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Shifting Towards the Gig Economy: How Will This Impact HR Departments?

Gig economy impact hr departments

Read this blog to find out what the gig economy and flexible workforces means for HR departments around the world.

The gig economy is a catch-all term that encompasses everything from Uber and Lyft drivers to freelance workers, but what does this flexible workforce mean for human resources?

The gig economy is a growing trend that includes workers for ride-share services, portfolio workers, freelancers, and online brokering platforms. This shift has major implications for the modern workforce, and HR professionals will be the ones tasked with successfully incorporating gig workers into their organisations.

Although it accounts for a small portion of the current workforce, the trend is moving upwards. In fact, according to the Deloitte Global Millennial Survey 2019, millennials and Gen Z-ers state that freelance work appeals to them more than full-time jobs. A total of 84% of millennials and 81% of Gen Z-ers said they would consider joining the gig economy.

Given the current pandemic crisis, companies are in increasing need of agility. As more and more talent shifts to this new model in search of more control of their time, higher pay and greater flexibility, HR professionals will need to determine what that means for the future of talent recruitment, acquisition, and retention.

The gig economy and human cloud platforms

Defined broadly, the gig economy is talent acquired for a specific period of time. This is distinct from the sharing economy, which is when someone offers something for rent, but there’s no labour involved.

The software tools that allow the gig economy to run are called ‘human cloud platforms’. Employers are beginning to see the human cloud as a new way to get work done. Jobs are divided into projects or tasks within a virtual cloud of willing workers all over the world.

This new dynamic presents organisational challenges, but it also gives HR an opportunity to add value to the current workforce. For example, the traditional views on career development and talent acquisition could stand some change, and the gig economy has shifted leadership culture from command and control to collaboration and mentoring.

The gig economy also focuses more on a performance culture that’s based on contractors taking responsibility for their own work volume, compared to a performance-management approach with formal milestones and appraisals.

Some other challenges for HR include:

  • Managing a talent pool and developing employee value that works across permanent and gig economy workers.
  • Integrating contract terms and conditions that are appropriate for both types of workers.
  • Positioning a company as an employer of choice for contract workers.
  • Ensuring the proper technology is implemented to automate the onboarding process and reduce the burden on HR.
  • Managing quality control and choosing the highest-quality talent rather than the cheapest.

Changes to HR departments in the gig economy

Flexible workforce

One of the most significant impacts of the gig economy is the prioritising of the work/life balance. Work flexibility is no longer a perk of certain jobs, but a priority for many applicants.

For candidates in search of flexibility, the gig economy appeals in a way that traditional employers don’t. To address this challenge, employers need to adapt with flex time, remote opportunities, and holiday allowances to attract talent. For HR, this means adjusting benefits packages or implementing technology that makes remote work a possibility.

Determining gig economy roles

Attracting and retaining strong talent in full-time positions at the company should be the highest priority for HR professionals, but there’s no reason to ignore the growth of the gig economy. Companies that prepare for and embrace these changes will be the most desirable employers for the top talent in the future.

You may already have some gig workers in your company, such as freelancers or vendors. If so, you’re more prepared to adopt additional gig workers in the future, as you could always benefit from having more.

To start, identify the roles within the organisation that can adapt to the gig economy structure. Consider what services can be achieved on a contract or freelance basis, particularly with vacant positions. By doing so, you’re ensuring that you’re prepared if someone chooses to leave your organisation.

Independent workers, such as freelancers and contractors, typically have more engagement, satisfaction, innovation, and pride in their work than traditional employees. However, gig economy workers aren’t as committed to the companies they work for, especially if they have a full portfolio of 10 or more employers at one time.

This lack of commitment can be detrimental to your organisation, but you can prevent issues from arising by integrating these workers into your company. Introduce freelancers to multiple points of contact, include them in department communications, and give them access to communication channels. This will not only remove any feelings of exclusion, but it will also drive teamwork that benefits everyone.

Preparing for the gig economy

Addressing these challenges is imperative to attract gig workers and position your company as a preferred employer. Fortunately, many tools and apps are available to help you revamp and streamline your processes to deal with paperwork, negotiate contract terms, automate pay, and ensure compliance.

Productivity tools also help the entire organisation prepare for the future by providing the tools necessary for success. You can build an employee community and transform outdated intranet, build apps for different users to keep them collaborative, and engaged, and ensure that all employees are working toward their project goals.

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