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Managing for success in the gig economy

November 18, 2016

Before the birth of the gig economy, working folk were pretty much either employed or self-employed. But with the emergence of the sharing economy those binary labels are looking less relevant and harder to apply. And the implications for employers are profound.

A smooth flight?

Arun Sundararajan, a professor at New York University’s Stern School of Business, says the ‘Uber debate’ – on whether the app’s drivers are employees or contractors – is masking a deeper issue in the US economy.

Sundararajan – author of The Sharing Economy – says that an increasing proportion of the US workforce no longer fits the traditional employee model. He suggests that a new relationship between individuals and institutions will soon supersede the model of full-time employment.

This new model – the “gig economy” – is where temporary positions and short-term engagements dominate employment. Seen positively, it empowers workers, allowing individuals greater power to organize their lives and to find a work-life balance that suits them. From this perspective, those with rare enough talents can now command the levels of pay and terms that reflect the values of the marketplace. Where demand exceeds supply – for example, in some hi-tech roles – this is certainly proving to be the case.

But where supply and demand are more equally balanced, the gig economy is seen as heralding the end of reliable employment, and it this environment that has spawned multiple court cases and legislation designed to protect workers’ rights. Whether it is class action lawsuits against Uber, unions seeking collective bargaining rights for delivery men and women, or San Francisco’s widely-copied Retail Workers Bill of Rights, the regulatory environment around work is changing.

This is a lot of turbulence in the employment space, and it’s not set to end any time soon. On the contrary, the gig economy is set to grow. A study by Intuit predicted that by 2020, 43% of American workers would be independent contractors, compared to 36% today and 17% a 25 years ago. That adds up to an estimated 7.6 million Americans will be regularly working as providers in the on-demand economy by 2020, more than doubling the total of 3.2 million of late 2015.

Managing staff during turbulence

All this spells growing uncertainty for employers, who want to know the legal implications of hiring staff (whether employed or not) in the future. The short answer is that there is likely to be more legislation, appearing piecemeal, to tackle different aspects of employment. As we shift from a world of sure, predictable employment to the more fluid gig economy, we can expect the administrative complications for organizations to grow.

As well as the legal side of this issue, HR has to learn how to service a workforce no longer homogenous in its hours, pay scales, and perks. The core of management and HR, including scheduling, costings, pay, and compliance will all become considerably more complicated.

In this complex, changing employment structure, organizations will likely turn to new tools to help them manage their workforce (from fully employed to contingent to casual) better. And, just as the gig economy is largely supported by Cloud-based apps, so such systems are likely to be Cloud-hosted and agile in nature. Whether the issue is dealing with new smart scheduling requirements or other legislation, they will reduce the load on the HR function by making transactional HR activity self-service. In fact, the complexity of new regulations and employment structures is likely to mean that it probably won’t be possible to handle tomorrow’s workforce any other way.

Good for all

The rise of the on-demand economy or gig economy is part of a shift in the way developed economies and their organizations operate. With no let-up in the pace of change, the challenges facing work and workers in the US in the 21st century are set to continue.

But done right, with smart workforce management, everyone benefits. Workers can plan their lives with security, knowing their rights are protected. Conversely, the enterprise can respond to market conditions faster with a flexible labor force, while being sure they are meeting their legal obligations. Underpinned by the right systems, the gig economy can be good for all.

Carrie Bradfield, Product Manager, Development, Infor

  • North America
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