What do Uber drivers, Grubhub delivery people, TaskRabbit taskers, Dolly movers, and Upwork freelancers have in common? Although they work in vastly different fields, they're all part of an independent workforce that's known collectively as the "gig economy."
Once a minority workforce, technology has made it possible for gig workers to move from the margins into the mainstream. In fact, research by TurboTax owner Intuit shows that there are currently some 4 million gig workers in the United States alone -- representing approximately 34 percent of the U.S. workforce. By 2020, that number is expected to be 7.7 million, or 43 percent of the total workforce.
The benefits the gig economy offers workers are obvious: increased flexibility, independence, and variety. What you might not realize, however, is that gig arrangements also can benefit employers. To find out how, Incentive spoke with gig economy expert Marion McGovern, author of Thriving in the Gig Economy: How to Capitalize and Compete in the New World of Work.
According to McGovern, employers that leverage the gig economy can realize big returns on their gig investments -- as long as they understand one very simple rule: Although they have a different legal status than full-time employees, gig workers have the same need for motivation, engagement, and recognition. Companies that want to avail themselves of the "new world of work" must therefore pivot from viewing gig workers as disposable to viewing them as indispensible. McGovern explains how:
First of all, what is the "gig economy," exactly?
The gig economy is all about gigs, and the term "gigs" dates back to the 1920s, when jazz musicians would play a club for two nights in one town and then play for a week at another club in another town. Today, a gig is work that is variable, of a certain duration, and done for multiple companies or clients. Gigs have been around in all sorts of disciplines forever. The reason we're talking about the gig economy now is because of the huge investments in technology platforms that have created a more efficient market for various talent disciplines. Some people who refer to the gig economy are talking only about work that is secured through large digital talent platforms like Uber, Lyft, or TaskRabbit. I am not one of those people. To me, anybody who is working independently -- whether they are getting work based on their reputation, through a digital platform like Upwork, or through a more traditional intermediary like a staffing company -- is a gig worker.
So the gig economy isn't restricted to on-demand workers like Uber drivers?
It's all flavors. There are the people who show up as your driver, bring you your dry cleaning, and deliver your Chinese food. But it's also copywriters, system developers, marketing analysts, and financial analysts. There also are a lot of consulting gigs where people are physically onsite. People don't always appreciate the breadth and depth of the gig economy; the type of work that is being done independently is staggering. It is everything from personal service workers -- massage therapists, tutors, and electricians -- to data scientists and lawyers. There is even a digital talent platform that is just for Ph.D. scientists; if you want to invest in a business that's got some cool new polymer, you can go on that website and find scientists who can explain that polymer to you.
So what is the advantage to an employer? Why might they hire a gig worker instead of a full-time employee?
There are a lot of reasons. It might be that they don't have the talent in house because it's a skill they don't need all the time. Sometimes it is to create knowledge management opportunities in your organization; if you bring somebody in and have them work with your employees, their knowledge can become embedded in your organization. There also are vacancy issues; instead of leaving a new mom's job vacant while she's on maternity leave, you can have a subordinate assume her position and bring someone in to cover that person's role.
What are the biggest mistakes you see employers, or clients, make in the gig economy?
A lot of companies will use the same recruiting process that they use for regular employees, and that's not always appropriate. With your regular employees, you're trying to find the person who has the right chemistry, so you might go through a fairly long interview process. In the independent talent world, workers have other options; if you take too long to decide that you want Jim to manage a project, Jim may be gone. So you need to have a different mindset. That mindset also applies to the criteria you use to screen people. I remember a client saying to me at one point that they didn't want to bring in a particular consultant because they didn't see a long-term fit with the organization. I was like, "It's a two-month project; long-term fit doesn't matter here."
The other thing that is, quite frankly, a pet peeve of mine is: Some people still have the idea that people who are working independently are doing it because they can't find a real job. There's a sense that their credentials, their capabilities, or their competencies are inferior. And that's really not the case. More than half of independent workers -- close to 70 percent -- are working independently by choice, not by default. They've made a bold career choice to work independently, and they have both the confidence and the competence to do that. We should honor that and make sure that people recognize that these are great resources that we are bringing into our organizations.
You said independent workers have choices. So what are they looking for? What kind of companies are they choosing as clients?
That's a great question, because I firmly believe that as this trend continues is going to be a "client of choice." What's going to make you that client? Providing good opportunities for challenging work is obviously important -- that's what most people want -- but there also are basic things like paying people on time. It's one thing to pay your office equipment vendor 60 or 90 days out; it's another thing to pay an individual 60 or 90 days out, because they've got rent to pay. So simple things like paying quickly matter.
What about engagement, incentives, rewards, and recognition? Do those things matter, too? Why or why not?
Yes, they do. There is a technical talent platform called Toptal that purports to have one of the toughest vetting processes ever: Only 3 percent of freelancers who apply to [join the platform] get in. One of the things they do every year is they have a sort of "Academy Awards" for their contractors. There's a big event and you can submit the projects you did for clients for awards. So yes, those things do matter.
Why? Well, it helps you attract better workers, for one. It also harmonizes with what you're already doing with your full-time employees. Think about it. Imagine you've got a team where your employees are going to be highly incented to finish a project -- maybe there's an enormous bonus pool that's going to be divided among those employees if they finish the project on time. Would the team perform better if you gave that carrot to everyone, even if some of them are independent workers? That's a question for the company to consider.
Quite frankly, there are other incentives, too, that are less expensive. Millennials who are out there in the gig economy, for example, want access to training. A lot of companies don't offer the kinds of training programs that a lot of boomers experienced back in the day when you went through a nine-month training program at Xerox or IBM. Allowing a consultant who is part of your team to take part in those kinds of training programs -- especially soft skills training programs -- is as much of a reward or incentive for many people as additional dollars would be.
Is it always incumbent on employers to offer incentives? Or is it also up to workers to ask for them?
I advise more consultants to think about different ways of being incented by virtue of the quality of their work. For example, I think too many people charge a straight hourly rate, or a straight project fee. But what about a project fee that has an incentive built into it? If the client really needs to get the project done by the end of June, what if you asked for an incentive to deliver it a week early? Or if your project is about cost reduction, what if you negotiate to share in a portion of the savings? Independent workers can create fee structures that have those sort of incentives built into them.
Finally, what would you like companies to know as they consider hiring gig workers?
Companies need to stop thinking in terms of people and start thinking in terms of work. It's not about hiring the right person in the marketing department; it's about accomplishing the workload of the marketing department. My favorite analogy is the treasurer of a large organization. He or she has all of these instruments they can use to manage their financial risk -- debt, equity, convertible debt, interest rate swaps, etc. There are lots of instruments in human resources, too, but people too often default to just hiring regular employees. I'd like companies to remember that there also are independent consultants and freelancers, professional services firms, and consulting firms that can do certain pieces of the work. You have to think about the work and how best to attack it.