How to Respond to the Impact of the Gig Economy

Share This Article

0 0 0 0

Is the gig economy good or bad for businesses, or is it even happening?

impact of gig economy

In 2016, experts said the gig economy was going to overtake traditional business models in the near future. People started paying closer attention to companies such as Uber and TaskRabbit that built their business models on flexible laborers.

Those same experts are recanting their analyses in 2019.

There’s only been one other debate in our history with this much emotional whiplash: the egg debate. We still don’t know if eggs are good or bad for us to this day.

I jest. But, is the gig economy healthy for businesses or not? Is it something that might negatively impact your business, or should you try and use it to your advantage?

In this article, we’ll hear from business owners on three ways the gig economy has affected their businesses, for better or worse.

Effect #1: The gig economy enables business agility

Carlos Suarez , chief design officer at Truxx, a truck-sharing service with a national driver network, is a gig job provider. He says his business has been impacted by the gig economy in two ways: supply chain and last-mile delivery.

“In both cases it’s the agility of these services that brings value and helps businesses respond in ways they were unable to not long ago,” Suarez says.

Small businesses that need fluidity in their business operations—such as temporary workers, one-time services, or occasional equipment use—should embrace the gig economy. They can use a gig provider for business trappings or services without incurring the capital cost of hiring permanent workers or owning the equipment.

The gig economy enables agility that allows smaller businesses to compete without providing the funds up front.

What to expect: Use gig ability to your advantage

Think of the gig economy as a lake full of fish. Just throw your hook out, take what you need, and release what you don’t intend to use.

You should use the gig economy if you:

  • Have to move inventory between multiple locations on an inconsistent basis
  • Need a temporary set of hands to help with a project
  • Want a service provided on an infrequent basis

Pro tip

If you’re planning on using the gig economy to move inventory around, make sure you have a solid inventory management system in place. Since you’re hiring individual contractors to move your goods, you need to be able to track where your goods are.

Effect #2: The gig economy competes with businesses for top talent

One effect that gigs have had on businesses is that potential new hires expect the flexibility of a gig job, even at traditional workplaces.

Workers expect more money

Ollie Smith, chief executive officer of ExpertSure, says he’s become increasingly aware of the negative effects of the gig economy on his business.

“While the aggressive growth which characterizes this ‘economy’ consumes an increasing amount of the talent pool with the flexible work-life balance it offers,” Smith says, “it has driven up wages for the top performers that I compete with larger businesses to attract.”

A study released in 2017 from JP Morgan Chase indicated that most gig workers are getting paid less than they were in 2013. The freedom of flexibility may be worth more to them than a high paycheck. One theory is that to give up the freedom the gig lifestyle offers, workers are asking for more money as a way to compensate for the imbalance.

Great employees are more difficult to find

“A direct consequence of the gig economy is that it has clearly reduced availability of quality talent in the market, and the increased remuneration which I must offer to continue to attract the aforementioned talent to my organization,” Smith says.

“The result of all this is the increased financial pressure that we feel as a small business in comparison to much bigger companies that can offer increased incentives with little or no added pressure to their finances.”

It’s easier to offer the world to an employee when you don’t have to fund a 401(k), healthcare, or other traditional benefits. Traditional workplaces will have a difficult time competing for highly talented individuals who have awesome gig opportunities on the table.

What to expect: Increased expectations from new hires

The long and short of the matter is this: An economy that has sustained low unemployment puts employees in the position to demand greater perks at their workplaces. You need to adjust your expectations or risk losing the most qualified talent on the market, which inevitably will hurt your competitive edge overall.

As a business owner, you’ve probably heard of work-life balance, but what that means is different to every employee. You should expect that employees will ask for things such as:

  • Unlimited PTO
  • Flexible work hours outside of the traditional “9 to 5”
  • Remote working
  • Stipends for education
  • Mental health days
  • Wellness activities at the office

Pro tip

If you’re planning on remaining competitive in today’s talent market, you should invest in benefits administration software. This will enable you to track how much providing a flexible work environment impacts your bottom line, as well as which incentives you’re offering to which employees.

Effect #3: The gig economy offers flexibility to more than just workers

“As a small business owner, I just brought in four new team members to our company last week,” says Reuben Yonatan, founder and CEO of GetVOIP. “How? The flexibility the gig economy offers isn’t just a good fit for enterprise-scale corporations.”

Trial periods for new hires

“I enjoy being able to trial contractors who I might like to hire full time,” Yonatan says.

“I can test their reliability, their skills, and whether or not they are a good fit for my budget—all before signing on paperwork that obligates me to provide health insurance, X months of employment, a severance package, etc.”

Yonatan said that the trial period also allows employees to see if they like a new employer before making a full commitment.

Flexible hiring for special projects

“Another way the gig economy has benefited my small company is that it gives us the flexibility to contract a specialist when we have need of one,” Yonatan says.

Yonatan contracts gig experts to complete special projects. He sets the expectation beforehand that the gig contract will not result in a full-time position, and allows his employees to focus on their jobs instead of getting stuck completing a project they either don’t want or aren’t a fit for.

What to expect: An increase in demand for talented gig workers

According to Gartner’s TalentNeuron analysis (full research available to Gartner clients), you should expect to compete for gig workers in the following markets:

Gig economy job demand by occupation in the U.S.

Pro tip

If you’re planning on a contract-to-hire plan with gig workers, you should invest in talent management software. This will help you track their development and manage their growth from a temporary worker to a full-time worker.

The gig economy isn’t as big as we thought it was going to be

But that doesn’t mean that you can completely write it off.

Gig workers and service providers enable many businesses to grow quickly with limited resources. They also can help businesses recover from bad hiring decisions with less fallout than a traditional hire.

Ultimately, you should view the gig economy as a shared resource pool to dip into when your business needs help. How much you use it depends on how much time and money you want to invest on individual projects. Would you rather just buy a few eggs for breakfast, or have to buy and raise a whole chicken?

Want to learn more about the latest tech trends?

We all want to stay on top of the newest trends; here’re a few articles to keep you in the loop for the rest of 2019:

Looking for Human Resource software? Check out Capterra's list of the best Human Resource software solutions.

Share This Article

About the Author

Avatar

Tirena Dingeldein

Follow on

Tirena Dingeldein is a former Lead Emerging Technology and Business Trends Analyst for Capterra.

Comments

No comments yet. Be the first!

Comment on this article:


Comment Guidelines:
All comments are moderated before publication and must meet our guidelines. Comments must be substantive, professional, and avoid self promotion. Moderators use discretion when approving comments.

For example, comments may not:
• Contain personal information like phone numbers or email addresses
• Be self-promotional or link to other websites
• Contain hateful or disparaging language
• Use fake names or spam content

Your privacy is important to us. Check out our Privacy Policy.