The gig economy: Be careful what you ask for

The gig economy is here and growing fast. It is estimated that within a few years over half of the workforce will be self-employed in it. Well, if that is the case, it must be a good thing, mustn’t it? Perhaps so. But, perhaps not.

The corporate perspective

During periods of recession or high competition, many organizations feel forced to take cost-cutting actions. Two areas often take the biggest hit – marketing expenditure and headcount. We do this despite decades of experience showing that such actions are rarely effective (reducing marketing, if it was any good to start with, reduces sales and thus increases the need for cost cutting; and, if “employees are our greatest asset,” getting rid of them is clearly a questionable strategy). 

But, the gig economy has provided corporations with a face-saving means of reducing headcount without fully losing access to the knowledge and skills they need. Indeed, they have access to the knowledge and skills, on demand, combined with the benefits of not having the individuals on the payroll… and all of the ancillary costs and bureaucracy that payroll entails. They can even bring on board new individuals (e.g., specialists) confident that if things don’t work out they simply won’t have to use such individuals again.

The gig economy has provided corporations with a face-saving means of reducing headcount without fully losing access to the knowledge and skills they need

The individual perspective

There are two categories of individuals attracted to the gig economy – those without a choice and those with a choice. 

Many in the former category are the fallout of the corporate downsizing and cost-cutting. For these individuals, faced with the difficulty of finding alternative permanent and full-time employment, working in the gig economy may be their only option.

However, many individuals do have a choice, and make a conscious decision to become part of the gig economy workforce. There can be many reasons why this is a preferred option including:

• Greater flexibility in working hours and location e.g., to cope with personal circumstances such as caring responsibilities;
• Work-life balance, especially when the consistency of earnings is not essential;
• Avoiding bad experiences of working in a corporate environment (even in the developed countries, we still face a severe shortage of quality managers and leaders);
• Increased earning potential. For some, self-employment offers the chance to achieve higher earnings than could be achieved in full-time corporate employment;
• Variety – the option to pick and choose the work to do.

So what?

At face value, it would appear to be a rare win-win - companies save on payroll and related costs, and most individuals can exercise choice. But is that really the case? My own experience and observations suggest that this may not be as positive a trend as we currently perceive it to be, for a number of reasons:

Most companies face a crisis of management – individuals are still promoted for excelling at something other than managing people and then, with minimal training and development, are expected to do so. Productivity, engagement, and attrition data show us that companies are falling well short in terms of the quality of their management - of staff who are permanently on the payroll! So, how can we expect those same individuals to manage individuals with whom they have less contact and over whom they have less influence?

Flexible working location and flexible hours are popular employee benefits that most organizations now offer to at least some of their employees. These benefits are believed to increase employee engagement, lead to increased productivity, and reduce attrition. But, at what cost? These are relatively early days and there is little robust research data to hand. However, I have seen many issues arising from such practices, which may prove to be more serious than currently thought. First, much of the research data I have seen has been collected relatively soon after implementation. I strongly suspect the positive conclusions may suffer from the Hawthorne Effect and, after time, we will see a decline in productivity and engagement as such working becomes the norm and gig workers are left more isolated.

Managing, even just communicating, virtually is not easy. Companies happily outsource, implement flexible working locations, form collaborative arrangements across geographical boundaries, create virtual project teams, etc … all without any training in how to communicate and collaborate in virtual environments. It is not simply a matter of choosing the communication software. This is a serious skill issue.

I have two particular concerns. My first concern is that we are already seeing the dramatic impact on the nature or style of interactions. The remoteness combined with the immediacy seems to fuel brutal, often negative, communications. I have recently seen this taking hold in a client where internal project managers started send curt, critical, and insensitive emails and texts to gig workers, using words and phrases that they would never use with staff they see face to face. 

Flexible working location and flexible hours are popular employee benefits that most organizations now offer to at least some of their employees. These benefits are believed to increase employee engagement, lead to increased productivity, and reduce attrition

My second concern relates to the quality or rigour of communications that take place and the impact that those have. My own research showed that, in face-to-face meetings with six or more people, at any instant in time, only 50 percent of those in attendance know what has just been said (as an aside, this is one reason that I work with my clients on how to run genuinely effective meetings). No wonder meetings are viewed so negatively by almost everyone! On video conferences, that figure drops to just over 33 percent and, on teleconferences, to less than 25 percent. Over time, this will take its toll!

So, is the growth in the gig economy a good thing or a bad thing? The jury is out. There are clearly benefits to be had, for individuals and for organizations. But, like with certain medications, with the cure come the side effects. And, it is too early to say what some of those might be. Time will tell.