Is the 'on-demand' workforce economy a step forward – or backward?
The on-demand workforce is real – but how will HR Services manage it?
These days so many companies are taking advantage of the on-demand economy, making products or services available to customers instantly. It’s all about the real-time fulfilment of one’s needs. With the smartphone and mobile application revolution we no longer have any time, geographical nor supply boundaries. We’re always ‘on’, forever connected, and can buy anything, anytime, in just few simple taps.
So, you are thinking, what does this ‘on-demand economy’ have to do with employees? In fact, everything. I'll explain...
Today, employee motivations have changed dramatically as their expectations have jumped. Gone are the days of slogging to the same desk, day after day. Instead, employees understand the importance of developing knowledge, happiness, and earning their money with relative ease without spending too much time in the office. As a result, companies are swapping office setups for cool coffee shops, hipster workups, and of course even our own homes or any other work environments where employees feel liberated…
Companies are also breaking from tradition and recruiting freelancers and consultants to collaborate in groups on various short-term projects. This is a relatively new idea that has steadily gained popularity especially within the global technology services space.
As employees increasingly demand freedom and peace of mind, there is a shift towards being self employed which provides the freedom to choose when to work, still offers a good income, and at the same time commands respect.
The rise of the gig employee – and the on-demand workforce
Astute companies understand that they no longer need to rely on permanent teams or even departments filled with skills that not only age, but are also of diminishing value.
This shift toward independent, free working is changing the hiring game. Next-generation recruitment models will be radically different from the ones in use today. Hiring the right candidate with 'a single tap' is now within grasp.
The knock-on effect will be that the recruitment market, which has remained commercially stuck in the dark ages, will literally reinvent itself. Working on subscription basis, and pay-as-you-go pricing, will become commonplace for most companies.
Of course, some big questions around employee recruitment in an on-demand market are now coming to light. For example:
- How will companies adapt to the growing on-demand workforce?
- How will companies manage these hybrid organizations of the future?
- Will there be negative repercussions on workplace culture?
- How will companies govern a workforce on demand?
- How do companies hire for the present but also make future resource plans?
- What will be the right performance management metrics?
- How will companies integrate this workforce into their systems?
- How do you optimize and provide training?
- Is this workforce on or off the balance sheet?
- What kind of extra setups will be required to manage these plans?
I believe that the on-demand workforce economy is not only going to become prevalent but that it will stay with us. It's already growing like crazy: freelancers, contractors, interns, and temporary workers are all delivering a nonstop supply of experience for services on tap. Surely, it is not unreasonable to expect that, by 2025, 30-40% of the workforce will represent the on-demand economy. This idea of getting anything you need instantly is truly empowering.
Tapping into experienced professionals or even new college graduates with current knowledge offers a great opportunity to get work done. Imagine if, for every product, you could hire the right talent, for the right job, at the right price, and at the right time. Wouldn't that be great? And with so many trusted portals where experienced professionals have already registered themselves, implementing this shift will not be difficult.
A few facts to consider
So, is it utopia? Yes. But is it real? Also yes. In truth, it's already happening. From freelancers right through to tradesmen. And given the rapid adoption of the gig economy, many companies are already taking a new approach to structuring their workforce. There are plenty of organizations where full-time and part-time employees cohabits in the same space, and many organizations are exploring the idea of hiring contract workers, consultants, or freelancers to complete short-term projects. These changes in the workplace provide the flexibility many workers are seeking, and at the same time help to reduce the cost of reskilling employees at a time where technology is constantly changing.
For organizations considering adopting the on-demand economy for their workforce, here are a few facts to consider:
- Are companies comfortable or ready to share internal confidential business practices and processes with these workers?
- Do they have any plans for training on-demand employees so that their customer/employment brand is maintained as these employees come and go?
- Do companies have correct contractual relationship policies in hand as they are not actually “employing” them as full-time employees?
- Do companies have policies in place to deal with dishonesty, illegal residents, or otherwise unsuitable employees?
- Is the company ok with people continuously entering and leaving their network, on a regular basis?
There are a few areas where such contract work has been well proven over the years. These include:
- Specialized skilled workers (IT, engineers, designers, content writers, mathematicians, etc.) who are difficult to hire and may work in specialist labor pools
- Industry consultants who choose to be independent to make more money and achieve a desired life/work flexibility
- Delivery, services, and repair engineers where jobs are highly repeatable
- Roles where skills are difficult to find, so that contractors or part time workers offer a way of tapping into these unique skills (i.e. marketing experts or digital marketing exerts)
Litigation and loyalty – some hurdles
One major challenge that needs to be addressed is the fact that part-time or geek workers, despite being economically attractive, lack the loyalty of full-time employees. Companies cannot ask them to pitch in and do other things apart from the specific work they are recruited for, so when times are tough there is little flexibility. In addition, these employees cannot be moved around, from place to place, as business dynamics change. Managing the on-demand workforce, therefore, can be very challenging. On the other hand, of course, companies can tap into amazingly talented people part-time, even eventually absorbing them if necessary, as the company grows.
Based on recent trends and the increased adoption of these kinds of practices, it is likely that we will see continued growth of this workforce model. Certainly, there are concerns around the potential for litigation centering on misclassification, and problems may arise around recruiters' classifications; for example, should a project-by-project part-time employee be classified as an independent contractor or as a full-time employee? Should they be liable for all company benefits or not?
These kinds of questions will undoubtedly be addressed as companies become more familiar with contract workers, consultants, and freelancers. Recruiters should preempt this shift by building up strategies to support organizations in the on-demand world. Smart companies will take a cautious approach towards adopting these changes, and work collaboratively with recruiters to avoid snarl-ups.
With the on-demand workforce economy growing, it will be interesting to track how much industry is able to reap its benefits and what strategies emerge to support recruiters in finding the right resource that allows companies to scale the business and gain a competitive advantage at the same time.
Abbas Jalis Rizvi is Head of Service Delivery – SME, HR Global Operations for Ericsson
A Global Head of Human Resources with 14 years of experience in HR Business Partner, HR Operations, HR Shared Service, Talent Acquisition, Leadership Hiring, and Campus Recruitment; with a demonstrated history of working in the information technology and services industry. Skilled in Talent Management, HR Consulting, Personnel Management, Employee Engagement, and Business Process Improvement.
Currently Heading Operations Excellence for HR Global Operations at Ericsson. Before this he was Region Service Delivery Head (North America and Latin America) in HR Global Shared Services. Prior to this he worked as Talent Acquisition and HR Business Partner.
In his current role, Abbas is involved in driving Transformation & Transition Projects for generating Headcount & Cost Efficiency, Robotics Process Automation Projects, CMMi Certifications, process evolution and business excellence for HR Operations Global Team of 500-odd members (spread over 20+ countries & 6 major services centers) catering to HR delivery in Ericsson.