The increasing level of unemployment has forced many people to invent new ways to make a living. Similarly, contemporary organizations are introducing new working models to transition from standard jobs to atypical or nontraditional jobs and the human resource practices that support them. These factors have contributed to the rise of the gig economy in the global labour market.
What Is the Gig Economy?
The gig economy is a type of free market system where organizations hire independent workers for short-term work arrangements. The term “gig” suggests that the job has a temporary nature. Examples of work arrangements under this category include consultants, freelancers, and temporary or independent contractors. This new trend focuses on prioritizing flexibility, streamlining HR processes, and ensuring cost-effectiveness.
Recently, a lot of people have been scrutinizing the gig economy because technological advancements have reduced the barriers to entry, increasing the accessibility of gigs. Initially, this arrangement was perceived as a side hustle but the increasing popularity has turned it into a trillion-dollar industry. Some gig economy participants, especially the highly skilled ones, consider their work as their primary source of income.
How the Gig Economy Has Affected the Human Resource Role
The gig economy abolishes the standard employment relationship between workers and employers. The adjustment has created the need for companies to adopt new human resource practices that support the new dynamic while still maintaining coherence. Here are the HR functions the shift from formal employment to freelancing has affected:
Recruitment
Firms participating in the gig economy have a high turnover rate due to the work’s short-term nature. On one side, this new model reduces staffing expenses, such as medical and pension, involved in long-term employment. On the other hand, it has made it difficult for the HR department to find the right talent and skills for different positions within the organization. However, the manager can use this opportunity to fill permanent positions with people who understand the organizational culture and have completed a project successfully.
Integration and Onboarding
Frequently onboarding and offboarding employees during projects can be quite challenging. The HR department might also experience challenges incorporating gig workers into the organizational culture. However, streamlining the onboarding and integration processes by creating communities that consist of permanent employees can create a sense of unity within the company. It can also help to close the gap between workers of all kinds, including remote, onsite, permanent, and temporary.
Talent Management and Retention
The gig economy has made it challenging for organizations to attract and retain top talent. The best way to manage this situation is to devise strategies to make their firms unique and attractive for contingent workers. For instance, they can offer robust training, competitive benefits, and flexible work arrangements to stand out from their competitors.
Training and Development
A significant challenge posed by the gig economy is training the gig workers. Since organizations hire these individuals for their expertise, training programs should focus on enabling them to improve their capabilities. The HR policies should also offer opportunities that facilitate continuous professional development to make the gig workers assets for the hiring company.
Legal Compliance
How a company classifies gig workers determines their legal rights. Sometimes, this issue can cause confusion, making the company vulnerable to legal issues. The HR professional should consider consulting legal experts to ensure they make informed decisions that protect the gig workers and the firm.
Summary
The labour sector is experiencing rapid transformation due to changing employee preferences and the introduction of new business models. The gig economy has increased the number of freelancers and temporary contractors in different sectors. Although this adjustment has availed more opportunities for workers, it has also introduced challenges for human resource practice, especially in the recruitment, legal compliance, and onboarding functions. Business owners and human resource specialists should adjust their employee techniques to accommodate and benefit from this shift.