What is Gig Economy?
The "Sharing Economy" refers to an economic system where resources are easily shared within a digital ecosystem, allowing organizations to utilize online human capital for tasks, also known as "Gig Economy (Ganesh, 2020). The gig economy is gaining popularity due to increased mobility and remote work, allowing freelancers to work with employers worldwide and employers to select the best manpower from a larger pool than geographically available.
According to the Ganesh,
2020 Gig Economy workers characteristics as follow,
- Gig Workers complete their work as needed and on demand. There's no assurance that the work will continue.
- Work suppliers receive payment only for the products they produce.
- Work producers must utilize their capital equipment. For example, Uber mandates that its drivers possess their cars, and programmers must own computer hardware.
- An organization that is distinct from the people who will utilize the finished product, i.e., a middleman between buyers and suppliers, organizes and facilitates tasks.
- Digital intervention is utilized for commissioning, supervising, facilitating payments, and delivering completed jobs.
The notion of the gig economy includes a wide range of contingent job arrangements, like : Freelancers, Consultants, Independent contractors, professionals and temporary contract workers.
Why Employees select the Gig economy?
HR Challenges and Role in Gig economy
Talent Acquisition : HR teams should enhance talent acquisition processes, build a strong employer brand, improve job descriptions, and utilize the internet and social media to attract and retain gig workers. Project-based short-term projects may be more advantageous for gig workers compared to role-based projects (Raja, 2023).
Performance management: Managers may prioritize short-term employee retention over training, leading to a more transactional work environment and shorter measurement timelines for appraisal systems (Christmann and Luo, n.d.).
Benefits and Compensations: HR departments must explore alternative compensation packages for gig workers, such as group health plans, flexible payment schedules, or performance-based incentives, to attract and retain top talent in the gig economy (Training, 2024).
Foster a sense of community and belonging for gig workers: HR strategies for the gig economy should focus on creating a sense of community and inclusion for gig workers, rather than just managing logistics. This can be achieved by fostering a culture of diversity and respect, creating online communities, implementing recognition and rewards programs, maintaining clear communication channels, and offering relevant training and development opportunities. This approach can lead to improved project outcomes and higher retention rate (Admin, 2024).
Compliance with labor laws : Requiring HR professionals to stay informed and implement policies across regions to avoid penalties, lawsuits, and damage to company reputation.
Uber is a prime example; a recent court found that Uber's drivers are entitled to the national living wage and holiday pay since they cannot be categorized as self-employed, as Uber had desired.
Background Verification: HR teams require a streamlined onboarding process for gig workers, utilizing blockchain technologies for background verification and digital credentials to accurately assess their history and make hiring decisions (Virgil HR, 2023).
Communication and Collaboration : HR teams Managing a remote contingent workforce can be challenging due to language and culture barriers, requiring to treat workers equitably, maintain engagement, and align with company goals.
Invest in communication and collaboration tools to improve interactions between in-house and contingent workers, such as regular check-ins, virtual meetings, quality audits, and project management platforms (Tomson, 2023).
Real world scenarios adopting gig economy
Upwork: Global freelance marketplace connecting freelancers and businesses in various niches. It offers a user-friendly platform for freelancers to showcase skills and secure remote work projects, while promoting transparency and security through features like hourly tracking and dispute resolution.
Uber: a prominent gig economy business, connects independent drivers with passengers, offering flexibility and autonomy. Its innovative approach to self-employment has transformed the transportation industry, creating a network of gig workers and encouraging individuals to become entrepreneurs and achieve financial independence.
Conclusion
The gig economy has significantly transformed traditional HR practices by necessitating new approaches in talent acquisition, performance management, benefits and compensation, compliance, and background verification. Companies must adapt to these changes to effectively manage and retain gig workers. By embracing innovative technologies and flexible HR strategies, organizations can harness the potential of the gig economy to enhance their workforce and drive business growth.
References
Admin (2024). The Gig Economy and its Impact on HR Practices. [online] ANC Global. Available at: https://ancglobalhr.com/the-gig-economy-and-its-impact-on-hr-practices/.
Christmann, M. and Luo, A. (n.d.). Gig Economy: What It Means For HR. [online] Eddy. Available at: https://eddy.com/hr-encyclopedia/gig-economy/ [Accessed 31 Jul. 2024].
Ganesh, A. (2020). The Gig Economy: HR Perspective to managing platform. [online] Available at: file:///C:/Users/Lap.lk/Downloads/Dissertation_ResearchGate%20(1).pdf [Accessed 29 Jul. 2024].
Kempton, B. (2023). Gig Economy Statistics and Key Takeaways for 2024. [online] Available at: https://www.upwork.com/resources/gig-economy-statistics [Accessed 1 Aug. 2024]
Raja, S. (2023). Evolving role of HR: Adapting to an emerging gig economy. The Times of India. [online] 11 Mar. Available at: https://timesofindia.indiatimes.com/blogs/voices/evolving-role-of-hr-adapting-to-an-emerging-gig-economy/ [Accessed 31 Jul. 2024].
Training, A. (2024). HR Challenges in the Gig Economy. [online] Aurora Training Advantage. Available at: https://auroratrainingadvantage.com/articles/hr-challenges-gig-economy/ [Accessed 31 Jul. 2024].
Virgil HR. (2023). The Gig Economy: 6 Challenges HR Faces. [online] Available at: https://virgilhr.com/news/the-gig-economy-challenges-for-hr/#:~:text=HR%20teams%20need%20a%20streamlined [Accessed 31 Jul. 2024].
CivilsDaily. (2022). [Burning Issue] Gig Economy in India - Civilsdaily. [online] Available at: https://www.civilsdaily.com/burning-issue-gig-economy-in-india/ [Accessed 11 Aug. 2024].
Tomson, A. (2023c). The rise of gig workers: Adapting HR strategies for the contingent workforce. [online] Higginbotham. Available at: https://www.higginbotham.com/blog/the-rise-of-gig-workers/.
Well drafted. Good reading
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