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The Savvy Employer's Guide to the Gig Economy AN ON-DEMAND WORKFORCE GUIDE The Savvy Employer’s Guide to the Gig Economy The Savvy Employer’s Guide to the Gig Economy AN ON-DEMAND WORKFORCE GUIDE If there’s an iron law of business, it is that the world never stands still. Technology is always changing, and with it comes new business practices, capabilities, and expectations. The most successful businesses are the ones that make the most of new developments, adapting to changes in the market- place before competitors have a chance to do the same. The quicker you are to adapt, the better you can take advantage of developments that improve productivity, quality, and compliance. The most consequential change in the modern market is arguably the advent of the gig economy. The result of online marketing and a changing labor force, gigs open up new possibilities for firms that are looking for skilled workers. Companies of all stripes can benefit from the growing gig economy, and the sooner you learn how it works, the more you will get out of it. 2 | 7 The Savvy Employer’s Guide to the Gig Economy AN ON-DEMAND WORKFORCE GUIDE GAUGING GIGS The gig economy refers to the rise of temporary work assignments, or gigs. Whereas in traditional employment, a firm will hire an employee to do many tasks indefinitely, in the gig economy the firmhires someone to do a single job for a specific period of time. Gigs differ from traditional forms of employment in three main ways: Pay - Instead of earning hourly wages or a yearly salary, gig workers are usually paid according to the results of their labor. This can be a flat fee for completing the job, per word payments for writing and translation assign- ments, or pay tied to specific outcomes. Gig workers also usually do not receive health insurance or other benefits from their employers. Anonymity - Gig workers and employers often know little about each other; de- pending on the medium they use, they may not even know each other’s names. Open-Endedness - Gig workers and employers have no long-term obligations to each other, and can work together for as long or as short a time as they please. If an employer likes a gig worker’s product, they can continue to hire him or her for future assignments, but there is no need to do so if they decide not to. Temporary work in itself is nothing new, and some industries, such as construction, have always relied on temporary labor forces. What sets the modern gig economy apart is the sheer range of workers who are now willing to work on a temporary basis. From computer programmers to translators to marketers to travel writers, the list of workers who have es- chewed salaried positions for short-term gigs is vast, and will likely continue to grow as the gig economy develops. Employers now have a wider range of options for filling temporary positions at their firms. The expansion of the gig economy is primarily the result of the Internet, and in particular online marketing and payment tools. Before the Internet, it was difficult for employers and temporary workers to get in touch with each other, making gigs unrealistic except in certain specific industries. Thanks to online forums, however, employers can easily post job details, which all interested workers can easily view and apply for. Uber, for example, is an online forum for drivers; anyone who needs a ride can post a request there, and all drivers in the area can see it and pick them up. Online payment tools like PayPal and Venmo also allow employers to compensate temporary workers without any complications. Employers always benefit from more options, especially when those options expose them to a wider range of workers and labor arrangements. By taking full advantage of the gig economy, firms in all industries can reap productivity and quality benefits. 3 | 7 The Savvy Employer’s Guide to the Gig Economy AN ON-DEMAND WORKFORCE GUIDE BUSINESS BENEFITS Most businesses still rely on traditional hiring to recruit most of their workers. Although this process is valuable for certain purposes, it does expose your firm to a variety of inefficien- cies and perverse incentives. The gig economy offers a number of advantages, namely: Speed - Hiring new workers is a long and expensive process, and the more skilled or sensitive the job is, the harder it is to find the right person. Gig re- cruitment, on the other hand, usually takes a matter of minutes. Most gig sites will rate and vet workers for you, allowing you to quickly determine whether a worker has the skills and track record needed for the job. This allows you to obtain the talent you need without delay. Variety - Once you are fully integrated into the gig economy, you will have access to thousands of skilled workers in a wide range of fields. This is far more talent than you would ever be able to hire formally, giving you more options for your projects. If you are ever unsatisfied with a gig, or just want to try something new, you can easily find someone else to do it. Responsibility - Most businesses pay the vast majority of their employees by the hour, giving them little direct incentive to do their jobs efficiently. If anything, they have an incentive to work more slowly so that they can obtain the same pay for less effort. By contrast, gig workers are usually paid per word or per job, meaning that they are responsible for their own time; every minute they waste is a minute they aren’t earning money. Gig workers are thus far less likely to keep you waiting, allowing you to meet your goals ahead of schedule. Ratings - Gig workers live and die by the reviews and ratings of past clients. A good rating makes them more likely to attract new clients, while a poor rating will scare clients away and reduce their earnings. Gig workers thus need little motivation to follow your instructions to the letter, correct mistakes, and show you respect. Commitment - Skilled employees often demand contracts, meaning that you have to agree to pay them wages, benefits, and other compensation as long as your agreement is in effect. This makes it expensive to fire or censure your workers if you have a falling out. By contrast, gig workers have no spe- cial protections, allowing you to quickly jettison them if you discover they are not a good fit. 4 | 7 The Savvy Employer’s Guide to the Gig Economy AN ON-DEMAND WORKFORCE GUIDE Flexibility - Employees often have set schedules, and while you can ask them to stay late or work irregular hours, you have to do a lot to make it worth their while. Gig workers, however, are often available at all times of the day; if you need a job done between 12 and 3 AM, you can usually find someone who will do it. Internationality - Although it has always been possible to hire employees from other countries, doing so is an enormous hassle. You have to comply with the laws and regulations of both the other country and your own, which often requires you to navigate a foreign bureaucracy with little resemblance to that of the United States. The gig economy lets you do business across international borders with little red tape and minimal delays. The gig economy is particularly valuable if your company needs to do something that it doesn’t have much experience with. Many companies that do not specialize in program- ming, for example, occasionally will need to debug or add to the software that they rely on. Hiring a new employee just to do this would be expensive, especially if they don’t expect to ever need that employee’s services once the job is done. Vetting will also be a problem; if your company doesn’t have experience with this work, how can you tell whether the employee will do the job well? The gig economy eliminates all of these problems, letting you quickly get the talent you need without any additional expense or uncertainty. Besides hiring workers with skills you don’t normally need, the gig economy will also help you meet temporary increases in demand. Many businesses are seasonal. Travel mag- azines, for example, may temporarily need more writers during the winter and summer months, when more people will want to read their articles. If their current staff can’t write enough articles to keep up, it makes sense to enlist some freelance writers to make up the difference. They will thus be able to complete their workload during months of high demand without taking on extra expenses during months of low demand. For all of the gig economy’s advantages, however, it is not without its downsides. Before your business starts offering gigs, make sure that you: 5 | 7 The Savvy Employer’s Guide to the Gig Economy AN ON-DEMAND WORKFORCE GUIDE RECOGNIZE THE RISKS If there’s another iron law of business, it is that with every choice, some things are gained and others are lost. The gig economy brings flexibility, open-endedness, and a lack of commitment, all of which can be helpful in some contexts but disastrous in others. Before you begin to rely on gig workers, consider that doing so will come at the price of less: Engagement - What open-endedness gives, it also takes away. Lacking a contract makes it easier to get rid of workers if you no longer want to work with them, but it also makes those workers less engaged in the success of your company.
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