A combination of the Uber-fication of the working world, improved connectivity and a shift of business operations to the cloud, have laid the foundation for a global on-demand workforce. A rise of platforms such as Upwork, Crowdflower, and location-based tools like Handy connect people with project-based work opportunities. These platforms are transforming whole industries, as Bloomberg columnist Justin Fox says, “Jobs are out. Gigs are in.”
Freelance workers make up one-third of the U.S. workforce. By 2020 it is predicted to reach 40%, and by 2040 experts say the U.S. economy will be “scarcely recognizable.” This increase of contract workers is impacting more than just Silicon Valley startups and it’s forcing the giants of the corporate world to take note.
Large corporations will soon rely on tech platforms to ensure their remote workforces are integrated, they will streamline HR processes and provide the framework for project-based employment. These companies can learn a great deal from the struggles of startupland and the solutions that have surfaced, and they are in a position to set the bar for a better working model, on a larger scale.
On-demand employee upset
Uber debuted a fleet of self-driving cars in Pittsburgh (photo credit, Uber)
The on-demand model pioneers a progressive working solution, injecting billions into the economy. These services — marketplaces, transportation solutions, food deliveries, home services, freelancer platforms and more — attract an estimated $57.6 billion from some 22.4 million consumers annually. This has driven an increase in part-time, task-oriented work.
Ideals of increased flexibility, the employee as their own boss and specialized experts have been overshadowed by low prices and low wages, with poor benefits and dissatisfied employees. Worker misclassification lawsuits and protests have shrouded the model in controversy, proving fatal for many startups.
At the center of these disputes, workers are calling for a fairer deal; they want to be treated as employees, not independent contractors. This means adhering to minimum wage salaries, paying overtime, taxes and work-related expenses, and providing benefits likes insurance and breaks. And contractors are taking a stand. Uber was forced to pay out up to $100 million in settlements and many startups including Homejoy have folded. This has led to a fear of the “on-demand apocalypse”, a phrase coined by TechCrunch writer Josh Constine.
A low barrier to entry has led to a one-size-fits-all treatment of disempowered workers, with fixed wages irrelevant of experience or skill. Adding fuel to the fire, an increase of zero-hour contracts, a common occurrence in Europe that is catching on in the U.S., means workers have no job security and are unable to plan for the future.
HR solutions for the “gig economy”
While Uber refuses to acknowledge its workforce of 385,000 drivers as employees, new socially-conscious services Juno in the U.S. and TappCar in Canada challenge that approach. As Uber dismisses worker problems as mere bumps in the road, its competitors are providing drivers with full employee rights. These come complete with insurance and pension plans, all paid for with just a 5% hike in prices.
A wave of new platforms like Instacart and Sprig now recognize workers as employees. Sprig CEO Gagan Biyani claims a deciding factor in this was the intent to provide “ongoing training and development”. By investing in these individuals they seek to create a strengthened, skilled workforce. Steps to evolve the on-demand model now rely on the new startups that chose to provide this and a growing ecosystem of supporting tools.
Today a handful of startups are offering up their own HR solutions to cater to the neglected on-demand worker. For drivers in search of health insurance, Uber recommends insurance broker Stride Health. Stride Health is also partnered with TaskRabbit and Postmates, helping workers find health coverage.
Other platforms such as Staffjoy provide workforce scheduling, Honest Dollar offerings retirement plans and Qwil helps contractors get paid instantly. Workshops and training sessions, such as classes in “maximising income” or “identifying marketable skills” provided by Crowded.com, furthermore seek to educate and empower the on-demand worker.
There are also non-profit organizations and steering groups such as the Big Innovation Centre Purposeful Company Taskforce, working to provide governance systems to advise and incentivise businesses. Unfortunately, developments led by new startups are on a small scale, they lead to an even more fragmented industry and progress is slow. There is a call for a bigger shift, with many demanding a revamp of old labor laws, to put in place the necessary regulation to protect this workforce.
How corporations integrate new gig employees
Large corporations forced to embrace the on-demand model and enter this world at a time of hot debate and great tension. Many will already have extensive experience of working with contractors, but as we have seen, the on-demand model demands a different approach.
There is already a need for corporations to step up the game when it comes to managing part-time contractor workers. Last year, thirteen of the largest retailers in the U.S., including Target and Gap, came under attack after their questionable use of on-call staffing systems. The retailers used these tools to save on pay-roll, resulting in reduced hours and late schedule changes that upset employees. This industry relies on part-time workers and it will need to evolve quickly to find effective solutions to satisfy these people.
In the advertising world, the biggest brands are evaluating long-term agencies relationship and also opting for individual projects and consultant work. While Madison Avenue fights to retain clients, a shift to on-demand contracts is inevitable. This new way of working is increasing in all major industries; hospitality, media, education and even the health sector.
There has been significant investment from the corporate world into on-demand startups. As corporations pick up on-demand startups – see GM’s investment and partnership with Lyt, and hotel giant Accor’s recent acquisition of Airbnb – this provides an opportunity to communicate a unified message of company culture.
Some of the biggest companies are already jumping on this. Europe’s biggest software firm SAP has integrated its contract workers platform Fieldglass with its internal HR system SuccessFactors. This enables managers to view employee data for the company’s global workforce, helping them to evaluate individual performance and training needs.
The challenges for corporations onboarding a new team of on-demand workers, be these employees or contractors, will be to manage a global workforce, providing job security and effective, inclusive HR solutions and career progression. They will rely on centralized tech as the framework to enable these developments.
Large institutions are notoriously slow to change, in contrast with the fast-changing startups of Silicon Valley. But through their sheer scale they are also in the best position to redefine the standards for this style of employment. By mastering the integration of these workers the most successful companies will set themselves apart from others when it comes to competing for new talent in the new gig economy.
I originally published this article on GeekTime.
