How can you motivate and engage people who work for your business but aren’t actually employed by you? Jenny Perkins, Head of Engagement at Cirrus, looks at the rise of the gig economy and the challenges – and opportunities – it presents for employers.
There’s a lot of talk about the gig economy these days. Recent media coverage has led to a widespread perception of gig workers as mostly young and relatively unskilled. Research demonstrates that the reality is quite different. A study from Indeed indicates that Baby Boomers (those born between the mid-1940s and the mid-1960s) are more likely to embrace gig working than any other generation. In fact, they are 22% more likely than Millennials to be part of the gig economy. Another new study, from the Resolution Foundation, has found that 60% of the growth in gig working since 2009 has taken place in lucrative sectors such as advertising and banking.
So, the gig economy is not all centred around industry challengers such as Uber and Deliveroo. It is also having a significant impact on large, established businesses. While there has been criticism of gig workers’ lack of rights, there is also evidence to demonstrate that many enjoy the flexibility and choice that gig working provides.
The unprecedented growth of the gig economy presents many challenges for workers and for business leaders. It does of course present opportunities too. At the end of this post, I offer some tips for leaders on how to motivate and engage gig workers. Before we get to those, let’s explore some of those challenges and opportunities a bit more.
What is the gig economy?
The gig economy is characterised by the prevalence of contractors or freelancers, rather than permanent employees. Gig economy workers get paid for the ‘gigs’ they do, whether that’s building a website or delivering a pizza.
Diane Mulcahy is author of The Gig Economy. Writing in Harvard Business Review, she observes that, “Work is being disaggregated from jobs and reorganised into a variety of alternative arrangements, such as consulting projects, freelance assignments, and contract opportunities.”
Advocates of the gig economy claim that both workers and organisations benefit from enhanced flexibility and greater control.
The growth of the gig economy
Recent research from the University of Oxford identified the ‘online gig economy’ as a new labour market where employers use online labour platforms to engage workers for short-term or project-based work delivered over the internet. The Online Labour Index shows that employers in the United States are the biggest users of online platforms for recruiting freelance workers, representing 52% of all the vacancies posted, followed by the UK (6.3%), India (5.9%) and Australia (5.7%). Growth was fastest among UK employers.
In a recent EY survey, 50% of US organisations reported an increase in their use of gig workers over the past five years.
Recent Willis Towers Watson research found that Singapore is expecting a 59% growth in share of contingent workers over the next three years.
The UK’s Office for National Statistics (ONS) estimates that 15% of the British labour market is self-employed with an estimated 5 million people classified as gig workers. ONS figures show that 60% of self-employed people work in high-skilled managerial and professional roles.
The gig economy and business transformation
The gig economy is just one of the rapidly changing elements in our uncertain and unpredictable business environment. Dell’s latest Digital Transformation Index found that half of all business leaders simply don’t know what their industry will look like in three years’ time. Gartner’s latest CEO and Senior Business Executive Survey found that half of CEOs expect their industries to be substantially or unrecognisably transformed by digital. Our increasingly networked world is both enabling and driving the growth of the gig economy.
In this ever-changing world, the flexible nature of the gig economy offers significant benefits to employers. It is also becoming increasingly sophisticated. In the past, contingent workers have often been viewed as an additional resource used by organisations to address labour and skills shortages when needed. However, today’s gig workers can be central to business success. As part to the trend towards more mobile and virtual workforces, we are starting to see many more examples of effective integration where gig workers are an important component of the workforce.
A recent paper from the Australian industry employers association AiGroup, The emergence of the gig economy, predicts that as the gig economy continues to grow, traditional corporate structures will transform. Their research suggests that in many organisations a core team will champion the purpose and values of the company, while the majority of tasks are allocated to gig workers.
What does the gig economy mean for workers?
In a world where more and more people seek meaning from work as well as money, the gig economy offers opportunities for individuals to create rewarding, portfolio careers. However, while gig working can offer the luxury of choice to some, taking up a role in the gig economy can be a necessity for others.
The Gig Economy author Diane Mulcahy says that people who struggle most in the gig economy are corporate workers whose skills are widespread and less in demand. She cites roles such as executive assistants and bookkeepers, which are increasingly becoming automated or eliminated.
“Workers with specialised skills, deep expertise, or in-demand experience win in the gig economy,” says Mulcahy. “They can command attractive compensation, garner challenging and interesting work, and secure the ability to structure their own working lives. Workers who possess strong technical, management, leadership, or creative abilities are best positioned to take advantage of the opportunity to create a working life that incorporates flexibility, autonomy, and meaning.”
Recent EY research found that flexibility is the greatest perceived benefit of gig working, followed by working from home and control. A University of Chicago study, Work Schedule Flexibility: A Contributor to Happiness?, revealed that flexibility has a bigger impact on work satisfaction than either the total number of hours worked or income earned. While developing more relevant, sought-after skills may present a hurdle for some people, the benefits can be significant. As well as increasing employability, skills development can give individuals greater control over how, where and when they work.
Alex Rosenblat from the USA’s Data and Society Research Institute has carried out qualitative research into what motivates gig economy workers. She found that workers are driven by a range of motivations. While some have few other job opportunities, others want more control over their working life. Social connection can also be a motivator. This is particularly true for those who are less financially reliant on gig work.
Some workplace experts believe that the gig economy is part of a significant structural shift in the labour market where the gap between high and low-skilled employees is becoming increasingly wide.
Following some well-publicised cases of gig workers not always being treated well by the companies they work for, the UK government recently launched a Work and Pensions Select Committee inquiry into the gig economy. It is exploring how employment regulation and practices are keeping pace with the changing world of work.
Top tips for engaging workers in the gig economy
As the gig economy continues to grow at a considerable pace, here are some tips for how to engage gig workers and ensure that they are a valuable and integral part of your organisation.
1. Treat people as people rather than as resources. This is the number one, most important thing you can do. No matter how transient the relationship, don’t just think of gig workers as flexible resources. Take time to communicate with them on a human level and get to know them.
2. Ensure your employee value proposition (EVP) is attractive and engaging to gig workers as well as employees. Think about what your organisation offers in return for their skills and experience. Articulate and communicate your EVP wherever gig workers are most likely to find you.
3. Streamline the way you contract with gig workers.EY research found that 31% of US organisations have multiple vendor management systems. Bureaucracy is a barrier to engagement, so introduce simple and clear processes.
4. Create an induction process for gig workers. The EY research found that 55% of contingent workers are not ‘onboarded’. Gig workers benefit from induction as much as employees do. Even a pared-down induction process can help them to understand your organisation’s purpose, culture and goals, and to become an integral part of your business. This also applies when you are rolling out new business initiatives. Ensure that you involve gig workers and take them on the journey with you.
5. Offer opportunities for learning and development. Your organisation-wide L&D strategy should consider the needs of gig workers and the benefits you will gain from developing their skills.Consider part-funding any relevant training, or offering other sources of support such as access to an online knowledge portal.
6. Harness innovation.IBM research shows that independent workers are significantly more innovative than other employees. Researchers found that many successful organisations have established innovation teams which combine internal and external collaborators.
7. Use gig workers to catalyse change. Gig workers can be change agents, helping to highlight benefits to employed workers. They often bring fresh perspectives and can help overcome resistance to change within a legacy workforce. EY’s research found that 43% of US organisations find existing employees benefit from contingent workers’ skills transfer.
8. Include gig workers in company communications. You may need to have different levels of confidentiality, but sharing company news and seeking feedback from gig workers will help them feel engaged. Digital communication tools such as intranets, chat applications and social engagement platforms are particularly helpful for engaging gig workers in a mobile, geographically dispersed workforce.
9. Recognise contributions. Gig workers will be more engaged (and more productive) if they are aware of how they contribute. Offer (and seek) regular feedback, celebrate success, and demonstrate to both gig workers and employees how much their joint contributions matter.
10. Treat gig workers with respect. If you don’t, they may damage your reputation. If you do, they will be valuable advocates for your organisation.
At Cirrus, we are experts in engaging your people with your purpose and goals – whether those people are employed, freelance or contractors. If you’d like to know more, we’d love to talk to you. Please get in touch any time.