Whatever you may think of the gig economy, it looks like it’s here to stay. Our survey, taken late last year, shows that gig workers (or the contingent workforce) is growing, with 60 percent of respondents saying they hired more gig workers last year compared with three years ago. And there’s no signs this trend is slowing down, with 42% expecting to hire more contingent workers in the future.
Up until now, few organisations have really thought about what this means for their overall reward strategy. Gig workers – and how they’re rewarded – have been largely quarantined from the rest of the workforce. With the impact of contingent workers growing, this fragmented approach can’t continue. Reward strategies need to evolve to encompass gig professionals as part of the overall reward strategy.
The dual-speed gig economy
While 46% said that gig workers save money for their organisations, the top two reasons given for hiring gig professionals weren’t about costs, they were about staffing-up for short-term projects and accessing expertise they didn’t have in-house. Even so, stories about underpaid gig workers – especially in the on-demand economy for drivers and food couriers – are still common and rightfully raise ethical questions.
The result is a dual-speed economy for gig workers with very different characteristics. Organisations need to consider how their overall talent and reward strategies can respectfully integrate these differences.
The gig economy employer market typically includes lower level jobs that usually don’t require a degree qualification. The jobs in this pool are characterised by routine work, high competition and no shortage of workers. Workers get the usual gig flexibility, but with lower pay and little security. They’re paid based on the job requirements, rather than what they personally bring to the job and are usually hired on a ‘per project’ basis or for a defined period of time, with the aim of driving cost savings. With an excess of candidates in this group, there’s little pressure to increase pay.
In contrast, the gig economy employee market is characterised by highly-skilled workers who are in high demand. Think STEM, social media, cyber security and other digital fields. These workers are normally paid for their personal skills and capabilities and may work remotely. Competition for this group is fierce and companies must offer competitive compensation to secure the talent needed for business-critical projects. It’s an employees’ market for these gig workers, and the flexibility and alternative work arrangements they seek do not come at a price.
Four ways to make the move from tactical to strategic
While the gig economy trend is still relatively new, the shift is already happening from tactical to strategic, from cost savings to investment in talent. These four actions will help ensure your reward strategy reflects this shift.
- Be clear: Organisations need to be able to articulate why they hire contingent workers and what part they will play in the organisation.
- Be transparent: HR and business leaders need to be aligned on a coherent strategy for communicating the different ways employees are compensated—and why that’s okay—is necessary if companies are to mitigate some of the risks associated with the gig economy.
- Increase respect and recognition: Just as for their traditional workforce, companies need to recognise their contingent workers as individuals, empower them to make decisions to do their job better, check in regularly with them to stay aligned and reward them fairly and competitively.
- Promote collaboration: Making the most of the expertise of gig workers shouldn’t just be limited to the specific project. Look beyond the project and help contingent and non-contingent employees alike to gain knowledge and experience from each other through working in cross-unit, cross-border teams
For more insights into the gig economy, watch the recent panel discussion on this topic hosted by Korn Ferry alongside research and consulting firm ISG.