Capacity and the Rise of the Contingent Workforce
A guest post by Rita Trehan
The United States is gearing up toward election time, and that means certain newsworthy changes that affect the economy are used as a battleground for the candidates vying for position. One of these topics that have gained heat most recently is the “gig economy,” which points to the shift in business-to-business transactions versus larger business-to-consumer transactions. In other words, the workforce is shifting from a large base of employees with some small contract outsourcing to a smaller employee base and a larger roster of contract resources.
My forthcoming book, Unleashing Capacity: The Hidden Human Resources (Charles Pinot, 2015,) speaks a lot about HR utilizing its resources to anticipate the needs of the business. Elections aside, the gig economy is something that deserves a considerable amount of attention for companies large and small, particularly since it directly impacts corporate agility.
On the positive side, on-demand labor can be cost-effective and it keeps overhead low. Getting work done under the category of variable expense rather than fixed looks great in year-end reporting, particularly if you can show profitability from these variable expenses. Benefits and FICA stay low, and in lean times, there’s no need to do a reduction in force. The contracts are ended and your employee base stays safely engaged within the cost structure.
On the negative side, contractors don’t necessarily have the same stakes in the game as paid employees. There’s no real connection to the vision, strategy or leadership brand of your organization, so outside of the tasks at hand, their only connection is via the exchange of money for their goods and services. This also means that they could also end their contract before you’d like and that they’re not obligated to do anything over and above their assignment. If you’re small and looking to build a long-term workforce, this may not be the right solution.
I would say that the gig economy has many benefits as a supplement to a core workforce. As HR, we have the legal obligation to ensure that contractors don’t start encroaching on full-time benefit territory and remain within that legal definition, but in addition to that, we also have the ability to encourage our business leaders to view them differently. If we’re ever to align our contract resources with our goals so they act in accordance with our leadership brand, it behooves us to treat them as business partners, not just on-demand suppliers.
With the economy shifting to a million different separate interests, make sure that all connected with your interests share your goals. Make them part of the profit strategy somehow. Keep valuable assets aligned with your goals, and seek their counsel when it makes sense to do so. As a valued supplier, they should be treated with respect. In return, they become increasingly connected to the goal. They share in the spoils, and they can, in turn, help solve the capacity problem by acting as true business partners, looking to solve problems before they arise.
The gig economy shouldn’t frighten any of us who are prepared to create the infrastructure to utilize it to its full potential. It’s just another step in the evolution of corporate capacity, and regardless of who wins the US election, it’s more than likely the next big evolution of the world of work.
Note from TeamFit
At TeamFit we are committed to helping individuals and organizations succeed in the gig economy. Organizations get a view of skills across their extended talent network and can use this information to rapidly assemble effective teams. Individuals can get on the projects that best fit their current skills and aspirations.
