How the Gig Economy is Impacting HR Decisions

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The gig economy is real and here, especially with the rise of a very diverse set of professionals. Independent consultants, temporary workers, moonlighters, freelancers—you name it and you will find a resource eager to take on such a work opportunity in every sector and domain. The gig economy presents advantages to both employers (payroll cost savings) and employees (flexibility and freedom). However, it presents a fundamental challenge, since recruiters would need to scout a new talent pool and turn to new employment models to make such employment a success.

The gig economy has shown tremendous growth in the US, with the rise of the Internet and mobile. According to a McKinsey survey in 2016, about 20-30% of the workforce in the US and EU belongs to this category. Specialized aggregators that cater to the requirements of this population, such as Upwork, Freelancer, TaskRabbit, etc. have come up, and are bringing together employers and candidates. Yet, established enterprises have their apprehensions about employing this “different” workforce.

On one hand, they are not confident about the commitment levels and quality delivered by these professionals. On the other hand, they are not sure about how to go about hiring this talent. In fact, a single biggest challenge that recruiters face in hiring talent from the gig pool is regarding how and from where to source them. Since most such professionals work remotely, they may not be available for traditional interviews. Moreover, very few recruiters are open to actively exploring the Freelance forums.

Another important consideration is the legal and regulatory challenges associated with categorizing such employees if hired. Last but not the least, enterprises just do not have the technological resources (infrastructure, software, etc.) to help them work in the manner they choose to, yet ensure constant communication and seamless collaboration with other teams. The result is that most HR departments shy away from embracing the gig economy and stick to traditional talent pools.

HR professionals must realize that the gig economy is here to stay, and they must not miss out on this significant talent pool that can add incremental value to the enterprise. The first step is to accept that doing so will involve a huge change, in people, processes, technology and most importantly, mindset. Hence, it is necessary for the senior management, especially the CHRO to support the move towards engaging with the gig talent pool.

Preparing for it starts with designing a new staffing model by analyzing the costs and benefits of such a move. Right from job requisition and posting, i.e. creating specialized job descriptions to sourcing strategies, hiring negotiations, and offer/contract management, HR must rethink every stage of the hiring chain.

Another critical element is investing in the right collaborative technologies and laying down communication norms for such workers. This must be done in collaboration with IT and business leaders. Moreover, efforts must be made to appeal to the freelancer by revisiting the employer branding and employee value proposition differently. Of course, all these moves must be balanced with the hiring strategy for full time, regular workers, else they may end up feeling insecure. The key to unlocking value from the gig workforce is to find the right balance between the freelance workforce and the regular workforce.

The most important aspect that HR must keep in mind for this change is to educate existing employees about the transformation, by coaching them and making them more accepting of this new staffing ideology. Only when freelancers and full-time professionals work together seamlessly, can this new staffing model succeed.