For decades, an ideal job has been considered to be a full-time, 9 to 5 job with benefits. But this ideal is now being deconstructed to fit the new skill economy with new expectations.
An increasing number of organizations and workers are now shifting to contractual offers or gig economy.
A data report published by McKinsey revealed that between 20 to 30 percent of the workforce in the US and EU engage in contractual work. And a study by Gartner reported that over 70 percent of Indian businesses employed gig workers at least in the year 2018.
Gigs have been around for decades, even though the term ‘gig economy’ can be considered fairly new. A gig is anything that lasts for a short period and pays immediately (mostly). So, it wouldn’t be wrong to say that gigs have been around before the first industrial revolution as well. However, much has changed since, and hiring and managing in the digital world has never been easier.
Naturally, then, organizations have started to see the benefit and strategic value in employing gig workers. But does it suit every one and every role? The onus now falls on HR leaders and thinkers to determine if it is the right model for them.
Here are some of the benefits and risks of employing gig works to consider before making the decision.
Benefits of Hiring Gig Workers:
- Monetary Benefits
There are other monetary factors involved rather than just compensation when a person is onboarded, such as direct costs, benefits, sign-on bonuses, and several others.
Organizations can forego this expense by tapping into the gig market. They can assess the unique skills and experiences without incurring these costs. Not just that, costs involved in retention and managing a permanent employee, real estate costs could be saved as well.
- Diversity and Inclusiveness
Organizations can benefit from this by getting people from varied backgrounds, cultures, and geographies.
For instance, organizations would want the experience of an ageing workforce, which might not be open to working full time. But with gig-based structures, everyone would be able to benefit as there is no long-term engagement.
- Greater Flexibility
You can easily connect with someone regardless of their location, and there are a plethora of collaborative platforms that you can use to your benefit as well.
As a practice, contractual roles are easier to fill than full time roles. Businesses often want to assess new models and capabilities; they can undertake new projects with gig workers and assess the viability of it. They also get the flexibility to adjust their workforce based on their requirements.
For instance, Southwest Airlines Co. has about 55,000 permanent employees and 10,000 contractual employees, this helps the org protect its full-time employees from the fickle nature of the airline industry.
- Innovation
Gig workers add more agility in the work process, leaving more scope for innovation. They work for different organizations, learn different methods, and undertake new projects frequently, which makes them highly adaptable to agile working methods. Moreover, hiring gig workers also means a frequent exchange of knowledge and best applications.
Risks of Hiring Gig Workers:
- Legal Constraints
One of the global legal constraints have had led organizations paying millions and millions in fine is employee misclassification. Mistakenly (or otherwise) classifying an employee as a gig worker can lead to legal repercussions.
Furthermore, most of the organizations follow the policy of BYOD or Bring Your Own Device when it comes to hiring gig workers. That has proven to be tricky for quite a few. The lack of proper risk training, legal compliances, intellectual property rights, and lax cybersecurity puts you at risk. So, unless you have proper measures to monitor that, and you’re hiring for crucial roles, you may want to consider not going the gig economy route. - Reputation Management
Employer branding has never been more important. With people relying heavily on the image and branding, maintenance of employer brand is vital. However, in most scenarios, little to no investment is done on the part of employers to onboard them, which can harm the reputation. - Employee Engagement
Within a short span of onboarding contractual workers, they are expected to perform. This means the usual time taken to appraise someone of the organizational goals, culture, and knowledge is less, which may lead them to not be dedicated towards the job. It would be natural for your gig workers to feel distant from your organization, and perhaps not as productive. - Morale of the FTEs
Consider a place that just ramped up its contractual hiring, would that be worrisome to the existing FTEs of the same department? They might feel that the increase of investment in gig workers means layoff the FTEs, which could likely lead to attrition.
To avoid this, ensure there’s a proper communication plan, state your objectives, tell your employees what they’re being hired for in simple words. - Compensation
Gig workers expect to be paid in a short period, sometimes as soon as the work is done as well. If your accounts department or payroll process doesn’t allow that, it may deter contractual workers from working with you in the future. Compensation, in general, is a tricky topic for gig workers because they don’t get paid on a periodical basis. So, in case there’s a negative change in their compensation model, it may lead to sudden attrition.
If you’re still wondering which model to choose, we understand. This isn't a simple black or white decision and neither it is a decision you can take in a vacuum. There would always be a number of things to consider; with the ever-evolving landscape of the employment models, HR leaders must keep in mind the risks and benefits of it all.
How can iMocha help?
While hiring gig workers, especially, one must be careful about the skills they are expected to perform. iMocha is AI-powered Digital Skills Assessment platform has the strongest offering (2,000+ ready skills and Job-role based tests). We understand the changes in the skill world - digital transformation across the globe, technology evolving at a rapid pace, and a number of factors that make each role vulnerable to change or even extinction! We have the largest skills library in the world and provide the fastest response to custom skill test creation depending on the role you're hiring for.
