The Gig Economy: What is it and Are You Ready?

gigeconomy-blogWhat is a Gig Economy?

In years past, the word “gig” meant a musician trying to land the next opportunity to play in front of others. In business, the definition of a “gig” or “on-demand” economy can vary depending on its context. One definition refers to customers bidding for specific services at the best price. Well-known companies in this space include Uber and Airbnb.

Another definition refers to individuals making a living off “gigs,” rather than being employed full-time for a specific organization. Workers provide their services for one or more employers, which gives the workers more flexibility. Traditionally, gig workers are known as freelancers or independent contractors. However, this definition can also include temporary, on-call, and part-time workers. Smart organizations recognize they can buy a specific skill set for a short period versus hiring workers as full-time employees.

The Gig Economy is on the Rise

While the gig economy is only a small percentage of the labor market, it is growing. A 2015 study by Intuit and Emergent Research estimates that approximately 7.6 million Americans will be regularly working as providers in the on-demand economy by 2020. This is more than double the 3.2 million workers estimated at the time of the study.

A few factors behind the growing trend of gig work include changing technology, Millennials in the workforce, and the need for organizations to save money. First, evolving technology means where, how, and when work gets done is changing. This allows employers to provide more flexibility, knowing that work can be done essentially anywhere. Second, Millennials have embraced the gig-worker mentality. Expected to make up the majority of the workforce by the year 2025, Millennials are less likely to embrace the traditional employee role fulfilled by so many generations before them. They tend to stay in jobs for shorter periods, value flexibility and work/life balance, and seem to be more open to self-employment. Lastly, organizations are starting to look at gig workers to save money. As technology evolves, many jobs take less time to perform. So hiring an individual for a shorter period to complete a project, versus hiring them into a full-time position, helps the company save on benefits, office space, and training.

Is HR Ready?

HR departments struggle with the gig economy. Many employers are not considering the rise of gig work when developing workforce planning projections for the organization. This may be because of quality-of-work concerns and a perception that gig workers are not engaged.

HR must also figure out how to manage a diverse workforce of both full-time employees and independent workers and how to attract gig workers to the organization. These workers have specialized skills and talents they can take anywhere. HR must differentiate the organization to become the employer of choice for this segment of the labor force. Finally, HR must review internal policies to ensure compliance with the law and continue to stay on top of legal developments as the gig economy continues to evolve.

The gig economy is here to stay. Stay abreast of this trend and take advantage of what it has to offer.