14th October, 2020
Still a relatively new trend in the labour market, the gig economy is nevertheless now a force to be reckoned with. So how does it work?
In the past ten years the gig economy has grown to become a rock-solid fixture in Australia’s workforce – and it shows no sign of slowing.
Employees in the gig economy – also referred to as the on-demand economy – are sourced only when required for work tasks, or a ‘gig’. You might be most familiar with these employees being classified as independent contractors or freelancers.
The most well-known example of the gig economy relates to large-scale online platforms such as Uber, Airtasker and Airbnb, where independent contractors are tasked with completing small jobs organised through mobile apps. Although these independent contractors do make up a large portion of the gig economy, this emerging workforce is actually far more flexible and complex than you might know.
Although popular, the term ‘on-demand worker’ can be a bit vague, so it’s helpful knowing what kinds of workers exist in the gig economy.
In Australia, the on-demand workforce is mainly made up of the following:
Because there’s considerable variability within these structures, the gig economy might mean very different things for people working in different pockets of the on-demand workforce.
For example, the hours of an UberEATS food delivery worker will be very different from those of a highly specialised contractor working on a large-scale project in the digital space.
In the case of the latter, the work that the contractor takes on may closely resemble a traditional work arrangement (such as full-time and part-time work hours), but their fixed-term contract will provide freedom that is rarely associated with ongoing work.
The on-demand workforce can scale effortlessly with the needs of an employer, so the roles and responsibilities of a contractor or freelancer will usually depend on the needs of an organisation.
By providing workers only as their services are needed, the gig economy creates a very lean and flexible workforce.
Such a workforce won’t benefit all organisations, of course, but it can be extremely valuable to those that exist in industries that constantly evolve and change, such as the tech and creative industries.
Such industries are highly reliant on fast-paced methodologies and industry experts and are also the organisations most likely to offer project-based work.
Statistics also confirm this thinking – a recent study commissioned by the Australian Industry Group found that the 32 percent of Australians undertaking freelance work worked in the following sectors:
Flexibility in these industries is quickly becoming the norm rather than the exception, and this shift has afforded organisations unprecedented agility in how they approach work. The best example of this is perhaps how the gig economy has allowed start-ups and mid-tier organisations to tap into resources only previously available to larger companies, such as highly-specialised professionals.
Businesses looking to benefit from the gig economy should be aware that getting the most out of on-demand workers requires consideration of both the positives and negatives.
Employers in bigger businesses can find a lot to like in adopting an on-demand workforce.
1. Lower costs
The costs of onboarding, training and employee benefits add up quickly, particularly for smaller organisations. Fortunately, on-demand workers often negate these costs as employers will be usually paying contractors exclusively for their labour.
Cost savings also extend to equipment and workspace – smaller, agile teams require less space and fewer tools, which can be a godsend for growing enterprises.
2. Rapid scaling
Businesses can add staff as required in a gig economy – a particularly valuable feature for organisations applying agile work practices. On-demand workers are ideal candidates for one-off projects or short-term contracts that would otherwise not be financially viable.
If projects permit, organisations unable to afford significant employee investment can also look to hiring remote contractors, as these employees will manage their own workspace and equipment.
3. Flexible access to workers
The gig economy provides organisations with access to a highly specialised pool of workers, making unusual or difficult projects much more feasible.
Short-term contracts mean organisations can encourage top-quality talent without having to blow their budgets. Short-term contracts also allow organisations to find new contractors if roles change or if contractors are found to be unsuitable for allocated roles.
Read: What is employee cost and how do you minimise it?
While there are a lot of benefits to be had for a well-prepared organisation, the gig-economy isn’t as fuss-free as many might have you think. As with any other way of working, there are also a few downsides worth acknowledging.
1. Unreliability and inconsistency
Finding the right contractor for the job can sometimes take some trial and error, and this can quickly lead to wasted resources. Screening processes are often not as rigorous when it comes to the gig economy, so it’s also possible to hire workers who have a poorer work ethic or are less reliable than you’d like.
How to manage this: Set expectations early and regularly monitor and update contractors throughout the term of their contract. Working with labour hire agencies and online platforms (like SideKicker, for instance) may offer benefits when it comes to screening applicants.
2. Complexity in hiring legislation
Organisations new to the gig economy will find they need to take the time to understand all the relevant regulations required to maintain contractors, as misunderstanding or misconstruing responsibilities can result in legal and financial headaches later down the line.
How to manage this: Research legal obligations related to on-demand work in your state or territory.
3. Poor employee cohesion
Working with an ever-changing roster of gig workers can be jarring, and permanent employees may occasionally struggle to work as efficiently as they’d like. This can also lead to company culture being compromised if ignored.
How to manage this: Introduce processes that help contractors and permanent staff collaborate more efficiently and take the time to train permanent staff in these processes where appropriate.
Read: Talent acquisition: Building a modern workforce
The gig workforce is well-suited to a wide variety of organisations and their needs, but effective implementation of on-demand workers requires a very thoughtful approach to certain key tools and processes.
Although flexible work opportunities have existed for some time, technology development has directly fuelled the exponential growth of the gig economy.
The on-demand workforce relies heavily on technology, so organisations wanting to make the most of gig workers should ideally have good technology infrastructure in place already. This preparation also feeds back into the agility of the entire organisation, on-demand workers or not, by allowing superior opportunities for collaboration and worker mobility.
1. Improve collaboration and mobility
Collaborative tools such as Slack can help teams better focus on specific projects.
For on-demand workers, integrating into these systems can help concentrate their focus to the projects they are assigned to and increase productivity to a great extent.
2. Uphold company culture
The temperamental nature of the gig economy makes it difficult for contractors to connect to company culture, and this disconnection can impact productivity.
Technology shifts communication away from email services and into platforms like Microsoft Teams to give gig workers increased visibility and more opportunities to connect with other permanent staff and project workers.
3. Making scaling simpler
Onboarding and infrastructure scaling has historically been very expensive and time-consuming, but the use of cloud-based software as a service (SaaS) apps, such as G Suite and Office 365, allows for fuss-free resource scaling.
4. Organising your processes
The flexibility demanded by the gig economy can place significant strain on unprepared administrations, so preparation is key to ensure your processes are up to snuff.
5. Change management
Management should be well-versed in the ins and outs of the gig economy and be prepared to effectively guide employees through expected changes.
6. Streamlined onboarding
Freelancers and contract workers require quick and seamless onboarding to perform efficiently – particularly when on short-term contracts – and processes should be set in motion to support this.
Although it might be tempting to have them work outside of your established business systems, this will eventually cause more problems than it solves.
Ideally, businesses should work on developing a ‘fast track’ to their onboarding systems, specifically designed for bringing in contract workers, bringing them up to speed with necessary processes and systems in short order
7. Unite departments
Onboarding contractors and freelancers is complex, and this is even more pronounced in organisations with poor communication. To streamline onboarding, organisations must unite IT and HR departments and have them support one another at every stage.
Likewise, technology considerations are also critical when it comes to improving the flow of key data in your organisation at the HR level. A well integrated business management software will allow both all workers to access centralised, real-time data that enables better collaboration and efficiency.
The gig economy is here to stay, and organisations looking to grow can find a lot to like in the flexibility and agility of the on-demand workforce.
It’s important to remember that the gig economy is as much about workers as it is organisations, so by supporting contractors, freelancers and labour hires and giving them the tools they need to engage and succeed, you’ll be sure to find your organisation quickly transformed.
Bring onboarding, rostering, timesheets and payroll together in one seamless solution with MYOB Advanced Workforce Management.