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Businesses get growing with the gig economy

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Woman freelancerThe gig economy isn’t just for rides anymore. While Uber and Lyft may have successfully leveraged the contingent workforce, organizations of all types are beginning to recognize the significant benefits of this engagement model to attract the workers they need to grow their business.

While the use of contract workers is not new, the numbers have been on the rise for over a decade as both organizations and individuals recognize the value of this workforce model. In fact, a national survey by the Freelancers Union and online freelance job board Upwork found that two-thirds of the 55 million Americans who freelanced in 2016 did so out of choice, up 10 points from 2014 levels. This year’s findings predict that the majority of the U.S. workforce will be freelancers within a decade (by 2027).

An Accenture report predicts that 43% of the U.S. workforce (60 million people) will be contingent by 2020, roughly four times the number of contingent workers in 2015 (15.5 million). By 2020, according to the recent International Data Corporation (IDC) report, IDC FutureScape: Worldwide Manufacturing Predictions 2018, augmented reality and mobile devices will drive the transition to the gig economy in the service industry, with “experts for hire” replacing 20% of dedicated customer and field service workers, starting with consumer durables and electronics.

Interestingly, according to a Mavenlink report that tracks white collar gig economy on-demand workforce trends, the biggest growth in the gig economy is coming from senior management and the C-Suite. Nearly half (47%) of respondents reported they are looking to hire contractors to fill management and senior executive roles, including C-Suite contractors. For these high-level contractors, or “supertemps” such as CFOs, general counsels and HR executives, employers value specialized degrees the most (35%) and a decade or more of experience (29%).

What’s driving this change in workforce models? There are a few core factors. First, talented workers including baby boomers, Gen Xers and millennials, are dropping out of the full-time labor force. They seek the flexibility that contingent work can provide. Second, globalization has made it easier to perform knowledge work from anywhere at any time and an increased use of business process outsourcing is providing employers the comfort level needed to do work with people outside geographic and employment boundaries. Finally, technology has been a critical factor in driving the growth of the gig economy which enables talent accessibility. Gig economy-driven technology platforms have proliferated including HelloTech and TaskRabbit, the latter of which boasts more than 60,000 freelance workers.

Indeed, employers are turning to online platforms as a way of matching gig workers to priority tasks. According to the Ardent Partners’ report, The 2017-2018 State of Contingent Workforce Management: The Convergence of Talent, Technology, and the Future of Work,” more than half (56%) of organizations are leveraging labor automation and online talent platforms when addressing talent requirements for a new business project. Many of the platforms specialize in specific verticals such as field service, industrial and blue-collar work, while others use unique algorithms to help make successful matches.

Best-in-class organizations are not only using online talent platforms but also mobile talent engagement apps (23%) and gamification modules (21%) as part of vendor-management system platforms. Some VMS systems also now align freelancer skillsets to the enterprise projects at hand, to enable direct-or self-sourcing.

There is a reason many organizations which once only sought traditional workers are turning their attention to a contingent workforce model. Doing so allows them to source niche skills which may not be required on a full-time basis. They can access top talent who’ve opted out of the traditional labor market and they can assess a contractor’s skill and cultural fit before bringing them on full time.

Steve Coman, director, Human Capital Management, Grant Thornton LLP, stressed that the need for flexibility and agility is causing organizations of all types, including mid-sized companies, to explore the gig workforce model. “The flexibility of mid-sized organizations is really in play here as they think about how best to staff priority initiatives, some which may be technical in nature or require specialized skills,” he said. “They are looking to band together teams that may work virtually so good leadership and team building processes will be critical so they can ramp up quickly and make adjustments as needed over the life of the project.”

Getting prepared to leverage the gig economyDespite the increasing interest in leveraging the gig economy, a key question remains. Are organizations prepared to support this new workforce? The Mavenlink report indicates 69% of organizations have inadequate support structures and policies for managing on-demand talent, and 77% state they do not understand what changes are required to better manage contractors. There still remains uncertainty among some organizations that contractors can deliver the goods or that contractors can be effectively on boarded.

However, with adequate preparation, your organization can take advantage of this emerging talent pool of talented knowledge workers. Here are some tips for adapting to modern workforce practices:

  • Clearly classify employees.
    “It’s important that middle market companies be very careful about the way they classify their employees,” Coman said. “Always think about putting an arm’s length relationships with contractors in how you recognize them, communicate with them and staff them. Make sure you have a clear demarcation point and that contractors are affiliated with you through a 1099 relationship. You want to avoid potential issues with co-employment and double counting.”

  • Define expectations for the role.
    Whether you’re recruiting contractors directly with individuals or with a third-party provider, it’s essential to define expectations for the role and develop a service-level agreement. Coman suggests that doing so will help organizations avoid scope creep and paying for services or skills that are not needed. “From a productivity standpoint, it’s important to think about the cost of acquiring this talent in terms of defining the ROI. Identify the specific deliverables for the contractor engagement to make sure you can measure progress and efficiency.”

  • Consider leveraging the crowdsourcing model.
    Crowdsourcing is being used effectively by organizations to not only source talent but to solve key business challenges. “Companies are turning to open source environments to ask independent contractors to come together to try and solve an issue they have not been able to resolve internally or for which they do not have dedicated resources,” Coman explained.

  • Steve Coman“You need to make sure gig economy workers feel engaged and purposefully attached to the organization.”
    Steve Coman,
    Director, Human Capital Management

  • Address internal resistance to new workforce models.
    Pivoting to a gig economy workforce model can pose challenges for some organizations relating to human resources practices and traditional recruitment models. These organizations need to consider how they can create an inclusive environment to provide gig economy workers a sense of ownership and belonging, Coman suggested. “You need to make sure gig economy workers feel engaged and purposefully attached to the organization.”

  • Tap into new talent sourcing options.
    Grant Thornton’s Coman also suggest that organizations need to step out of their comfort zone and work with organizations or leverage resources they’ve not historically considered. “If you’ve been hesitant to take a risk or work within a particular niche you haven’t been able to push yourself to pursue, think about engaging a LinkedIn group that may have an organization that’s already formed,” he said. “Tap into those resources and begin networking to get a better understanding of the diverse talent of the group and potential ways those individuals could interact with your organization. Get yourself out there and think about working with a group to help launch an idea or explore a new market.” Other options to consider include:
  • Nationwide talent networks. Organizations like Catalant, Business Talent Group, Work Market and Upwork among others make it significantly easier to find, vet and contract with freelance talent.
  • Local intermediaries. Many major cities have local intermediaries to help organizations connect with top contractors or freelance talent.
  • Company alumni. An organization’s own alumni base can also be a valuable resource. Retirees or former employees who left for more flexibility can be productive contractor workers as they are already familiar with the organization’s culture, processes and brand.

  • Consider engaging a consultant.
    Engage a human capital consultant to talk through pain points, identify what’s working and what’s not and determine best areas of the organization to use an outsourced recruitment model. “A consultant like those provided by Grant Thornton can help you understand where you could gain a better footprint into markets you may not be exploring right now,” Coman said.

  • Leverage technology.
    Investigate those technologies that can help you maximize the growth potential generated by exploring new workforce models. Coman suggested that “Organizations may be feeling a little timid about extending their workforce with these models due to hiring restrictions or other reasons but there are technologies and automation processes that can help improve efficiencies and productivity.” As an example, one tool allows candidates to respond more quickly to employers. “The average response to an email from an employer is 90 minutes but the average response to a text message is 60 seconds,” Coman explained. “Now that’s a game changer. If someone responds back to you in 60 seconds, they are probably very interested in the role. These tools open up many doors to potential talent pools to allow organizations to plan for near term and future workforce needs.”

  • Redesign traditional job descriptions.
    Increasingly, gig economy workers are being tapped to perform skills-based, value-added tasks which requires a new way of thinking about crafting job descriptions. Organizations can think about dividing work into skills-based tasks and incorporating them into job descriptions, processes and management.

  • Redesign employee evaluations and policy assessments.
    Existing internal policies and candidate assessment processes may not work well for contracted workers. Talent acquisition teams need to rethink their approach to assessment processes and job requirements, as well as benefits and policies for both on-site and off-site workers.

  • Define and communicate employer brand.
    Organizations that are interested in exploring the gig economy workforce model need to revisit their employer brand and value proposition to make sure it resonates with this new breed of contracted worker. The employer brand should be communicated in an authentic manner, not just to targeted gig workers but also to existing permanent employees. Focusing on the company culture and its people, organizations can foster a positive experience to existing and potential employees alike. Additionally, organizations need to think about how they can bring their brand to life in channels and platforms of interest to gig workers such as mobile-friendly job application and assessment tools, career sites, blogs and video sites.

It’s clear that the gig economy is here to stay and that the contingent workforce must necessarily figure into many organizations’ talent management strategies. Leveraging this workforce model can help organizations plan for and manage growth but it requires a collaborative effort and a new mindset.

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Contact: Steve ComanSteve Coman
Director, Human Capital Management
T +1 214 561 2374