Before the advent of the gig economy — there was a time where people were nomads who roamed the land in search of food. A few centuries later, people discovered that they could create more food by domesticating certain plants and animals. When the industrialization age came, people started massively migrating to cities where more jobs were available. Fast forward to 1926, and the five-day, 40-hour week began, led by Ford Motor Companies. Today, we’re witnessing another significant movement called the gig economy. Here’s the gig economy and how to leverage it in 2020.
In essence, thanks to the advance of technology, the way work is viewed and performed has drastically changed. Roughly 150 million employees across North America and Western Europe have left their 9-to-5 jobs to join the gig economy.
For employees, the benefits are crystal clear: more flexibility, work/life balance, and higher rates.
But what does the gig economy mean for businesses? Can they leverage it in order to enjoy some benefits? The answer is yes.
Exceptional employees are waiting to be found.
Think about this: You’re building a tech product with an in-house team of software engineers. However, you need to hire two more to speed up the process. Unfortunately, you realize that it’s challenging to hire two senior engineers as there’s a major shortage in your local area. It would take too long and would be too pricey. What other options do you have?
You can always hire a gig worker outside of your zip code.
The talent shortage is not limited to a few businesses like yours. It’s a global issue. One survey by Gartner found that 63% of 137 senior executives find talent shortage to be a key concern for their organization.
If the skills you’re hunting for are in short supply in your home country, nothing prevents you from scouting experienced engineers in other countries. When it comes to working arrangements, there are no boundaries.
You can easily find gig employees on talent platforms or marketplaces/communities. Talent platforms like Fiverr are an amazing solution that connects businesses and professionals. Here, you can find freelancers with various skills and with hourly rates that range from $5-$100+.
On the other hand, talent marketplaces and communities differ from platforms in a way that they offer exceptional talent in a specific field. For example, Adeva, one of the fastest-growing companies in this sector – is a community for flexible, on-demand tech talent. They vet every tech talent before they enrolling them in the platform to provide additional value to the customers. They claim that they work with the best talent in the world.
Hire gig workers to lower your costs
A report by Glassdoor found that the average cost to hire an employee in the U.S. is $4,000. What’s more, companies need around 24 days to fill an open position.
When hiring a new employee, there are external and internal costs to consider. External costs include:
- Job sourcing.
- Background checks.
- Recruitment technology.
- Pre-hire assessments.
Some internal costs include:
- In-house recruiting staff.
- Systems (for example ATS).
- Referral Awards.
In short, your company will likely spend thousands of dollars on hiring one engineer. Even worse, that engineer might not turn out to be the best fit for the company.
Apart from hiring costs, companies have a myriad of other expenses to think about. A significant part of a company’s expenses comes in the form of real estate costs, employee benefits, and perks.
When you hire gig workers, your costs are dramatically reduced. There’s no need to spend big bucks on benefits, taxes, or office space. Recruitment, hiring, and interviewing costs are also reduced. What’s more, there’s no risk of investing in employees that later turn out to be a cultural misfit.
Reduced costs are also directly related to a company’s faster time to hire and lower turnover. Gig employees’ increased productivity is another factor that can save a company thousands of dollars per year.
Employees want more flexibility, so give it to them
The 20th century has gone, and with it, the belief that employees must spend eight hours in an office from 9 to 5. The modern employees have a different mindset than previous generations.
Millennials are considered to be the drivers of the work flexibility movement. They’ve expressed their ideas on how the ideal workplace should look like. According to them, the perfect workplace is the one that offers work/life balance.
And many companies have understood that happy employees are more productive employees.
A joined study by the Stanford professor Nicholas Bloom and James Liang, the CEO of Ctrip, China’s largest travel agency, tried to discover how productive are those employees who are allowed to work from home.
Over two years, they found that flexible workers:
- achieved more
- took fewer sick days
- worked longer hours
- were happier in their work
Millennials make up 40% of the current workforce. Many of them possess high-quality tech skills that are sought-after anywhere in the world. They are also equipped to hold executive and managerial positions.
Additionally, 80% of U.S. employees said they wouldn’t accept a job unless it offered flexible work options. In other words, companies that will allow flexibility to their workers will have higher chances to grow its talent pool and hire faster.
If you choose to embrace the gig economy, your company will be more appealing to Millennials but also the newer Gen-Z workforce. Your business will be in a better position than your competitors who will not embrace this trend.
Test gig employees before offering full-time employment
Let’s assume another scenario:
You’ve recently hired a new PHP senior developer for your company. You’ve wasted 26 days and spent roughly $3,000 to bring her on board. However, after a few months of work, you realized that her skills are not satisfactory and that her engagement is at a low level. The thought of firing that engineer and reliving the same thing with another employee makes your stomach turn.
Apart from spending thousands of dollars and compromised work quality, bad hires can affect other employees. Poor performers lower the productivity bar for other employees on the team, and their bad habits spread throughout the company.
This is where gig employment can help your business. A large number of companies hire gig workers as a means to test talent before offering full-time employment. They spend less money and less time recruiting and training expertise.
Once the company is certain that the gig worker possesses the right skills and is the right cultural fit, then they proceed with offering a full-time contract.
Speed up your project execution times
And many teams struggle to meet those deadlines. The reasons for failure can be numerous, including not having the right team in place or the correct number of people on the team.
When you have fewer employees than you need, you’re risking overworking them. If your employees are exposed to stress for an extended time, then you’ll soon start noticing a drop in their engagement, productivity, and presence. Moreover, job burnout is directly related to higher rates of job-changing among employees.
No one wants to lose their best talent to burnout and spend thousands of $$$ on disengagement. That’s why you must take the needed steps to prevent burnout.
Hiring gig workers is one idea. Contingent employees can help you meet aggressive deadlines and speed up your project execution times. Instead of burning out your full-time employees, consider adding a few gig workers on the team to help with the workload.
After the project is done, you can choose between assigning them a new project or ending the part-time contract.
There’s no doubt that the gig economy is a chest of treasure for businesses. Companies of all sizes and across all industries stand to save costs and expand their talent pool if they embrace it. By joining the gig economy, companies can also appeal to the younger workforce that’s made up of Millennials and Gen-Z.
As the gig economy continues to grow, everyone that’s part of the world of work will have much to gain. It’ll be a future abundant in flexibility, innovation, and opportunity. In this future, everyone wins.