The Uber-ization of your workforce (Editor's Notes)

Simply calling a worker an independent contractor doesn't make her one
By Todd Humber
|Canadian HR Reporter|Last Updated: 01/22/2016

There’s something so easy and appealing about Uber. You download the app, set up an account and instantly get a ride anywhere you want at the touch of a button. Plus there’s no fiddling for change or waiting for the driver to swipe your credit card at the end of the trip — you just get out and go.

Uber is the poster child for the so-called sharing economy, along with services such as Airbnb which lets you easily rent a private residence while on vacation. To say those two companies have been disruptive to the taxi and hotel industries respectively would be a massive understatement.

But these firms are giving us a glimpse into what the working world will look like in the coming decades. For the past couple of years, I’ve been a judge at the Focus 2040 competition where post-secondary students from across Canada outline their vision of what the working world will look like in 25 years. 

Every year, at least a couple of entries outline a vision that shows fewer and fewer full-time employees on the payroll. Instead, there will be free agents available to be hired by the task to do your bidding. Need a marketing campaign? Peruse the database for a highly rated, yet affordable, professional to build it for you. 

Need a press release written? Don’t call the employee communications department — it won’t exist. Instead, put out an RFP to a talented pool of freelance journalists. 

These are all things you can do now — and many firms are already on this bandwagon. But it’s set to explode and, from an HR standpoint, it’s a mind-boggling change fraught with pros and cons. 

The pros are relatively straightforward — you have access to a pool of trained candidates, you can pick how much you want to spend. And if you’re not happy with the worker, there are no performance management issues to deal with, no PIPs, no severance packages. Plus you have an endless supply of fresh perspectives — for better or worse.

But the cons are pretty complicated. First and foremost is stability — institutional knowledge is a difficult thing to put a price tag on. In a free-agent era, you won’t build much of it. That increases the likelihood mistakes will be repeated because there’s nobody around to learn from past lessons.

There’s also little stability and no knowledge management. In the world of publishing, it’s easy to have a workforce that is largely freelance. But nearly all the news stories written in the pages of this publication are penned by staff writers. 

There’s a reason for that — the editors feel a real ownership for Canadian HR Reporter and the content that goes in it. They build up knowledge over the years that helps them determine what stories interest readers and what angles to take. (Every new journalist who works here inevitably pitches a story from the employee’s viewpoint, not the employer’s.)

And then there’s succession planning. How do you identify high performers and groom them for leadership positions? The talent pipeline could quickly run dry if the pool of talent exists primarily outside your walls.

There is also unpredictability around costs. Just ask Uber customers on New Year’s Eve how much they paid for a ride — a woman in Montreal paid more than $600 for a cab ride that would normally cost $100, thanks to surge pricing when demand soars.

One of the key reasons this labour model is so attractive to employers is because it can circumnavigate employment standards legislation. But as most HR professionals know, calling a worker an independent contractor doesn’t make her one. At a recent symposium, Doug MacLeod, principal of MacLeod Law Firm in Toronto, pointed out some of the factors a court will consider when determining if a worker is truly independent.

This includes the intent of the parties, but even that can be meaningless. Courts will look beyond that to see who truly has control — does the employer supervise the worker? Does it direct her on what to do? Are there performance reviews? Who provides the tools for the job?

True independent contractors have a chance of profit and loss, and the work can’t really be integral to the business. That may be one of the reasons Uber calls itself a technology company and not a taxi service.

The sharing economy is here to stay — Uber-like models will spread to other industries. Earlier this month, a headline said Canada’s big banks faced a similar threat as technology makes banking easier and easier. 

This new way of working will have a tremendous impact on how organizations handle human resources. Senior editor Liz Bernier recently attended the Canadian Sharing Economy Symposium in Toronto. Look for her report in the Feb. 8 issue of Canadian HR Reporter.

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