What Is The Gig Economy, And What Does It Mean For Business Owners?
At TSheets, we’ve seen how the terms “gig economy” or “on-demand economy” inspire reactions ranging from confusion to excitement to fear for the business owners we work with, in light of research indicating that the percentage of contract employees and freelance opportunities are growing at unprecedented rates.
And while some opinion pieces argue that gig employees and on-demand work are just new names for an old game, it’s hard to deny that the prevalence of opportunities combined with advanced and expanding technology in the hands of the masses has created a dynamic that is changing business as we know it.
So, what does all of it mean for business owners?
Advanced technology in the hands of the masses is changing business as we know it.
In a Nutshell
As this trend continues to gain traction, business owners should be prepared to do their due diligence in research, make decisions about balancing innovation with stability, stay flexible and open to change, play by the rules or make your own rules, and collaborate with other business owners and policy makers to effect change when needed.
Start with Due Diligence
For business owners, making wise decisions related to the gig economy starts with gathering – and continuing to regularly update – information from credible, applicable sources. This includes managers, employees, high-quality news outlets and listening to those who are at the forefront of researching the trend. Understanding the global and local economy, the perks and drawbacks the company affords to both traditional and 1099 independent contractors (as seen by the independent contractors themselves and the business community), and where opportunities for improvement and innovation lie is a needed first step.
Asking the right questions along the way is just as important. What made sense a year ago but doesn’t now? Or, more realistically, what made sense last month but won’t next week? Why are employees staying or leaving? What types of employees does the company need to attract most right now? By gaining a solid understanding of the many moving parts at play in a changing economy, business owners can ask – and answer – the right questions to realize optimal profitability, maintain or develop an attractive corporate culture, and avoid potential pitfalls.
Balance Innovation with Stability
In a shifting economic climate, business owners will be challenged to balance necessary innovations while identifying and preserving tried and true business practices. Recognizing which is which may be one of the biggest factors that separates a successful business from the pack.
What services does your business offer that might need to adapt as technology increases and consumers come to expect more on-demand options? While companies like Uber and Airbnb are the biggest players revolutionizing the on-demand market at the moment, a groundswell of others are following in their footsteps, looking to add an on-demand angle to everything from food delivery to handyman services to furniture.
How does the company’s service offering stack up with the growing competition? If innovation is needed, what’s the best path forward? If the tried and true is still exactly that, what can be changed in marketing approaches to highlight the company’s unique value propositions when stacked up against the competition?
Business owners should also ask themselves whether staffing dynamics are meeting corporate needs on a regular basis. What is the balance of traditional employees and freelancers? Could the company utilize contractors in a new or greater capacity to accomplish goals more quickly or efficiently?
Where It’s Important to Play by the Rules
Most business owners are likely to see an uptick in the percentage of employees who prefer to work part time, moonlight as contractors, or work full time as freelancers. Knowing the legal implications involved in working with full- or part-time contractors can help businesses avoid sticky legal situations.
The consequences for misclassifying employees can be particularly significant for business owners, resulting in back taxes, legal penalties, and interest based on when the misclassification took place. Making sure Human Resources and managers are on board and involved, in an effort to ensure employees are classified correctly based on job duties and hours worked, will help keep companies out of hot water.
Making sure that business runs smoothly for all employees can also yield less obvious benefits. Intentionally cultivating the reputation as a company that treats all classifications of employees equitably can reap substantial rewards in retention and recruiting.
Collaborate
Business owners can look out for their own needs while contributing to the greater good in their communities by collaborating with local and national lawmakers and other business owners to ensure that legislation and regulations surrounding freelancers in their industry are fair and equitable.
“We absolutely can shape win-win solutions if we gather the right people at the table and together design our future based on shared values and goals,” says MaryBeth Maxwell, Principal Deputy Assistant Secretary for Policy at the U.S. Department of Labor.
Working to create a sustainable dynamic can reap benefits to everyone from the employee to the economy as a whole in today’s connected global economy.
“Our task over the coming decades is to amplify their opportunities while mitigating their challenges. Only together can we design new structures all of us can live with – and work in,” Says Devin Fidler, head of the Workable Futures Initiative.
Stay Flexible
As technology continues to expand and new innovations change the face of the economy, business owners can gain significant benefits by staying light on their feet and being willing to make necessary changes that benefit their employees and business as a whole. Cultivating an attitude of flexibility and innovation can help businesses stay both relevant and able to take advantage of the new opportunities the rising economy presents.
Alex Chriss, vice president and general manager of Self-Employed Solutions at Intuit made this remark of the company’s recent release of Workforce, a product specifically designed to meet the needs of managing an on-demand workforce. “QuickBooks Self-Employed and our new Intuit Workforce work together to make it easier for both workers and companies to collaborate, share data and efficiently meet their respective compliance requirements.”
It may be helpful to remember that the way business is done today in corporate America is a relatively new development that came about as industrialization changed society. As technology provides new options for increased opportunities and growth, assumptions about the most effective way to do business will naturally evolve as well.
While it can be tempting to view the on-demand economy as either primarily beneficial or primarily detrimental, business owners stand to make substantial gains by learning all they can and keeping an open mind. By staying flexible, playing by the rules, collaborating with others as needed, and balancing innovation with the tried and true, business owners and their employees position themselves to adapt and thrive in the on-demand economy.
Posted in T Sheets
