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How to Manage and Engage Workers in the Rapidly Growing Gig Economy

Now more than ever, companies understand the importance of talent in meeting their business objectives. They’ve seen the strong connection between engagement and company performance and are investing millions each year to recruit, train and retain their employees to keep them happy to keep them longer. However, the marketplace for talent is shifting quickly, making it difficult to know where to best invest training and development budgets.

Increasingly, companies are turning to the gig economy to meet their workforce needs. Companies like Lyft, Uber, Airbnb, TaskRabbit, and others are built entirely on this model and are significantly changing the labor landscape. As of 2015, Airbnb – an online marketplace and hospitality service – had more than half a million properties listed in the US. If we conservatively estimate an average of two properties per host, this amounts to at least 250,000 people participating in the gig economy for that company alone. Add more than 100,000 drivers now working with Lyft – a popular rideshare company – and it becomes clear that the gig economy is poised to have significant impacts on labor markets in the U.S. and beyond.

It’s still not known how big an impact they will have. Because there is no single definition for this type of worker, the U.S. Labor Department has struggled to quantify this new and growing labor market. The number of workers estimated to be participating in the gig economy vary. However, many researchers estimate that it is much bigger than we might think. For example, Intuit and Emergent Research state that there were 3.7 million people working in the on-demand economy in 2016 up from 3.2 million just the year before.  Now, they are forecasting that the number of workers here will more than double by 2020, to 7.7 million. McKinsey Global Institute reports that globally, 20-30 percent of the working population currently engage in some form of independent work.

No matter whose numbers you believe, one thing is clear, for most companies, the workforce of the future will be comprised of an ever-increasing number of gig workers. This isn’t a bad thing. These workers are becoming an increasingly important way to fill gaps in the labor market. For companies such as Airbnb and others that operate exclusively in the online marketplace, these workers offer an extremely low-overhead way to do business with virtually no benefit costs or space needed to accommodate their workforce and an ability to scale it up quickly as needed to meet business demands.

In order to reap these benefits, HR practices will have to evolve in order to effectively manage workers that have no formal relationship with a company. Since most HR practices today are still focused on the traditional employee, the key question is how do we adapt to take full advantage of all the benefits this new kind of worker has to offer?

When considering this question, it is important to realize that while gig workers are not full-time employees, they’re also not simply a workplace commodity. Just like regular employees, they want to do a good job and to be paid well – their incomes depend on it. They also want to be rewarded for success just like regular employees.

However, because their relationship to the company is fundamentally different than that of traditional employees, our ideas about how to attract, retain and engage them will have to evolve as the number of gig workers we rely on in the coming years continues to grow.   

New challenges for businesses operating in the gig economy

Businesses operating in the gig economy face different challenges than those we encounter in the traditional employer-employee relationship. One of those challenges is how to grow a company when many or most of its workers are not employees. For most businesses, growth is dependent on attracting, training and retaining the right kind of workers. For businesses operating in the gig economy, lower barriers to entry into the labor pool make it easier to find new workers. But, it also makes it easier for them to leave when not supported or engaged.

Managing a distributed and highly fluid workforce with no formal ties to the company can be challenging. For example, the lack of a formal setting for employer-employee interaction can make it difficult to identify problems that can lead to a negative experience for the customer and thus affect sales. It can also be difficult to help workers improve, which can also impact performance in terms of opportunities lost.

Another conundrum that HR professionals face in operating in the gig economy is whether to invest in talent when that talent is not tied to the company in any formal way. However, all companies need and expect their workers – whether traditional employees or gig workers – to be productive, which requires a base set of skills and the ability to solve problems quickly. This requires training.

Admittedly, it can be difficult for companies to see the value of providing more than the bare minimum training for workers with whom they expect to have a shorter-term commitment. It is important to understand, though, that while gig workers are not employees of the company, their performance can directly impact the company’s performance and reputation. Training is thus critical for communicating standard processes and ensuring consistency in service from one worker to the next.

Companies should also consider the fact that while most gig workers likewise do not view their relationship with your company as a long-term one, they nonetheless want and expect to grow their skill sets through their relationship with your company. They view each experience as a building block that prepares them for the next, better opportunity.

By offering them the opportunity to improve themselves, these workers feel supported and valued. When this happens, they become more committed to the work and are more likely to become ambassadors, encouraging their peers to consider working with the company even after they’ve moved on. So, while your relationship with gig workers may not be a long-term one, providing them development opportunities can significantly multiply the value of each individual relationship.

When companies like Airbnb, Lyft, and others built on the gig economy begin investing in providing their current workers better development opportunities, they will begin to benefit from better retention and a greater ability to attract new workers – the lifeblood of their business – and the increase in market share that comes from that.  

Technology is the key to solving these challenges

Technology that allows us to inspire, engage, and motivate remote workers caters well to a distributed and independent workforce and can solve the most of the challenges businesses operating in the gig economy face in managing a fluid workforce for greater growth. First and foremost, they must support their gig workers. To do this,  companies will have to provide them with the technology that helps them stay connected, efficient, and successful. We believe the following features are critical to any technology that will be used to support gig workers.

 

Just-In-Time Training (JITT) In today’s fast-paced business environment employees want and need training that can be easily accessed and quickly consumed the moment it’s needed on the job. Gig workers are no different in this respect. They want easy access to resources for their continued development.

Technology that provides JITT capabilities is not just beneficial to companies that rely on gig workers – it is a necessity because of the fluidity now in the labor market. Gig workers will not stay if they are not supported by the companies for whom they are working. They can’t afford to. Because their earnings are directly tied to their performance, they will demand almost instantaneous access to the information they need to solve the problems they encounter on the job. Companies that adopt technologies that provide just-in-time training will retain their gig workers longer. For example, new hosts on Airbnb want and need access to information quickly to find answers to their questions that arise from one rental to the next in order to provide better customer service and deal with any issues they encounter.

 

Social Features – Competition is fierce in the gig economy. In an environment where workers can move fluidly from one opportunity to the next with little downtime, companies need a strong focus on engagement. Technology that offers social features such as friendly peer competition, badges, and leaderboards, has been helping gig companies to engage new workers and boost their productivity.  

On-demand workers are never going to be “engaged beyond their contractual commitments or their ability to earn. Their motives are completely different than those of traditional employees. Engaging them is none the less important to their retention.  

Social features allow remote workers to feel more connected. For example, if Lyft were to adopt a platform that offers social gamification, it could build a stronger sense of community and instill a sense of corporate culture among its workforce to increase the retention of drivers. Social features would also allow drivers to more easily connect with each other to share tips and advice on how to be more successful in their work. For companies that foster a culture of inclusion in which their on-demand workers are treated with the same trust, respect and professional regard as their employees, social features will make them feel more valued – and far more likely to stay.   

 

Analytics  – Analytics is critical to managing an open talent workforce. According to Deloitte, given the scale and reach of the on-demand economy and the vast number of workers connecting to it now and in the future, a technology that facilitates the collection, mining, and analysis of large datasets will be necessary to the management of workers. Companies that use data analytics for both predictive and prescriptive purposes, connecting data on individual performance with business data will be more competitive in the future.

Technology that measures and connects individual performance, satisfaction ratings of their customers, etc. with corporate goals such as monthly revenues in a particular city can help companies identify where problems exist and where training and/or other interventions may be needed. With people analytics, a company like TaskRabbit – an increasingly popular home services marketplace – can gain deep insights into understanding the different types of human resources that are needed and where. On another hand, the company can learn what training might be needed for those that lack important skills in order to boost their service offering. Likewise, analytics can reveal what is working well, providing insight into new ways to train and engage independent workers. Companies can use analytics to identify geographic and demographic areas in which additional engagement efforts will lead to increases in revenue by boosting the number of independent workers entering their workforce.

 

The apparently unbridled growth in the gig economy is sure to present new challenges to companies that rely increasingly or wholly on workers with which they have no formal ties. The biggest challenges – how to engage these workers and manage them effectively for greater growth – can only be met with technology. Technology that offers JITT, social feature and analytics will be critical to navigating the new, blended workforce of the future.

 

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