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Why Big Companies Should Rethink Their Approach to the Gig Economy

Why Big Companies Should Rethink Their Approach to the Gig Economy

With digital transformation sweeping across industries, the war for talent has never been more fierce, and it’s certainly never carried such vital consequences. Companies that don’t take advantage of the opportunities the Gig Economy offers to improve corporate performance and win the war for talent risk falling behind competitors that do. That’s because the Gig Economy offers human resources the opportunity to access the right talent at the right time, fill persistently open roles, and create a more robust culture of performance.

The Undeniable Value of the Gig Economy

In a recent study, Future Workplace and Field Nation interviewed 600 HR executives and found that the top three reasons for hiring independent workers included: 1) having a flexible team, 2) access to specific niche skills and expertise, and 3) the ability to scale work up and down in response to business needs. The results of this study highlight the important strategic ways that companies can benefit from incorporating independent workers into their workforce.

Being open to structuring a workforce that goes beyond the traditional full-time employee in a full-time job model can help companies find specific expertise and talent right when they need it. Companies that are launching a new product, entering a new market, or pursuing a new strategic initiative can look beyond their full-time employees and outside their local employment markets to access the specific expertise they need when they need it. Similarly, every company has a list of difficult-to-fill or persistently unfilled positions. Hiring independent workers can offer a solution to closing these open positions and overcoming the dearth of specific skills or expertise in a local labor market.

Finally, and perhaps most importantly, independent workers can support and amplify a company’s culture of performance. Because independent workers are hired and evaluated based on the results and value they deliver, not the time they spend in the office, or the effort they devote to internal politics, adding independent workers can help shift company culture to one that more explicitly values what matters (results and deliverables) over what doesn’t (office face time and politics).

An Important Shift in Perspective

Companies wed to the traditional – and increasingly outdated – model of hiring only full-time employees in full-time jobs limit and restrict their chances of success. In my work with large companies, I see several persistent myths and misconceptions that human resources executives hold about the Gig Economy that keep them from taking advantage of the opportunities it offers. When they have the opportunity to look deeper into the objective data about this huge macroeconomic shift, they often realize their fears about the Gig Economy have been overblown.

The True Breadth and Depth of the Gig Economy

There is a widespread lack of understanding of the true breadth and depth of the Gig Economy. In my work consulting to Fortune 500 companies, and in my book on The Gig Economy, I define anyone who is not a full-time employee in a full-time job as someone working in the Gig Economy. This includes a wide range of workers who are independent contractors, consultants, freelancers, and part-time and on-demand workers.

Data on Gig Economy workers is still nascent, but we know that the Gig Economy crosses all education and income levels, industries, and sectors. Even a casual review of labor platforms that match independent workers with projects reveals the breadth of the Gig Economy, including Catalant, for MBA graduates seeking consulting projects, Toptal, for software developers, designers, and finance experts, Axiom, for lawyers, and Upwork, which serves a wide range of workers including transcriptionists, personal assistants, marketers, copywriters, and editors.

In reality, the Gig Economy can offer companies a way to access the right talent at the right time across a range of roles and responsibilities, and across all income, education, and skill levels.

The Increasing Diversity of the Gig Economy Workforce

It’s true that an estimated 50% of Millennials work in the Gig Economy, most frequently by having a side gig or working independently in addition to their full-time job. But the Gig Economy is demographically much broader than 20-somethings. Estimates suggest that about 30-35% of Generation X is working in the Gig Economy, either through side gigs, or by striking out on their own to work independently or start their own consulting practice. Similarly, about 35% of Baby Boomers are active in the Gig Economy.

Many older workers find themselves technically at retirement age but realize they don’t have the financial resources to stop working completely. They need to continue working and generating income but don’t want the constraints and time commitment a full-time job requires. Older workers also increasingly eschew the notion of spending a decade and a half on the beach or the golf course, preferring a more active and engaged end of their career doing some type of meaningful work.

The truth is that Gig Economy workers represent all age ranges, and companies can find both older experienced and skilled independent contractors, as well as younger, more entry level workers.

The Surprising Volume of Knowledge Workers in the Gig Economy

About 20% of employees in the traditional jobs economy are high earners who make more than $100k per year. Similarly, about 20% of workers in the Gig Economy make six figures, and, among independent workers, these high earners are the fastest growing segment. This might seem like a surprising statistic, but upon reflection it makes sense that the workers most likely to strike out on their own and work independently are the ones who have the skills, experience, and expertise to make a good living doing so.

Related to levels of compensation, many companies believe that by hiring independent workers, they can save labor costs relative to hiring a full-time employee. This may be true in some cases, particularly in lower skill positions, but it is less likely to be true among independent workers who have in-demand skills and experience, and who can command high compensation and fully-loaded rates.

There’s no denying that many highly compensated workers with skills, experience, and expertise work in the Gig Economy.

Adapting to a more flexible workforce can offer companies more agility, options, and solutions than the traditional employee-in-a-job. Companies that win the war for talent and performance will be the ones that embrace a diverse, agile workforce made up of both independent and full-time workers.

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Diane Mulcahy is an Advisor to Aquent, the author of The Gig Economy (Harper Collins) and a frequent consultant to Fortune 500 companies and startups on the Gig Economy and the future of work. Learn more at www.dianemulcahy.com.

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