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what does the gig economy mean for your organization?

Posted by Yvette Rogier on Jul 11, 2017 7:42:48 AM

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You may be reading this on a laptop right now. Or like me, maybe on an iPad, or your cell phone. 

And while the act might seem so normal to you now, if you turned back time a few decades, I’m sure people would be amazed at the technology we wield so indifferently today. 

Just think of the capabilities of these amazing machines: they allow you to research an infinite number of topics on a whim, order a handmade product that would have normally been completely out of reach, and even talk to an entirely random person on the other side of the world. 

Though the internet and our smart devices have revolutionized how we spend our free time, who we maintain relationships with, and what we buy, it’s also changing the way we work. 

Thanks to the internet and increasingly powerful mobile devices, the prevalence of self-employed workers is on the rise. And if you are running a business, the shift towards a gig economy can create both opportunities - but also challenges for your organization.  

What is the Gig Economy?

You’ve probably heard the terms “freelancers,” “self-employed,” and “outside talent.” 

In essence,the gig economy is a way to describe the ever-growing shift towards workers choosing self-employment over the traditional 9 to 5 at a single company. 

This laissez-faire market is usually dominated by short-term contracts wherein the workers complete a specific project (or gig) and the employer pays the freelancer for the job. There is (usually) no promise for more work after the project is finished and both parties are free to go their own way upon completion. 

As mentioned earlier, the growing gig economy is due in part to improved technology. Depending on the type of work involved, many freelancers today are able to work entirely over the internet. Communication with clients, completing the work, and delivering the product can typically all be handled simply through a laptop or connected device. 

What’s more, the benefits of a gig economy lifestyle is increasingly more attractive - particularly for younger generations. Freedom to make your own business decisions, flexible hours, unlimited growth potential, and an unusually high rate of job satisfaction (84%!) are all widely agreed upon perks of being a freelancer. 

It’s no surprise, then, that there are somewhere between 20 - 30% of Americans are working as freelancers, while in Europe 15% of workers identify as independent  according to a McKinsey study. Beyond that, freelancers are also adding an impressive $715 billion annually to the economy with their work.

And while being a freelancer is one thing, employing one is entirely another. 


What a Gig Economy Means for Businesses

Businesses today are faced with a choice: either take advantage of the growing gig economy or find a way to stay competitive without it. This is a topic that comes up frequently with my customers, so I decided to take a look at some of the pros and cons of using freelancers at your company. Keep in mind that the magnitude of each changes dependent on your business. 

  • Pros
    • More Flexibility: One of the most notable benefits, utilizing freelancers lets you optimize your labor costs to meet the ever-changing demands of your business. If you know a peak season is coming up, you can opt to either hire and train a new employee to help out and then regret the decision after it’s slowed down, or you can bring in a freelancer to scale up where and when you need. 
    • Increased Scalability: If your business is looking for an approach that’s both flexible and scalable, it’s hard to beat the agility that a freelance talent pool can provide. Even if they are just used as placeholders until you bring on and train full-time employees to take their place, the quick availability of these self-employed professionals will give you greater scalability at an even quicker rate. 
    • Specialized Hiring: Freelancers tend to be experts in their field (at least the good ones are). As such, if the parameters of your project are well defined, you can bring in a specialist to knock out the job quicker than many full-time employees. 
  • Cons
    • Less Commitment: While this particular downfall is dependent on the personality and character of each individual freelancer, one drawback to the gig economy is using workers that aren’t necessarily tied to your company. In their eyes, you may be just another client rather than a 40 hour a week, 52 weeks a year, 20-year commitment. So, you may not experience the same level of dedication to overall company goals. 
    • Harder Training: One of the hardest parts of being a freelancer is getting a good read on your client. Whether it be accurately judging their tone of voice, interpreting their vague descriptions, or making choices based on what you think they’d like, there is always a learning curve. And if you cycle through different freelancers, each will come with their own period of adjustment. Full-time employees, on the other hand, will generally only need to be trained once. 
    • Less Control: And finally, working with freelancers is more of a collaboration than employment. This can be a tough characteristic to overcome for some employers. Don’t let it be the only reason not to use one, though. 
With the rise of the on-demand gig economy, there will be a significant impact on talent markets everywhere, and will impact your business whether you are in Mumbai or Berlin. Your talent strategies should fully embrace this change, as long term, it will help your organization become even more agile. As long as you develop a sound plan, and understand all risks, you will be able to leverage this talent pool to add value to your workforce.

Topics: workforce planning, flexible workforce, gig economy