Is the Gig Economy Shifting Gears?

New research suggests that many independent workers would prefer full-time jobs. That could mean slower growth in the so-called gig economy.

Monday, October 17, 2016
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The number of independent workers in the United States is expected to reach 54 million by the year 2020, up from approximately 40 million today, according to research from MBO Partners.

A 2015 report from the Society for Human Resource Management, meanwhile, finds 40 percent of employers anticipating they will rely on a "non-traditional" employment model in the next decade.

These sorts of statistics suggest the "gig" or "sharing" economy will continue to soar. But a recent poll suggests growth will slow in coming years.

New York-based advisory services firm Deloitte recently conducted an online poll of nearly 4,000 workers, finding 67 percent of respondents who have worked as an independent contractor saying they would not choose to do so again.

Some of the reasons workers are turning away from the gig economy aren't that surprising. Inconsistent cash flow and lack of employer-paid benefits, for example, were the most-frequently cited factors discouraging individuals from pursuing independent work again in the future.

"Contract work is awesome if you are in high demand, have a great personal brand, have significant [resources] to tide you over between jobs and don't mind not knowing where the next gig might be coming from," says Rita Gunther McGrath, associate professor of management at the Columbia Business School in New York.

"For most of us, however, these conditions do not apply," continues McGrath, "which means that temporary workers are at the mercy of budget cycles, unpredictable project approvals, slow sales cycles and other uncertain elements. For many people, they crave the stability of a regular paycheck, getting to know co-workers well, and, as the Deloitte [data] suggest, belonging to a corporate culture."

Indeed, nearly half of respondents in the Deloitte poll said a company's culture is "extremely important" in choosing where they want to work. Half of those who had worked as an independent contractor saying that a lack of connection to a company's culture would deter them from seeking independent work again., stability is certainly critical to many employees, and everyone likes to know when their next paycheck is coming. But the satisfaction that workers derive from feeling part of a company's culture on a daily basis can't be overlooked, says Mike Preston, chief talent officer at Deloitte.

Workers "want development, they care about their work -- and the organization -- having a purpose, and they want to feel a connection to the company's culture."

It's worth noting that 48 percent of those who have worked as an independent contractor report being "very satisfied" with their experience. In addition, 41 percent of overall respondents acknowledged that the flexibility offered by independent work arrangements is attractive. That said, some who have tried gig work "might have found the experience wasn't quite what they thought it would be."

Employers may largely shoulder the blame for the disillusionment some independent workers are feeling, says Steve Cadigan, founder of San Francisco-based Cadigan Talent Ventures and former vice president of talent at LinkedIn.

"I think a key driver of the dissatisfaction [expressed] in this survey results from the fact that most companies have not worked hard to make the contingent experience a positive one -- focusing more on the work than on the individual doing the work.

"I don't think most companies put a great deal of thought into how they treat contingent workers," says Cadigan. "[Organizations] see [an independent contractor] as more of a stop-gap resource, or as someone who's just going to fill in for a small project."

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Some employers, of course, take a different view.

Take Talmon Marco, CEO of New York-based ride-share service provider Juno. In August, Marco announced that the company -- which currently has nearly 13,000 drivers in New York City -- is preparing to offer full employee status with benefits, paid vacation and sick leave to drivers agreeing to work exclusively for Juno. The company has also set aside half of its stock shares for drivers, in contrast to competitors Uber and Lyft, which currently offer zero shares to their drivers.

Whether by providing such benefits or taking another approach, companies and HR leaders must sharpen their focus on how to attract independent workers, regardless of industry, experts say. 

Pockets of discontent aside, "I do think the amount of workers who work less than a regular ‘traditional' or full-time schedule will increase," adds Cadigan. "The competition for talent and the [scarce] supply of knowledge workers is going to force companies to have to be a better destination for part-time or contingent workers."

As always, the composition of the workforce "is evolving," says Preston, adding that the results from this recent Deloitte research don't represent "a hard left turn" in the course of independent work's development.

"We've clearly seen that a big chunk of the workforce has suggested they want to work this way," says Preston. "If that's the case, then that has to be on the radar of the CHRO, and we better have a plan for how we attract and retain this element of the workforce, or else we miss out."

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