HR Professionals: What Does the Rise of the Gig Economy Mean for You?
In traditional companies, HR work has not changed dramatically over the past decades: it aims at recruiting and keeping the best talent in those companies. However, as these companies are relying increasingly on contingent labor forces — contractors, freelance talent, temp workers — more of the talent the company depends on is actually no longer part of the company. As there is every sign to suggest that the freelancing, outsourcing and crowdsourcing trends are here to stay — and grow! — does it mean HR departments are going to be irrelevant?
Businesses are increasingly leveraging technology and on-demand talent and optimizing labor costs by making them more variable. Meanwhile, workers are sometimes “forced” into freelancing for lack of full-time salaried opportunities or, often, willingly choose to work as freelancers to pursue the freedom and flexibility of independent careers.
Not only are more workers external entities that are no longer managed directly by HR departments, but the transformations also affect the employees who do belong to the company… or those it may want to hire. You can not hire talented employees the same way when they now see and seek more alternatives to rigid and mostly boring 9-to-5 jobs. They want to be seduced by projects and teams and they demand more autonomy to accomplish the tasks they were hired to accomplish. How else can the thousands of articles about the difficulty of “managing millennials” be accounted for?
Hiring talent in the IT sector has become particularly tough in that context. Companies are desperately trying to woo the best developers, data-integration engineers or data scientists to solve their data-related issues and develop the seamless apps they know are critical to their survival in this day and age. Unfortunately for the traditional companies, even when they do know what their strategy should be and aren’t in denial about the competition, hiring the necessary talent sometimes proves extremely challenging because the necessary talent is precisely least likely to want to work in traditional companies. Because they’re talented, they know they can make it on their own and choose the projects they want to work on, based on how “exciting” these projects are. Or they want to work for startups that are culturally appealing and empower them to solve problems they actually care about and let them “own” whatever they achieve. In other words companies need entrepreneur-minded workers to adapt to a fast-changing world, but these are precisely the people least likely to want to be hired!
Here’s how they deal—or don’t deal— with the issue:
- They just can’t find them: in Germany today, there are more than 40,000 IT-related positions that are vacant and the same is true for a lot of other positions.
- They need intermediaries like IT service companies or web agencies that will charge them a lot for people who are seldom the best and if they are (good), they’ll expect to be paid a lot in exchange for what they have to put up with (see this tell-tale story in French of a guy who endured the pain of an IT service company).
- They acqui-hire the talent they want and buy entire companies they don’t need just to recruit a few of their employees. Needless to say, you need to be big and rich to be able to do that. Acqui-hiring is now quite common in Silicon Valley. It’s a little like bringing in an elephant to kill a mouse. Acqui-hiring is a good idea if you have hundreds of millions of dollars you don’t know what to do with.
- They hire second-rate engineers (which a lot of companies do) who will execute what they’re asked to do (if they can) but lack the creativity and talent to do things at the highest level, which is why so many corporate apps and services are so average, or even terrible! Making do with lower-quality products in the age of winner-take-all is a very bad idea because in the end the highest quality wins.
- They choose to be more creative in the way they recruit, pick unconventional profiles, train them, give them autonomy and trust them to accomplish great things. That’s where talented HR professionals still have a card to play.
- They accept the fact that great talent can be found among freelancers and make the best of it. Employers already hire millions of workers to perform knowledge-based work through online marketplaces like UpWork or Hopwork in France, which focuses on high-quality talent. Even high-level work like financial analysis and strategic planning can be bought on marketplaces like HourlyNerd. Accepting that implies being ready for risk because freelancers do present a bunch of challenges for traditional companies— confidentiality, security, legal liability and management.
Identifying, managing and monitoring freelancers is key but few companies actually have a plan for that. Here are 4 dimensions to the plan everyone should have:
- If you’re a big corporation, a Freelance Management System (FMS) may be of some use: an FMS is a private software-as-a-service platform that makes it easier to find, manage and pay freelance workers, in the new project-based paradigm. These SaaS solutions help deal with the tedious paperwork, negotiate contract terms, manage a large number of external workers, automate pay and ensure labor compliance — clearly distinguish between the two categories in the US, the W2 employee and the 1099 contractor. Examples of FMS include Field Nation, OnForce and UpWork. (UpWork has both a large online marketplace and an FMS called Upwork Enterprise).
- Ramp up your efforts to woo freelancers. If you want to seduce and keep top freelance talent, then you must be more attractive to them. The most skilled can work with anyone so why would they choose you? Building a long-term relationship is critical and bullshitting one’s way to a recruitment is no longer possible. Using the good old heaven/hell recruiting propaganda doesn’t work anymore — see this famous recruitment joke about heaven and hell (“because yesterday we were recruiting you, but now you’re on the staff”). Adapt and accept flexibility. Don’t expect your freelancers to be at your office all the time (it doesn’t mean they’re not working for you). Give them your trust.
- Break down siloes and share information. All talent within the company must be able to share information. Otherwise a lot of energy and resources will just get lost on the way. If a freelance worker must ask 10 people for some information and still can’t be sure the information is reliable, it means everybody’s time is being wasted. Agility is required, even if the cost is less security. Silos make the information safe indeed… but they also make it utterly worthless. What’s the point of having it in the first place if you can’t do anything with it?
- Analyse your data. This is not specific to HR or managing freelancers. Data intelligence is a huge differential whatever you do. Data intelligence can put you in a position to best attract and use freelance talent. (See 1. and 3.)
So the rise of the gig economy basically changes everything for good old HR work. Not only is a lot of the traditional HR work being automated through SaaS platforms, but a lot of the good old recruiting and managing techniques have also become obsolete. Because much of the talent is now freelance, by definition, it can’t be managed the same way as traditional employees.
I don’t think HR is dead yet, but it can’t be isolated from the rest of the company anymore: more people with different job titles have to be involved in HR management because HR is more important than even strategy. If HR professionals are empowered to be more, they can become strategic talent coordinators. To do that they must be more involved in the business itself.
Laetitia Vitaud with Switch Collective
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