Coming to grips with the gig economy

The gig economy — where a contingent workforce is hired on a short-term, project basis — along with the sharing economy are expanding, as seen with the likes of Uber and AirBnB. But what does that mean for HR-related issues? We talked to 3 CEOs to find out.
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 07/08/2016

Darrell Bricker
CEO of Ipsos Public Affairs Worldwide in Toronto
The market research firm has 600 employees in Canada

In a way, the gig economy is inevitable, according to Darrell Bricker, CEO of Ipsos Public Affairs Worldwide in Toronto.

“When you’ve got so much technology out there and you’re living in an age in which the entire content of human knowledge is available, it’s inconceivable that anybody wouldn’t think that people would use that type of information to challenge some of the conventions for how we make things and how we distribute them. And I think that that’s what we're seeing with the sharing economy,” he says.

“When you have the most educated population we’ve ever had in the world, in any way that you can measure it… and you have such access to information, it’s inevitable that what they’re going to do is challenge whatever conventional systems exist out there.”

While everybody talks about employer-employee loyalty, nobody actually lives it — particularly those who are technology-enabled and younger, says Bricker, citing research that shows many people have to leave their place of employment to advance their careers.

“Given an environment like that, is it any wonder that people are going to use technology and information and empower themselves to be able to make that choice?” he says. “The only way up is like playing checkers — there’s no straight lines on any of this, it’s just going sideways a lot of the time."

And given that millennials will make up a huge share of the workforce in a very short period of time, “they and the way they look at solving problems are going to be a big part of how the world of employment is going to be handled,” says Bricker.

But the truth is people don’t aspire to this idea of flexible, on-demand work — they deal with it, he says.

“People want to have regular, stable work and they would like to work for one employer, so they learn to deal with this type of environment. But… if you compare the two options, the vast majority of the people would prefer the single employer with a single paycheque,” says Bricker.

So, will a sharing economy eventually become the norm?

“There’s ways of adding this up on a global basis that make it look like it’s a big part of the economy but when you actually look at the amount of paid labour that the sharing economy is responsible for, I think that you’d be hard-pressed to show that it’s more than a fraction of what traditional employment is,” says Bricker.

Eventually, every business is going to be a combination of the two things, he says.

“You’re going to have your stable workforce that you’re prepared to invest in and prepared to grow with and then you’re going to have flux.”

But employers should be concerned about how they treat these workers, says Bricker.

“Absolutely, the way that Revenue Canada operates in terms of the tax system, you have to be extremely careful about how you use casual labour,” he says.

“The tax rules are a real problem with all of this.… if you’re a contractor, if you work for more than $30,000 a year, you’ve got to set up a GST number and start paying certain types of taxes. And if you are an employer, if you (have) a part-time person, in particular, and you employ them for more hours than what Revenue Canada deems is appropriate for their employment, they’re no longer a contractor, they’re an employee — whether the employer and employee actually want a different relationship doesn’t matter.”

As for the kind of people that will easily adapt to this new system, it’s not necessarily the younger folks. 

“One group that the shared economy will work especially well for is actually not millennials but for people at the other end of the employment spectrum, and those are people who are looking for bridge employment opportunities who are seniors,” says Bricker.

“They’re much healthier, much more with-it, much more capable than their parents were at that age, so they’re going to be looking for opportunities to stay busy and to do interesting things, so I think the sharing economy for putting together those people with opportunities, given that they have so much experience in the workplace, I think there’s considerable opportunity there for that.”

Kyle Couch
President and CEO of Spectrum Organizational Development
The Toronto-based consultancy has 10 employees

The sharing economy is not really that new, according to Kyle Couch, president and CEO of Spectrum Organizational Development — it’s similar to bartering systems from long ago. Today, it’s about give and take, it’s about sharing, it’s about knowledge transfer and it’s mutually beneficial to all parties.

“It allows organizations and people alike to be nimble, and allows for a greater flow… so you’re not trying to develop people necessarily — you bring in people that have the best use of skills, the best skill set at the right time, to get the best results.”

There’s been a rise in people wanting control of their own destiny, he says, so they’re able to move through projects that are meaningful to them.

It’s obviously a different way to work and it’s an evolution of contractual work, being much more project-based, says Couch.
“Contractual is ‘We need to ramp up our headcount for the next five years for a certain demand.’ I think this is more project-based: ‘We have a certain deliverable we’re trying to achieve and let’s bring in an A-team to get this done perfectly and let’s move on.’”

That means fewer full-time employees — and it’s very much the future, he says. 

“Obviously, organizations will have a core group of longstanding employees but they will use this kind of work to not have dead wood lying around, it’ll just be ‘Move along.’ And so obviously it’s going to be scary for some people because they’ll have to pick a path and stay on it and search for the next gig, but I really believe that this is very much going to be part of the future. Stability is a bad thing — you tend to rot,” says Couch.

“I think that the Aons of the world are going to have a hard time competing against savvy people using the Internet to find good work.”

Companies have realized the advantages of a gig economy, he says: “‘Gosh, we can hire somebody, pay a bit more for the short term but we’re not racking up a major pension plan or something like that, we can just move through people.’ So I think it started by companies trying to save some money but I think that individuals are seeing the benefit of it, that you can make a good living if you’re able to keep moving.”

There will be a divide, however, between those scared by the concept or content to stay in one place, and those who have the entrepreneurial spirit, he says.

“I don’t think it’s generational, I think it’s personality, I think it’s courage — you have to be brave to choose this path — but there’s some remarkable things that come out of it.”

As for gig economy workers, there’s an onus on them to be true subject matter experts, he says.

“There’s going to be a lot of personal branding that’ll have to come out of this, but the benefits are going to be control of your own destiny, more than anything.”

Bottom line, this is going to give a lot more people meaningful work, says Couch.

“It’s certainly not for everybody, and that’s a big thing. The problem is more and more jobs are going to go this way and if you’re not naturally inclined to this, it’s going to be very challenging in the future for work.”

As for employers, the advantages include being far more nimble, flexible and adaptable, says Couch. 

“The other thing is it minimizes your risk of having dead wood — employees that just run out of runway and then you’re stuck with them. This way, you can renew contracts on a short-term basis and get exposure to better people, you get exposure to a variety of ideas, you don’t get stuck in an organizational mindset, you’re constantly bringing fresh ideas in.”

But these people should not be considered “employees” in the true sense.

“They’re not employees and they should never be treated as such. They’re brought in for a job, they should be measured on their ability to do that job, and they should be rewarded based on how well or poorly they do that job,” he says.

“They should be considered team members... but certainly you don’t want to get into benefits packages and guaranteed salaries — it’s ‘Here’s what you’ll be asked to do, here’s how you’ll be compensated for it and when we’re done, thanks for your time.’”

As for HR’s role, they have to be like brokers, says Couch.

 “They have understand what is required, what the value of that is, and make ongoing offers… (and) making sure you don’t lose this person to another company for the six months you would need them.”

HR professionals would also have to be like “networking ninjas,” he says.

“If your head of HR does not have a database or a LinkedIn profile that has thousands of people in it so they can pull that skillset out tomorrow, networking is going to be critical. So if your HR person is stuck in the office all the time and they are not out and about meeting people, going to conferences, seeing what’s out there, what’s available, what sort of services are there, good luck trying to find them.”

Rick O’Connor
President and CEO of Black Press Group
The Surrey, B.C.-based company has 1,800 employees in Canada

Years ago, Black Press Group consolidated a number of newspapers into a cluster, printing all of them in one location. That was before today’s “gig” economy but still involved the use of information technology to optimize HR, according to Rick O’Connor, president and CEO of Black Press Group in Surrey, B.C.

“Most of our human resources assets were geographically based but with technology, we’re finding that essentially certain parts of our HR element are now being shared right across the spectrum, regardless of geography,” he says. “We’re able to essentially take a smaller group of employees in a more highly productive environment and essentially do the work… in a more efficient manner.”

But in the publishing world, a gig economy doesn’t necessarily work because of the daily or weekly schedules, says O’Connor.

“(We) still need to have scheduled employees, so the gig economy doesn’t really help us, in the sense of people just bidding on specific jobs,” he says. “We have contracted out work to third-party companies that have bid on the work and they’re based in the Philippines or India, but we find we’re better off to do that locally because of communication issues, so we do the same concept but we do it internally, enlisting employees.”

For the most part, Black Press in Canada tries to hire employees as opposed to contractors, says O’Connor.

“We’re such a large company, there are expectations of us and some of those extend to things like pension obligations and benefits and that sort of thing, and I think today’s employee is definitely looking for those things.”

As for the growth of the sharing economy, that can be explained by improvements in technology, which help to make processes more streamlined and efficient, along with a tougher economy, as people look to cut costs. But the regulatory environment is also behind the change, he says.

“Part of it comes down to the regulatory environment for labour becoming more and more complicated, so I think people look at it and go, ‘Hey, the fewer employees we have responsibility for, the better.’ And I can see all three points of view melding into a single direction and that is you’re better off with fewer employees and you’re better off with those employees not having benefits and that sort of thing. But, ultimately, I worry about, when we take that approach, the quality of the work and the stability of the work,” says O’Connor.

“And (contract employees) don’t necessarily have the background, familiarity and experience, and so I’m a firm believer that you just need to be efficient, you need to have your own people dedicated to the enterprise and they need to be top-quality employees.”

In a deadline-based business, there’s no room for error, he says.

“Because of that, you just need to make sure the employees know what they’re doing.”

And while boosted creativity and innovation are touted as benefits in a gig economy, with new people for each project, the same can be true with new employees, says O’Connor.

“One of the things that you find with the new age workforce coming into our industry is that they are very innovative but they also don’t stay long, they’re turning over a lot quicker than I think the previous generations have done and… when you deal with turnover, you also get the opportunity to bring in people that bring new skills and ideas.”

And while there may be savings for employers because they don’t have to offer perks such as health benefits and pensions, liability is a big factor, he says.

“It takes a little while for somebody to learn a job — when they come to us, it takes three to six months to really get up to speed, do whatever job it is at the expectation level we want, and so I think it would be very difficult to run a newspaper publishing business with that cast of characters changing every week.”

Another potential downside is the lack of comradery that builds in a traditional workplace, says O’Connor.

“When you get a group of reporters, sales people, sitting together, planning together, strategizing together, they feed off each other and you get way greater content developed, you get more sales. To have those people only interchanging through email or… phone calls, I don’t think would be as good.”

Plus, people are looking for stability in employment, particularly after economic downturns, he says.

“People are looking for steady employment or a steady contract or something they can rely on and fall back on, as opposed to gigs here and there because, at the end of the day, it’s all about supply and demand.”

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