Gig economy is growing in magnitude and complexity

Numerous reports now indicate that by 2020, 40 to 50 percent of the working population will be a part of the gig economy. The gig economy is excitingly disruptive. It is not only growing in magnitude; it is also growing in complexity. We are only at the end of the start and nowhere near the start of the end. 

Much of this change is being attributed to technology, which certainly has been a very significant enabler. Contemporary technology allows individuals to connect across time, space, language and culture. It has enabled specialized services like Uber and Airbnb. It has also enabled individuals to start their own businesses, merely using others’ platforms like Fiverr, Upwork, Etsy, and eBay. Other collaboration tools have also enabled organizations to create internal gig-economies — posting projects or tasks and enabling individuals to ‘bid’ on them as opportunities for development experience and alleviating the need for over-worked departments to increase headcount or reorganize.

However, focusing on the impact of technology fails to answer one critical question, “Why were so many attracted so early to the gig economy?” To answer that question, most organizations need to look closer to home than Silicon Valley!

• Recessions in 1990-93 across Europe, India, and parts of Scandinavia;
  
  
• The financial crisis in the late 90’s across Asia and Russia;
  
  
• The dot.com bubble of 2000;
  
  
• Financial issues globally in late 2000 including the USA sub-prime crisis, the oil price crisis and the USA automotive crisis;
  
  
• Financial crises in Iceland, Greece, Ireland, and others;
  
  
• The very recent turbulence in the stock market.

Throughout this period, workers in most sectors, countries, and at most levels experienced lack of job security, redundancies, frequent change, stagnating or declining wages, cost cutting, increasing demands and working hours, stress, and reduced investment in training and development — all of that combined with increased cost-of-living and reduced public services. And, concurrently, they saw reports after reports of executive and corporate malpractice, and excessive executive salaries, bonuses, and benefits.

Many argue that the gig economy has arisen because of generational differences. That may be true in part but is more likely coincidental rather than an outcome of a causal relationship. Beliefs and values come from and are shaped by experiences, not by birth year. We cannot ignore the experiences that organizations throughout the past 20+ years have given their employees and how these have shaped their beliefs and values.

• Organizations increasingly focused on short-term cost-controls and profit generation, they continued to promote into management and leadership positions those who excelled technically and who delivered short-term results, not those who demonstrated people-management or strategic capability.
  
  
• Most individuals must work to survive. So, finding paid work has always been and remains a primary need. Until the advent of the gig economy, this need was largely met by finding an employer who would offer consistent paid work. The process of locating such a position took considerable time, effort and emotional commitment. Hence, individuals were loath to repeat the experience unless they were forced to, or something significantly better appeared as an option. 
  
  
• Organizations took advantage of this and treated their employees as “Human Resources,” to be deployed and utilized for the good of the stakeholders, to whom loyalty was then expected. 
  
  
• Organizations set up processes to set goals for individuals, monitor their performance, produce largely invalid and unreliable assessments of their performance, and then reward and punish them in proportion to those assessments despite evidence to show that such processes did not work, do not work, and probably could not work in most cases.
  
  
• Managers in such organizations were encouraged consistently to focus on achieving more for less. Ironically, productivity has not increased in most sectors. Nor will it, while we continue to make the same mistakes. 

Because of such experiences, many employees lost respect for those running their organizations, they lost trust in their management, their organizations, and employers in general. Survey after survey has revealed that the primary cause of attrition and low employee engagement continues to be the low quality of people-management and leadership they experience.

The organizations that realized what was happening, unfortunately, tried the traditional style of “keep it simple” initiatives to address the problem. We saw an explosion of initiatives addressing Values, Employee Engagement, Wellness, Work-life Balance, and Flexible Working to name but a few. Whilst these produced some short-term positive impact, continued stagnant productivity, insufficient levels of employee engagement, undesired attrition, and staff-churn, more people choosing to enter the gig-economy demonstrated that we are not addressing the root causes.

Some argue that the gig-economy is the largest disrupter since the industrial revolution. But it is probably the two former technological changes that triggered the disruption – social media and eRecruitment. Social media enabled individual workers to share fears, concerns, and ideas together. They discovered that they were not alone, and the power or tribal affiliation took hold. eRecruitment enabled anyone to ask such questions as “What could I do?” “Who else could I work for?” “What am I worth?” and to make the process of considering and applying for multiple vacancies relatively easy. Suddenly, individuals who formerly felt trapped, undervalued, insecure, not respected, and/or not trusted knew that they were not alone and that they had options. The genie was out of the bottle. Many realized that they did not even need to be employed in the conventional sense. They could rid themselves of organizational constraints and poor management and offer their skills and services to multiple bidders.

A recent study by the McKinsey Global Institute “Independent work: Choice, necessity, and the gig economy”, reveals that “up to 162 million people in Europe and the United States, or 20 to 30 percent of the working-age population, already engage in some form of independent work.”

Many of these individuals are now independent resources for employers — contractors, consultants, associates, freelancers. On the positive side, this enables organizations to buy units of work, without on-going employee overheads and responsibilities; to access high-level expertise when, and only when, needed; to flex their capacity at short notice etc. On the downside, whilst many entered the gig economy from full-time employment in which they developed their skills, a rapidly increasing percentage is joining it straight after formal education. This begs a serious question, “How will they develop the interpersonal, organizational, and commercial skills to sustain the quality of service required of them?” The jury is out.

So, before organizations start attributing “blame” for or applauding the gig-economy’s disruption, or seeking to capitalize on it, they may need to look closer to home for the reasons for its explosive growth. Smart organizations will, of course, identify ways in which they can capitalize on the gig-economy by reducing permanent head-count, utilizing specialists only when needed, and ensuring coverage through concurrent contracting. Some are even setting up their own internal gig-economies enabling individuals to be employed without specific roles rather than bidding on projects and tasks as they arise. But really smart organizations will act to address the root causes of the growth in the gig economy and will rebuild employee trust as employers; be highly and appropriately selective in whom they appoint into strategic roles so that commercially, ethically and morally sound business practices are followed; increase the quality of people-management (primarily through selection and promotion decisions, and partly through education and role modeling expectations), and address the changing social role of employment.