There are many advantages of the gig economy for businesses but there are also disadvantages as well as challenges as the economy changes. Before we discuss the solutions to these challenges let’s talk about the gig economy and what it is.
What is the gig economy?
The term “gig economy” typically refers to a labor market defined by the prevalence of short-term contracts or freelance work. To learn more about the gig economy and how it is reshaping careers click here.
The gig economy comes with many advantages as well as challenges for employers.
Advantages of investing in gig workers:
Flexibility
As we discussed in previous articles, flexibility is a significant advantage of the gig economy. But not only for workers; employers need to be highly flexible as well. Flexibility is vital for employers who plan to:
- Expand into new markets
- Cope with seasonal highs and lows, or
- Maintain a national footprint of field workers without the overhead of full-time workers on the ground
By hiring on-demand gig workers employers can remain nimble and cost effective. Gig workers can be dispatched at a moment’s notice, receive mobile notifications, and upload completed work. It can be that simple.
CrewDriver is a valuable asset to employers automating their call outs and dispatch. Read more about how CrewDriver works to automates this process here (add link to SMS article).
Profitability
According to Forbes, 70 per cent of employers who use gig workers reported they were important to the company’s overall profitability and efficiency. This is due to a number of reasons:
- The opportunity to hire a worker with experience and expertise.
- The ability to obtain experts in an area that requires specialized skills but is not a full-time position. Like graphic design or copy writing.
- The opportunity to find workers who have expertise in more than one area. For example a web developer who also has design skills, or a software engineer with project management abilities.
- Remote workers can significantly reduce costs in some cases. And can help meet the logistical challenges posed by needs in distant areas
The more employer leverage gig workers for essential roles, the more important it becomes to recognize gig workers themselves as essential to bottom line. A bad reputation with your crew will cost you in overhead and with your clients. Read more about how your reputation matters and how these workers can make all the difference here (add link).
Some companies are leading the way to choosing to treat their gig workers the same as they would any other employee. One of CrewDrivers partners, Riggit, has achieved sustained growth and recognition by valuing, cultivating, and respecting their large pool of casual workers.
There are some challenges that gig workers are going to face due to the nature of a gig economy. But many of these can, and should, be addressed by employers to help maintain good worker relationships. As well as maintain a competitive edge in an unstable climate. To earn and maintain a good reputation it is vital to plan for these challenges before hiring begins.
Disadvantages of the gig economy:
Security
Short term and casual work opportunities offer little by way of stability. Success in gig work means efficiency in finding opportunities and good judgment in responding. There is not much employers can do to increase job security for individual gig workers, but they can offer reliability and transparency. This means communicating:
- Pay rate
- Length of job or contract
- Type and frequency of shifts
In the case of picking up shifts on a semi-regular basis, the employer should make the process as easy as possible. Both in the processing of picking up shifts and easily tracking them. This helps the workers make informed decisions and encourages them to respond to opportunities. CrewDriver does an excellent job of making this frictionless for both workers and employers.
The Challenges of Payment
A large number of gig workers and freelancers face slow or no pay for their work. At this point, there are few regulations affecting gig work. This leaves it up to the worker to figure things out on their own. Often workers provide the employer with an invoice and face a slow response or total silence. In these cases, recourse is minimal unless the worker has the funds and wherewithal to initiate legal proceedings, which is uncommon.
Another issue is the method of payment. Many employers and marketplaces use payment methods that are the most advantageous to them rather than the gig worker. These payment methods can be slow, hard to use, and charge excessive processing fees to the worker. In extreme this leads to workers leaving the marketplace and giving your business a bad reputation.
Click here to read more about how your reputation counts with gig workers and how it can make or break your business. (add link)
Making Payment Work
Businesses need to be proactive in keeping things running smoothly for workers as well as customers. You will never see the full benefits of the gig economy if your workers are regularly dissatisfied. If your competitors have a better payment system than you do, you can count on losing talent to them.
How businesses need to approach payment:
- Provide flexible options. Workers have differing payment preferences and needs, so one size will never fit all. For example; only paying through PayPal or only paying out in CAD or USD. This may cause workers to lose money through fees or conversion rates, and payments may be held or delayed. Offering flexible payment options allows the worker to choose the method that works best for them.
- Be proactive about communicating payment information. Simply knowing the status of their payment helps gig workers feel secure in their work. As well as see that their services are valued. This communication should include:
- When an invoice is received
- Then when it is processing
- When payment has been authorized
- Then when payment has been submitted
- If there are any problems with payment or an invoice
- Any action needed by the worker to resolve a problem
- Have a payment schedule. When workers are working on a semi-regular basis (ie. casual or auxiliary shifts) it is important that a regular payment schedule is maintained. This could be bi-weekly, monthly, etc. depending on the need of the work and how regular the shifts are.
A Payment alternative
As mentioned earlier, with the company Riggit, there are opportunities where a company can hire on casual or gig workers the same way they would a full-time or part-time employee. In this case the issues surrounding payment would decrease significantly.
These workers could be on the payroll in the same way that all other employees are. They would then submit their timesheet or invoice at regular intervals, and receive a cheque or direct deposit at the same intervals. At CrewDriver we recommend this as an option to employers whenever it is possible for them to do so. This allows employers to avoid legal issues, as well as payment issues. And it’s more likely to result in a more satisfied crew and a solid reputation as employers.
This is only scratching the surface of what is to come of the gig economy as is continues to grow in this city. Businesses are expressing concerns about the motivation levels of gig workers and many are not taking them seriously as workers. These types of attitudes have the potential to cause their business problems. Especially as more and more people choose to participate in the gig economy rather than relying on “traditional” full time work.
Visit CrewDriver to find out more information about the gig economy and how it has the potential to change your business. And how CrewDriver can help you day to day to manage gig workers.