The gig economy is driving innovations in working and hiring. As modern enterprises look for creative staffing solutions to meet their unique challenges, they now have a wider range of options. Previously, HR professionals seeking to fill a position only had the options of directly hiring someone or turning to recruiting and staffing agencies. Now, they can tap into the contingent workforce.
The size and strength of the emerging gig economy, which only received its official name in 2009, is impressive. It’s estimated that nearly 45 percent of the average company’s workforce was made up of contingent or contract-based workers in 2017. And, 51 percent of respondents to a survey of corporate HR leaders said that their need for contingent workers will keep growing.
Thanks in large part to the ongoing shakeup of the taxi industry caused by Uber and Lyft, many see the growth of the gig economy as a disruption. Others see the gig economy as an innovative talent management resource. While recruiting and staffing agencies still have their role to play, there are many reasons why the modern enterprises’ staffing solutions should include contingent workers.
Enterprises in all sectors are under constant pressure to reduce costs. While HR has made strides to reduce organizational costs, there is room to improve. Hiring contingent workers is an excellent way to keep headcount low and reduce payroll expenses. Since the enterprise doesn’t have to pay contingent workers a salary, it saves on providing benefits that can be as high as 30 percent of an employee’s total compensation. And, there is low to no overhead expenses associated with this staffing solution.
Still, the issue of lowering costs is a bit controversial. To keep costs low, enterprises may underpay contingent workers who are doing the same or comparable work as their own full-time employees. When this happens, it’s discouraging to those contingent workers. And, it places a drag on the gig economy.
Scaling a workforce up or down
As staffing solutions go, no other option gives enterprises the level of flexibility and agility than the contingent workforce. Essentially, contingent workers are available on demand. They empower an enterprise to quickly and efficiently scale staffing up or down to meet shifts in demand and changing business circumstances.
An excellent example of the need to quickly scale a workforce is when insurance companies must process claims immediately following a natural disaster. They have a limited number of adjusters who can’t be everywhere at once, especially if the disaster covers a large geographic area. Now, they can use staffing solutions like WeGoLook to get the workforce they need to assist adjusters. Then, when claims processing is complete, the insurance company can reduce its workforce back to previous levels.
Filling skill gaps
In today’s changing talent landscape, there is a shortage of workers that have the skill sets demanded by modern enterprises. Having the right talent is essential to business performance and growth. When considering staffing solutions, enterprises can hire contingent workers to fill skill gaps.
However, it’s important to understand which type of contingent worker fills which gaps. According to Gene Zaino, President and CEO at MBO Partners, there are two camps of contingent workers. “On one side are people that offer undifferentiated services, where it’s not really about their skill but more about supplementing their income. For example, sharing economy drivers and cleaners fall into this category.
“The other camp includes people who have niche skills and experience. They are often highly educated and are very confident about the particular skill they have. They tend to
do project-orientated work that lasts three to six months. They provide more of a strategic service to their customer rather than an undifferentiated commodity service. They usually bring in a certain expertise that is not core to the business but is necessary to build new capabilities.”
The camp of people who have niche skills and expertise is particularly important to many business sectors such as IT. Leaders in this sector are struggling with staffing solutions challenges that include retiring baby boomers, difficult to hire and retain millennials, and an ever-widening skills gap in key areas like cybersecurity, cloud infrastructure, Big Data, and mobile application development. Consequently, many enterprises are turning to contingent workers out of necessity.
Reducing the burden on full-time staff
There are times when employees do not have the capacity to handle their workload, never mind taking on new work. When enterprises hit this productivity wall, they can turn to contingent workers to lift some of the burden held by overworked employees. This frees up time for employees to focus on high-value work.
Additionally, contingent workers can be sort of an employment buffer that allows for stable employment of the “core” workforce. Because the contingent workforce is fluid, it can be expanded or reduced with minimal impact on the employment of the core workforce. Consequently, when the overall workload decreases, core employees may feel a greater sense of job security.
To improve operational performance, now and in the future, business leaders must embrace the gig economy as one of their staffing solutions. Truly leveraging the gig economy means understanding the benefits of hiring contingent workers. In addition to reducing costs, modern enterprises can source high-quality talent that is aligned to specific business needs and is available on demand to meet immediate talent needs.