Inc., a consulting and services company offering complete Human Resources solutions. As the former founder and President of MDH Consulting, a Human Resources consulting firm, Mike has more than 35 years of experience in Human Resources, and he uses his broad-based background to help companies solve employee problems and deal with governmental compliance.

3 COMMENTS Join the discussion
  • Felicity J. July, 25, 2016

    The main challenge for companies is to identify the type of employee a company is aiming to work with and to create procedures and approaches in order to collaborate with them according to their role in the structure of the organization.

  • Edison Denters July, 25, 2016

    Although the gig economy is a new term in the industry, the movement is here for a while and the three parties implied (workers, companies and governments) still haven’t found the best way to work together and to take advantage of this solution in this digital environment.

  • Amelia E. July, 26, 2016

    Since more and more workers choose to work independently, and for companies it is difficult to find valuable, full-time help, the best solution in this environment is the right approach toward gig workers. For HR departments, this means adjusting the recruiting process and the relationship with both employees and gig workers.

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Guest July, 26, 2016

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