How the Gig Economy Is Changing Employment
Today’s job market is changing at a staggering rate. The gig economy is reinventing how employers seek talent. In recent years freelancers have flooded the market, offering employers highly specialized skills at a fraction of the cost.
This is no fad either. In fact, we have created an entire market sector to facilitate and support this gig economy. From freelance business coaching to talent brokerage platforms, the gig economy is showing no signs of receding. The big question remains, is it right for my company?
To better understand if the gig economy is right for you, here are a list of pros and cons.
- Minimal Training: Not long ago, employers actually relished the idea of training a new employee. It was an opportunity to mold, develop and build loyalty. The cost of training a newcomer was seen as an investment in talent that would be realized over the course of the employee’s long career with the company. However, as the length of time in both jobs and careers is plummeting, employers are no longer realizing their returns, making training more of an expense, rather than an investment. Freelancers are already trained in the skills necessary to perform, thereby minimizing your costs.
- Proof of Skills: As the cost of labor increases, most businesses can ill afford the cost of an unproductive employee. With HR regulations tightening and the ability to verify past employment becoming more difficult, it seems anyone with a search engine can sound like an industry pro within a few hours. Most freelancers come with a list of clients, testimonials, and portfolio to back up their claims of experience and skills. Additionally, if the professional was found on a freelancer website, they’ll also have skills test scores available and a client driven rating.
- Minimal Onboarding Costs: Because gig economy hires are less of a financial investment, they also usually require less red tape and time to complete. As opposed to months of paper trails needed with traditional staff, if you are unhappy with your freelancer’s work, you simply end the contract. You also avoid the expenses of recruiting, onboarding, human resource filings, etc.
- Contract basis & Flexibility: This is probably the most attractive part of freelance work. Rather than hiring someone for a full time position, an employer can outsource work on a project or extremely part time basis. Rather than hiring a less skilled full time position, an employer can take a fraction of that budget and hire a more skilled freelancer to do the same work, at a better quality, in less time. Contracts also offer a very clear expectation. The payment is for achieving specific objectives and so theoretically, there are recourses if the client doesn’t get what they paid for. This is not so for traditional employees. Sure you have goals and expectations for your employees, and you can fire them if they don’t perform. However, good luck getting reimbursed for the time they wasted on the clock while in your employ. Another benefit for new businesses is the short term contract aspect. When first creating a role, you may be unsure of exactly what you need accomplished. Having short term contracts allows you to assess at the end of a contract and make responsibility, scope, and goal adjustments for the next round of contracts. Changing a position description for a traditional employee is much more difficult.
- Divided Attention: Whether or not you have multiple freelancers, you can be certain a freelancer has multiple clients. This can become a problem if the freelancer has overextended themselves or is working with your direct competitors. Having traditional employees eliminates the potential conflict of interest and ensures your company has their undivided attention. Also, you cannot control a freelancer’s time. If you suddenly need a deadline moved up, you cannot insist a freelancer bump you to the top of their list. They also set their own schedule, so their upcoming vacation may land right in the middle of your busy season.
- Budgeting Costs: If you’re new to freelance work, you can quickly find yourself overbudget. Unlike traditional employees, freelancers charge on a contract basis. These contracts are usually very explicit with regards to the deliverables and/or the time. For example, a content writer will charge per word, a graphic designer per image, or a bookkeeper per entry. This means every additional requirement, adjustment, revision, or modification will likely cost you more money. This is in stark contrast to a salaried employee with a general employment contract. Another note is that unlike a traditional employee, a freelancer is free to set their rates. It is not uncommon for freelancers to significantly increase their rates, without warning.
- Communication: Generally speaking, freelancers can significantly increase the productivity of your organization. However, there are areas that will likely suffer. When you have an employee in house, communicating with them is as simple as picking up the phone, sending an IM, or walking over to their desk. However, freelancers are not at your beck and call. They may take a day or two to return a phone call or e-mail, which could leave you in the lurch. Also, most freelancers work alone, rather than in collaboration with your in house teams. This means, when you loose a freelancer, it’s more difficult to understand or recreate the strategy or processes that said freelancer established for your organization. It’s not as easy as “getting with the team” when a traditional employee resigns.
- Turnover: If you thought the turnover rate of traditional employees was high, gig economy turnover rates will have you spinning. Because these gigs are so easy to come by and the digital world has gifted freelancers with an endless supply of clients, most freelancers don’t stick with a single client very long. As freelancers gain experience, they seek to add bigger and more established clients to their portfolio. It is rare to find a freelancer that is willing to remain with a client very long, while keeping the same general rates.
- Culture Gaps: One final con of hiring gig, is the culture gaps it can create for an organization. Translating your brand across products, messaging, competition, and internal culture can be difficult enough when everyone is attending the same meetings, getting the same memos, and looking at the same bulletin board. It’s exponentially more difficult to do so when these commonalities don’t exist. As a company, you want your customers to view your brand as one cohesive experience and when you have several independent components working separately, there is much more onus on internal management to make sure all the moving parts align in just the right way to produce that cohesive experience.
It’s a lot to think about, but if you are ready to take the plunge and hire gig, stay tuned for the next part in this series. We’ll walk you through the best ideas to leverage gig economy talent.
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