Is your business ready for the gig economy?

The way we work is constantly changing. With new technology augmenting or even replacing traditional workflows and opening up flexible avenues of communication and collaboration, the traditional office environment is no longer necessarily the norm.

It's amidst this evolving climate that a new field has emerged, known colloquially as the "gig economy". Employment structures and relations have rarely seen this level of change, and businesses who participate in the gig economy must be aware of the ramifications of engaging freelance and contracted workers.

Digital technology has enabled the rise of the gig economy.Digital technology has enabled the rise of the gig economy.

What is the gig economy?

Taking its name from the transient, freelance nature of touring musicians, the gig economy refers to the growing number of workers abandoning traditional 9 to 5 employment in favour of working independently on a task-by-task basis for various employers. According to an August 2016 report from the Australian Industry Group (Ai Group), over 40 per cent of workers in the United States will at least partially be engaged in freelance work by 2020, with similar statistics now being revealed in Australia.

The traditional office environment is no longer necessarily the norm.

Ai Group notes that in 2014-15, 32 per cent of the Australian workforce – 4.1 million employees across the nation – had participated in the gig economy. Thanks to digital innovation facilitating remote working capabilities, cloud-based communication and collaboration platforms and a growing demand for flexible arrangements by younger generations, freelancing is a more legitimate option for Australians than ever before. 

Finding and engaging a flexible workforce

For the millennial generation in particular, digital technology is second nature. Figures reported by Statista forecast smartphone penetration across Australia to reach over 82 per cent in 2017, indicating that the vast majority of workers have access to at least one connected device capable of engaging in the digital economy. 

Technological innovation runs both ways in the gig economy, however – Ai Group notes that innovative digital talent platforms have been created to link workers and employers, driving the engagement of technically savvy employees demanding flexibility. Freelancer.com, for example, an Australian startup that now boasts over 22 million employers connecting with workers globally, has opened new avenues for finding staff with no geographical limitations. 

For many organisations that have struggled to find the best talent in their local area, such as small businesses with limited resources, digital platforms offer new opportunities to discover previously inaccessible employees. That said, with new levels of freedom in hiring and collaboration, unique compliance and WHS concerns must be addressed.

The gig economy allows businesses to recruit from a wider pool.The gig economy allows businesses to recruit from a wider pool.

Managing a workforce in the gig economy

Ai Group's report notes that the majority of workers in the gig economy are freelancers and independent contractors, and as such employers must implement processes to accommodate. To start with, employers need to know the difference between a regular employee and a contractor.

The Fair Work Ombudsman has useful guidelines on how each working arrangement functions, with some of the most notable rules for independent contractors as follows:

  • Expectations of work: Usually engaged by the employer on a bespoke basis for specific tasks, an independent contractor often dictates their own hours (after agreement from the employer) and controls their own workflow and methods.
  • WHS risk: Unlike with a regular employee, the independent contractor is often responsible for any injuries sustained while performing the task. For certain remote workers, such as software developers or freelance writers, self-management of WHS concerns is expected, including any necessary insurance.
  • Payment and taxation: In most instances, contractors will submit periodic invoices as work is completed, or at the end of the contracted term. Payment of tax and superannuation is handled independently.

Employers must implement processes to accommodate freelancers and contractors.

Benefits of the gig economy for employers

Aside from the aforementioned access to a wider talent pool, there are a number of enticing benefits to employers considering tapping into the gig economy for their staffing needs. The inherent flexibility of freelance workers allows them to be immensely adaptable – Ai Group notes that the average hiring time of an employee can be significantly reduced, from 34 days for traditional recruitment down to an average of just 2.7 days.

Similarly, the report notes that engaging freelance specialists to focus on just one specific job, rather than spreading responsibilities across a number of tasks, results in better quality of work, greater efficiency and productivity and less chance of employee fatigue. Meanwhile, having workers operating in different time zones allows organisations to function in more flexible hours, meaning faster turnaround on urgent jobs or an ability to increase headcount quickly in peak periods.

Tapping into the benefits of the gig economy undoubtedly requires new strategies from businesses, and as the freelancing and contracted worker industry continues to grow, traditional structures will need to adjust. Attracting and retaining leading talent requires the implementation of solutions and procedures to manage freelancers, and devising compelling reasons for those in the gig economy to continue working for your organisation.

Adapting greater flexibility into your induction and engagement processes is a smart strategy in the digital age, as long as businesses are willing to change with the times. 

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