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Three Of the Biggest Misconceptions About the Gig Economy

Three Of the Biggest Misconceptions About the Gig Economy

The tech-led gig economy is supposedly revolutionizing work for Generations Y, Z and whatever comes next by converting full-time employees into freelancers and temporary contractors.

The US Census Bureau is currently collecting new data on the gig economy—its last survey of contingent workers was in 2005 due to a lack of funding—but a more recent study suggests 34 percent of Americans are now freelance or temporary workers. Elsewhere, a PwC report on the future of work estimated nearly half of Gen Zers and a third of Millennials said they were considering changing jobs in the next six months.

On the surface, it seems younger demographics want shorter-term positions—but it’s far more complicated than that. For instance, they also crave greater work-life balance and want to work for companies that care about their well-being, according to research done by Gallup. This introduces a complexity that has been a breeding ground for assumptions and misconceptions about how young people actually like to work.

There are, of course, some indisputable truths in the notion that our relationships to work are changing dramatically—but there are also a lot of myths, says Diane Mulcahy, a workforce consultant and the author of the popular book The Gig Economy. She helped us get to the bottom of some of the most pervasive misconceptions about the gig economy and its digital workforce.

Myth #1: Relying on freelancers will limit your company’s institutional knowledge.

There’s nothing more frustrating than reinventing the wheel. Most workplaces would agree that something—if not someone—has to stick around for long enough to keep a company on the right path. It used to be no problem finding people who wanted to stick with a company for their entire careers to fulfill that role.

That’s no longer the reality of the modern workforce, says Mulcahy. “The median tenure for someone under 35 is two to three years, so companies have to deal with a more dynamic workforce to begin with.”

The truth is, it will become harder over time to lock younger generations up into a single job for the remainder of their careers. It’s in organizations’ best interests to start leveraging technology and building a living knowledge base (like an internal Wikipedia, shared drives, and central repositories) to retain institutional history and codify operations.

Myth #2: Freelancers and contractors simply can’t fill certain mission-critical roles within a company.

While a freelance CEO may not be in the cards (yet), there’s already a long list of hugely important tasks that companies delegate to outsiders, says Mulcahy. “Companies outsource mission-critical things like financial audits, PR crisis management, and cybersecurity all the time. They regularly use external vendors to do incredibly important work,” she explains.

From an organizational viewpoint, managing a network of freelancers and contractors can still be a pain compared to hiring workers outright, but with more digital tools and modes of communication connecting us, the task is simpler than ever. This brings us to our third myth…

Myth #3: In-house, full-time employees work harder and are easier to control.

Hiring full-time workers may seem like a good way to ensure productivity, but as research from last year revealed, in-house employees spend eight hours of work time a week doing things unrelated to work.

Companies often tell Mulcahy, "We want full-time employees so we can control them.”

“In actual fact, how much control are you really exerting?” she asks. “Most companies manage by time place – by requiring employees to come to the office and sit at their desk every day. Yet companies gather very little data or information to understand and manage how productively, efficiently and effectively an employee is working.”

In an era of constant distractions, it may be unrealistic to expect your employees’ undivided attention. Perhaps that’s part of the reason why one of the main tenets of the gig economy—that is, paying people for the results they deliver, not their time in an office chair —has become an attractive business model.

In exchange for taking on considerable personal and financial risks by participating in the gig economy, Millennial workers expect to enjoy greater flexibility and a greater sense of purpose. In that sense, giving young gig workers an inch can get you a mile.

“Companies that succeed in the gig economy will be those that are able to attract independent workers,” says Mulcahy. “They will win the war for talent.”

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