Evolving Role of HR: Adapting to an Emerging Gig Economy

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Necessity, Demand for Independence and Changing Workflows Are Shaking Up Standard Recruitment Processes

The world and communities within have always been in constant flux. Things change, technologies disrupt, and new systems replace redundant ones. The role of leadership through any fluctuation is to find stable ground. 2020 has been an exceptionally unsettling year. COVID-19 has thrown any semblance of familiarity and stability out the window.

Leaders, especially HR professionals, have their work cut out for them: from helping employees transition to remote work setups to managing distressed employee needs in the midst of a global lockdown, they have their plates and hands full. Along with drastic workplace changes, the recruitment policies of companies have also undergone a transformation in the current scenario.

Sudden lockdown measures worldwide have forced many companies to downsize, or worse, shut shop. Some estimates suggest that since the nationwide lockdown imposed in March 2020 in India, 10.8 million people have lost jobs, with many more taking pay cuts. The hospitality industry, including travel, tourism and entertainment, have been hit the worst.

In the face of a dwindling budget, hiring freezes and layoffs seem justified from an operational point of view, but logic and hope appeal that businesses will resume. After the pandemic cools off, organizations are likely to be staring at yet another HR problem: a talent deficit. A gap within the company means recruiters will have to seek fresh hands outside, but here’s the catch we’ve always known: the cost of new recruitment is at least 1.5-2 times the salary of an existing worker. According to The Society of Human Resource Management (SHRM) 2017 Talent Acquisition Benchmarking Report, 70% of companies take anywhere between one to four months to process a new hire.

Clearly, HR professionals have another challenge looming on the horizon. A vital piece in cracking this jigsaw puzzle could be the plug-and-play solution offered by gig workers.

The Gig Rejig

Since the Industrial Revolution, a full-time role with a single employer has been the defining characteristic of jobs. A binding contract gave manufacturers more control over the labour force as well as planning the process. Since then, stable, payroll-based arrangements have become commonplace in corporate setups.

However, the emergence of a pandemic has put the “gig economy”, a term coined by former New Yorker editor Tina Brown at the height of a financial crisis in 2009, back in view. Gig workers can fulfill quick contract requirements that companies may have while going easy on the costing.

Permanent workers, or full-time employees, join an organization in a specific position, without an expiry date in sight. The intention is to stick it out with the company and grow over the years. While this provides stability to both the company and the employee, it can be a costly affair for the former. A gig or contract worker, on the other hand, jumps on board for a specific project or assignment to provide the hirer with specific services for a certain period of time, at a predetermined price.

According to a McKinsey Global Institute report, about 20-30 percent of the working population in the United States and EU-15 countries is already part of the gig economy. As for India, reports estimate that 15 million freelancers are actively engaged in the gig economy, with new ones joining in every day.

The rise of service-based roles like that of delivery executives, consultants, web designers, bloggers, among others has made it conducive for both workers and organizations to consider independent positions. Even for more skilled roles like web development or real estate consulting, hiring gig workers has many positives. In fact, IT and programming roles are most commonly outsourced to freelancers.

An individual with a specific skill set required to complete a job can be hired on a short-term basis. Once the project is complete, the individual is free to move on and find another fit, while the company does not hold a hollow, burning expense on its balance sheet.

The digital world and current remote working practices have already set the stage for this shift in working practices. The growth of the gig economy, or independent, contract-based assignments holds a great deal of promise for parties on both ends of the deal.

Gig Economy in Five Statistics

● 0.3-0.5 percent of the total active world labour force engages in the gig economy (World Development Report, 2019)
● Gig transactions are estimated to grow by a 17 percent CAGR with a gross volume estimated at about $455B by 2023 (Mastercard Gig Economy Industry Outlook and Needs Assessment, 2019)
● 20-30 percent of the working population in the US and EU-15 countries participates in the gig economy (McKinsey Global Institute Report, 2016)
● Gig workers are likely to be young, with 38 percent of them aged between 18-34 years (The Gig Economy, Edison Research, 2018)
● India is the second-largest freelance market in the world, with 15 million gig workers (Future of Work in a Digital Era: The Potential and Challenges for Online Freelancing and Microwork in India, 2017)

The Appeal of Gigs to Giggers

For the millennials and Gen Zs living in a hyper-connected and aspirational world, the resurgence of the gig economy is a blessing in disguise. Contract-based roles give these workers the freedom to choose not only the kind of work they want to do, but also the hours. From flexible working hours and the ability to work from anywhere, the autonomy of contract-based work is appealing. This is especially conducive to those who need to work around study or family schedules. It also accommodates health issues where doctors’ appointments or travel restrictions previously impeded full-time commitments.

Flexibility is one side of the coin: the possibility to explore a range of avenues is a whole different incentive. A wide variety of jobs exist in the gig market. An individual no longer needs to box themselves into homogenous requirements of a full-time commitment to be either a company web developer or graphic designer: the world is their oyster to explore and don more than a single role.

The rise of remote working options, from digital spaces to offline or online coworking zones also allows giggers to connect with a diverse set of people. As gig workers lean on each other to utilize their best strengths, work completed is also more efficient and effective, with a steep learning curve accorded along the way.

However, it is presumptuous to assume that everyone in the gig economy is there by choice. While certainly a considerable proportion of giggers choose to have an independent career trajectory, for certain others, circumstances dictate the decision. When one looks at the workforce in India, it is constantly growing. On average, 4.75 million people enter the labour force every year. “Formal” jobs may not have the capacity to absorb such a massive spurt year on year, even without a global pandemic threatening the economy. This automatically steers wage seekers towards alternatives and contract-based roles.

A McKinsey Global Institute report classifies independent workers into four segments, depending on whether giggers adopt the role by choice or economic necessity:

Free agents: Workers whose primary source of income comes from independent, contractual gig work. Such giggers actively seek such positions and prefer it to permanent roles.

Casual earners: This section of giggers turn to freelance roles for supplementary income. They could have a traditional, full-time job elsewhere but pick up freewheeling assignments for extra money. Sometimes, students and retired individuals also turn to this avenue for money.

Reluctants: An economic necessity and a lack of other options forces certain individuals to take up contractual work. These individuals would prefer a stable job.

Financially-strapped: These giggers are much like casual earners, doing a side job for extra income. However, unlike their willing counterparts, they would prefer not to be putting in the extra hours.

The Business Benefit

A changing work dynamic means that organizations are also having to adapt to an evolving workforce’s demands, but that doesn’t mean it fails organizational requirements. Contract workers are good for company bottom lines, can fill essential skill gaps on short notice, and many times, bring new ideas to the table that may not have been explored before.

Cash-strapped startups often turn to gig workers when they need quality hands on board but cannot afford to pay a permanent recruit. Even small and medium enterprises looking to expand their footprint on a smaller budget can turn to freelancers for support. Companies that run on seasonal requirements or come up with sudden vacancies can benefit from onboarding workers on a need basis.

Contract workers bring a host of positive payoffs to a company’s workforce. For one, handling multiple jobs makes them skilled multitaskers and ready to adapt to any challenge. They are quick and usually have fast turnaround times. More importantly, they are not afraid to innovate.

Full-time employees know the pulse of a company. Although perhaps unintentionally, a long-term employee thinks homogeneously, and often in silos. A contract worker comes with fewer preconceived notions and an extensive and diverse experience that could translate into exciting new possibilities for the company.

Hiring skilled people for specific jobs not only saves money and boosts the quality of work performed, it also saves considerable time. Full-time recruitment processes can take months and drain essential resources, via training and acclimatizing the new hires into the organization. The gig economy has a faster turnaround time; contract workers can be onboarded within weeks, sometimes days, and require no essential training. They come with all skill sets handy for the job.

Democracy in the Gig Economy

Perhaps the most compelling argument for the gig economy is the level of democratization that exists in the process. In the present day, most gig positions are filled via online platforms. This creates a true pool of unique talent where only the most qualified person for a position gets the job, irrespective of where they come from. Geographic barriers no longer exist.

Otherwise prevalent biases, such as gender, ethnic or age biases are eschewed in the selection process as well. The demand is simply for creative talent. The gig economy creates a level-playing field, which is often not the case in full-time scenarios. Take, for instance, the glaring gender wage gap that exists in traditional jobs. Women earn only 77 cents for every dollar that a man earns. Gig work allows individuals to seek a just compensation for the work they do, thereby increasing their earning potential. A study from Hyperwallet suggested that 86% of female gig workers interviewed believed that being in the gig economy offered them an opportunity to paid at par with men.

The gig economy also opens doors for differently-abled people, as long as they are able to bring the requisite skill sets the company requires. What they can do becomes centerstage rather than what they cannot.

Once again, this diversity translates into direct monetary benefits for companies, apart from adding on goodwill. A 2017 Boston Consulting Group study found that the innovation driven via diverse work teams can increase revenue by as much as 19%.

According to a report titled The Future of Work is Anywhere - Gig Workforce by Noble House, 70% of recruiters hired gig workers at least once to tackle a large organization issue in 2018. Of those HR representatives surveyed, 45% said that they would turn to gig workers to enhance skills in their existing workforce, 39% would keep the costing incentive in mind and 10% said they would consider it for temporary requirements.

In a snapshot, here are the top 10 benefits that gig workers can bring to an organization:

1. Cost-effective option with no non-working employee draining your profits
2. Best fit to plug skill gaps
3. Quick-fix for vacant positions that need to be filled immediately
4. Can easily absorb seasonal work requirements or a sudden spurt in work
5. Super-fast hiring process
6. No training required for good quality work
7. Speedy turnaround time
8. Fresh ideas and perspectives
9. Can bring in more diversity into your organization
10. Great opportunity to test out a candidate for a future full-time vacancy

The Big Picture: HR Trends

Even among the top league executives, the buzz around gig work is evident. While the demand for remote working and flexibility has been on the cards for a while now, the COVID-19 pandemic has made the need for transition to agile workflows even more immediate.

Most chief human resource officers agree that three big waves will dominate work culture in the future: artificial intelligence and automation, a rapidly growing multigenerational work pool, and gig or flexi-workers. Let’s look at some of the key trends to look out for:

1. Increase of Artificial Intelligence

Artificial intelligence has permeated many streams in business, finding strong roots in technical as well as HR teams. Many mundane and repetitive tasks have been taken over by AI-driven software. Chatbots, for instance, can double as customer service executives as well as marketing tools. They are handy HR additions too. AI-driven software can screen more efficiently based on a set of parameters and identify the right candidate for jobs. They can also simplify interviews, automate schedules, conduct deep-dive background searches and gauge the overall value of a candidate in the organization.

While on one hand, AI has resulted in the shortening shelf life of many skilled positions, it has made contractual skilled hiring more attractive than ever before. CHROs believe that in the years to come, more people will be hired for niche roles that require a specific skill set rather than expected to juggle a number of vague organizational requirements.

2. Emphasis on Safety and Wellness

The primary role of HR is to improve employee experience. Ensuring safety and wellness of employees will become a key concern for HR staff. Once employees return to regular work schedules after the pandemic, it will become vital for HR to educate, regulate, and enforce safety norms to ensure every individual is secure and well. Stress-management and engagement programs for employees will become another key element of focus for HR.

With contract workers, there is no law or obligation to institute specific safety or wellness programs. Yet, as more gig workers become the norm, organizations might consider bringing them under the ambit of safety as well. However, even if that were the case, safety expenditure on gig workers is likely to be lower because they will not require benefits like workplace insurance.

3. More Takers for Remote Work

The global pandemic and lockdown ushered in remote working on a scale larger than anyone anticipated. On-ground conversation shows that the remote work culture is here to stay long after the pandemic blows over. By 2030, two-thirds of the workforce is likely to be comprised of millennials and Gen Zs. With a younger workforce that is keen on flexibility and independence, HR’s most pressing concern will be to align organizational needs with employee needs.

As Peter Drucker once said, “Organizational culture eats strategy for breakfast, lunch and dinner so don’t leave it unattended.” Organizations that are not providing an accommodative and flexible work culture are bound to be on the disadvantageous end. Making room for more contract and gig workers early on in the game can smoothen operations in the future.

4. Digital Upskilling and Reskilling

The world today is run by technology, and that is not going to change anytime soon. As evidenced by the COVID-19 crisis, a shocking majority of permanent workers in many businesses found it difficult to adapt to technical needs. While on one end employees struggled, managers and leaders found it equally challenging to manage teams remotely on the scale required. Therefore, keeping in mind that the business workplace is invariable going remote, HR will need to undertake the task of upskilling and reskilling key personnel.

Gig workers are often already well-versed with digital platforms and remote coordination. HR recruiters who look towards such contract workers for lesser critical tasks are more likely to achieve cost-effective and efficient results.

5. D&I Focus

While a diverse and inclusive workplace has been essential all along, the emphasis will only increase in the coming years. A number of social and professional discriminatory trends have emerged in the last few years that will need to be addressed with more vigour. From ethnic and racial prejudices to the #metoo movement that marginalized womxn, HR in all organizations will need to set the tone for inclusive work cultures.

The use of AI and technology for recruitment can solve some part of the problem. The other approach that can help weed out bias from the recruitment process is using a skills-based approach, as in the case with gig workers.

Gearing Up for the Shift

In the past few years, HR has gone from a support function to a strategic role in business. As companies realize that people are the backbone of a company, from employees to consumers, attitudes and cultures have shifted. With another culture shift looming on the horizon, HR teams need to have a plan to balance a regular and contingent workforce while maintaining optimum efficiency.

The first step is for HR professionals to sit down with top leadership and deconstruct job profiles within the company. Demarcating roles that need full-time personnel from those that can be filled with on-demand skilled workers will simplify the process. This can also help budget efficiently and narrow down on the best person for each job.

Defining brand narrative is imperative. Just like attracting clients, having a strong brand image will attract the best and brightest talent. Diversity and workplace ethics play into branding, as does pay and the professional treatment of contract workers. Remember that gig workers network: the better you treat them, the better for your brand.

Infrastructural investment, in the form of IT investments to support a flowing workforce, legal and compliance, performance measurement software for contractual workers, and looking into virtual reality options are some of the other areas worth looking into.

It’s a Whole New World

Outsourcing work to gig contractors has mutual benefits that cannot be ignored. From cost optimization to finding the best talent for suitable positions, the gig economy has opened up a world of avenues. It is the way forward to support a truly global workforce, breaking barriers and traditions.

It is also time for companies and policy makers to look more closely at nurturing the gig workforce. With the innovation and creativity they bring to companies, it is also imperative to consider providing them with key benefits that many of the traditional jobholders enjoy.

The key goal for HR executives at the turn of this decade should be to find arrangements that are a two-way street. Technology will be the biggest enabler for an agile and dynamic workforce, bringing together talents and resources that can team up to be go-getters in the contemporary world.

SOURCES

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https://www.assocham.org/userfiles/GIG%20REPORT_2020.pdf

https://www.investindia.gov.in/team-india-blogs/gig-economy-shaping-future-
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https://newsroom.mastercard.com/wp-content/uploads/2019/05/Gig-Economy-White-Paper-May-
2019.pdf

https://www.mckinsey.com/featured-insights/employment-and-growth/independent-work-choice-
necessity-and-the-gig-economy#

https://www.gartner.com/en/newsroom/press-releases/2020-02-05-gartner-identifies-six-trends-for-
chief-human-resourc

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