Integrating a Traditional Business into the Nontraditional Gig Economy: An ExampleBy Ellie Walburg on July 10, 2019
Author's Note: This post is written by guest contributor Dr. Stephen Carlton, adjunct faculty member for Cornerstone University's Professional & Graduate Studies division. Stephen teaches a variety of courses in business, technology, project management and organizational behavior.
From Uber and Lyft to Upwork and TaskRabbit to UberEats and GrubHub, the freelance "gig economy" has grown in popularity and usage for both consumers and those looking for side hustle opportunities.
What is a "gig economy"?
The gig economy refers to the trend where employees are in temporary or freelance positions rather than a traditional employer-employee relationship.
Depending on your source, this is either a great development where employees are empowered to pursue a variety and multitude of opportunities or a dark exploitation of workers that cannot get full-time employment with stability and benefits. Both perspectives can be true, all depending on a worker's circumstances, skill set and desired lifestyle.
The gig economy trend is fueled by the internet and social media connectivity which allows these on-demand workers access to remote work as well as greater access to available labor requirements within a geographic area.
Why Use This Nontraditional Model in Your Traditional Business?
Companies who follow a traditional business model of hiring salaried or hourly employees on a traditional employment basis can easily incorporate this nontraditional model of the increasingly popular gig economy.
As an example of how a company can take advantage of this trend, the following discussion shows how my company uses temporary staff to create a more agile and adaptable business model.
We are a small to midsize government contractor specializing in delivering IT and communication solutions to our customers. The company provides research, design, engineering, deployment and sustainment services for mission-specific technical solutions. The resulting programs are cyclic and follow a standard pattern of a non-recurring engineering phase, followed by a production and fielding phase, leading to a lifecycle sustainment phase. The type of labor required varies significantly across these phases of the solution lifecycle.
My company utilizes the temporary workforce—the gig economy—to add value and meet our needs. We use these resources for three distinct reasons.
1. Surge Support
Because of the cyclic nature of the work, certain functional areas are manned with a core company staff. We bring in temporary workers to handle times of heavy need and release them when the work volume decreases. Although the per hour costs for temporary workers often exceeds the wages (to include benefits) of a direct company hire, the flexibility to surge to peak capacity is a critical driver for use of this model.
The company maintains an ongoing relationship with local staffing companies that can find and quickly deploy workers to our facility allowing maximum flexibility to align work and need. This allows us to get the labor we need, when we need it, in order to thrive.
2. Specialized Skills
A second driver of temporary staffing is the need for a specialized skill that is oversubscribed or simply unavailable in-house. This happens more often in the engineering functional area where unique models or analysis must be conducted during the design phase of a project. Having the opportunity to pull in additional workers who meet our specialized skills needs allows us to keep moving forward.
3. Staff Augmentation
Like surge support, staff augmentation adds additional workers in a specific functional area. However, this is not simply for surge workload. Often, the company brings on additional staff because of the uncertainty that the sustainment effort will justify an additional full-time staff member. If we see that the work will continue forward into sustainment, the company negotiates to have a clause in our staffing company agreements that allow conversion of the temporary employee to full-time company staff after a pre-defined period of performance.
This has an added benefit of assessing the employee's performance before committing to a long-term relationship, similar to a "try-before-you-buy" concept.
Through these three reasons, our company finds engaging in the gig economy a value add for our operations in being able to meet the demand and opportunities for growth. Surge support, specialized skills and staff augmentation with freelancers or gig economy workers allows our organization to continue to grow and achieve our mission and vision.
Four Challenges in Bringing on Nontraditional Workers
While incorporating "gig" employees into our workflow processes has brought about great value and a more agile business model, there are some challenges many organizations—including ours—face with this step. While these challenges may vary and may not be apparent in every work opportunity, it's important to be aware of them and plan accordingly. These challenges include:
1. Employee Loyalty
Even with excellent processes to integrate temporary employees into work assignments, it's important to recognize the temporal nature of the relationship. The temporary worker has the potential to soon be working for your competitor, so it's important to isolate intellectual property of the company such as technology and unique work processes, to just those elements that the employee requires.
Additionally, all employees, including these temporary workers, should have a non-disclosure agreement on file. This agreement ensures the security of confidential material and can enhance your competitive advantage.
Relying heavily on temporary employees for specialized skill needs can create a risk that the employee with that particular skill set is not available when you need them. The temporary nature of the work platform comes with the assumption that the worker may be pursuing other endeavors simultaneously with your company, so you can't always guarantee the worker will be available when you are in need.
3. Company Focus
Core capabilities and operations generally should not be outsourced to gig economy workers. It is important to identify the capabilities that are unique or the focus for the organization. These are areas where hiring full-time employees and spending training dollars should be applied. Peripheral functions are then the best candidates for temporary or surge support.
4. Labor Laws
Labor laws vary across geographic locations as well as opportunity types. Legal guidance is important in ensuring staffing agreements meet local legal as well as customer contractual requirements.
The Value of the Gig Economy
Despite these challenges, the use of temporary staff has been an effective way to deal with the cyclic nature of our business. It allows us to maintain a core staff and augment it for surge activities or to bring on specialized skills only required periodically. By engaging with this ever-growing gig economy platform, your organization can have the opportunity to continue to grow and thrive with access to the resources and personnel you need.
Grow your opportunities with a degree
If you're a manager looking to incorporate the gig economy platform into your workflow processes, foundational leadership experience and practice can make a big difference in the company culture you help to build for both traditional employees and your freelancers. At PGS, you can pursue your management and leadership skills at the associate through doctoral degree program level. Connect with our enrollment team to learn more about how you can best be equipped for tomorrow's economy.