Blog

Get expert advice on every topic you need as a small business owner, from the ideation stage to your eventual exit. Our articles, quick tips, infographics and how-to guides can offer entrepreneurs the most up-to-date information they need to flourish.

Subscribe to our blog

HR

How your business can capitalize on the gig economy

Posted by Carol Mahamedi

February 18, 2022    |     4-minute read (781 words)

A whopping 4.3 million Americans either quit or switched jobs in December 2021, according to the U.S. Bureau of Labor Statistics, a reflection of what has been popularly dubbed the Great Resignation amid the pandemic, as workers evaluated their priorities and adjusted to new ways of organizing their lives.

Now a Wonolo report called The Voices of the Gig Economy finds that “greater flexibility” is a primary reason for 63% of the job search site’s app users in seeking a new position, based on a survey of 3,000 respondents.

This dynamic of seeking new opportunities with greater flexibility, sparked by the pandemic, may be here for the long haul. In its World Development Report 2019, the World Bank says the global job market of the future will largely be filled with independent gig jobs rather than full-time, in-house positions.

Meanwhile, projections from the Freelancing in America Survey 2017 show that 50.9% of the U.S. workforce will be performing freelance work by 2027, assuming the current growth rate of freelancing continues.

Businesses eager to replace departing employees can benefit from this growing gig economy. For starters, it provides them with access to talent during a period when it has become increasingly hard to hire full-time employees. Further, participating in the gig economy can benefit businesses in the key areas outlined below.

Three ways employers can benefit from the gig economy

1. Cuts costs – By using gig workers, research suggests employers may reduce costs by as much as 60% versus hiring a traditional employee. In addition to not paying a full-time salary, they also save the 30% of the average worker’s compensation that goes toward benefits such as health care. This money can instead be reinvested into the business. Further, not having to maintain the expense of an office and its infrastructure and equipment brings employers even greater savings.

2. Simplifies onboarding – A typical small- to medium-sized business that onboards 100 new workers per year will spend about $40,000 on the effort, or $400 per employee, according to HR Onboard. By working with freelancers, the onboarding process is dramatically sped up as you are hiring an external resource. Also, hiring a gig worker enables businesses to trial prospective employees rather than go through an extensive recruiting process first.

3. Fills seasonal employment needs – Freelancer workers can help businesses manage the ups and downs in demand based on seasonality, and some 56% of businesses currently use gig workers to finish projects for which existing employees do not have the skills, according to EY.

Further, “organizations are using contingent workers to overcome resistance to change within legacy workforces. A contingent workforce can help drive and accelerate change … Given the extraordinary pace of technology change, contingent workers provide a critical bridge to integrating new products, services, technology and more into operations, without having to expand full-time equivalent headcount,” says EY’s “Contingent Workforce Study.”

How your business can tap into the benefits of the gig economy

Here are four ways that employers can maximize the productivity they realize from gig workers.

1. Understand the different types of gig worker – Gig workers comprise freelancers, contract-based workers and part-time workers. Freelancer workers tend to be available most of the time, while contract workers usually dedicate specific time slots to businesses. Part-time employees may or may not come into the workplace.

2. Establish a clear goal – Before approaching a gig worker about a job, list what things you need them to accomplish in a given timeline. You can use this list to gauge their performance if you decide to continue working with them.

3. Keep communication open – Sometimes employers can’t work successfully with gig workers because the business’s communication channels are not set accordingly. The gig worker may be forced to communicate with multiple people in the business for approvals and follow-ups, for example, which can create delays. Most gig workers work with several clients and won’t want to continue working with a client who makes the job too complicated. To circumvent this possibility, assign one or two people to interface with the gig worker.

4. Consider it a partnership – It’s best to view the arrangement as a partnership rather than simply assigned work. Because gig workers often work with multiple clients, they may be able to provide you with valuable input.

Also, keep in mind that while gig workers like their independence, they may be open to a bigger commitment depending on the company. And working with freelancers is a great way to try out people, not just in terms of the quality of their work but also fit, before adding them as a staff member.

We provide you with essential business services so you can focus on growth.