Coming to grips with the gig economy (CEOs Talk)

The gig economy is expanding – but what does that mean for HR-related issues?

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.

“I mean, 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 were 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, all the way up from basic literacy to graduate degrees… 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 to present it as a preference, I think there are some people who prefer to work that way but I think, by and large… if you compare the two options, the vast majority of the people would prefer the single employer with a single paycheque,” says Bricker.

“(It’s about) people who are motivated by something other than money, they’re motivated by a desire to feel that they’re still useful and motivated by a desire to stay busy.”

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 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. So we still have… a tax system that works against it, particularly if you’re a publicly traded company — it’s not like you’re going to do stuff under the table.”

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 or gig economy is not really that new, according to Kyle Couch, president and CEO of Spectrum Organizational Development — it’s similar to the 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 involved.

“It allows organization 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 at a certain point.”

There’s been a rise of people wanting control of their own destiny, he says, so they’re able to move through projects that are meaningful to them, “they don’t have to sit and rot somewhere.”

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: “‘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 its courage, you have to be brave to choose this path — but there’s some remarkable things that come out of it.”

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.”

As for the 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.”

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, and that’s the end of it,” he says.

“They should be considered team members, they should be considered  project 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.” 

Tony Elenis president and CEO of the Ontario Restaurant Hotel and Motel Association
The Mississauga, Ont.-based group has about 15 employees

For Tony Elenis, president and CEO of the Ontario Restaurant Hotel and Motel Association, the sharing economy is a challenge when it comes to the hospitality industry.

“What it means to me is traditional peer to peer, enabling people to share products, services, objects that they might have with others on a short-term basis, I guess is what it comes to… But then there is a difference between when that happens and when commercialization happens or an enterprise that does that for more than just sharing but becomes a total core business. I would call it, at that point, it is not somehow regulated but it is really a professional underground economy when it gets to that level.”

Technology really has been the instrument and the driver behind it, he says.

“But, of course, money talks, so the idea of making money in an environment that’s unrestricted, people jump on it and that’s what really the growth, this phenomenal growth that has happened. That technology has allowed (the) creation of platforms and systems that can reach massive scales.”

It’s employer-focused in that the employer really starts it and drives the agenda, “in whatever form that might be, but it has really changed considerably from a typical sort of business where again it becomes hushed,” says Elenis.

“Employers today, because the margins are shrunk, even in the traditional business, are looking for part-time, contract (employees) — that’s smart management, really, at the end of the day, it’s smart business, it’s not disobeying the law… that is fair and that’s how capitalistic societies work.”

The advantages for companies are obvious, such as not having to pay benefits and perks to employees, he says. But then is it a fair playing field or community-minded when these employers are not paying taxes?

“All that dough is not going into the deficit, for example. Our governments have a tough time right now in cutting back on health, education, infrastructure that we all need support in, all that, that’s where taxes go, so as taxpayer, why are there businesses out there not contributing to that?” says Elenis. 

 But the appeal for workers embracing the gig economy is obvious, with more flexible time — which millennials seem to like more than previous generations, he says.

“It is easier perhaps if they have a bit more say in their scheduling and it’s not sort of the typical… ‘I have a boss and I have to go to work and follow the rules.’ It depends on what relationship they have for it, so from that, the employee does have advantages.”

There’s also the appeal of extra money, he says. AirBnB participants, for example, may rent out their property to earn extra income on top of a regular job.

“And it’s hidden, with an unregulated industry… it’s the wild, wild west out there right now. And, secondly, it s the wild, wild west when it comes to employer-employee relationships because… it hasn’t been regulated to the point you can start talking about the employee side yet,” says Elenis, citing class-action lawsuits in Europe where people are often successful in claiming they’re employees, not contractors.

“In a normal employment market, a contractor would be given an opening and closing date, and usually it’s short-term with a specific skill set job… well, this one right now, we haven’t even got there yet to really comprehend it.” 

But for employers, there are risks and liabilities — and that’s where HR can help.

“Right now, many are doing it but do not know the laws and HR practices, really, other than making sure that the well-being and the social aspects of employees are looked after… and making sure that employees and management understand that employees are the biggest asset,” he says.

HR also knows about workplace regulations and laws such as occupational health and safety or employment standards, says Elenis.

“All those (sharing economy employers) need to understand their obligations — right now they don’t.”

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… B.C. is still a competitive market and you need to offer things like benefits and pensions to employees to induce them to work for you.”

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 every night or every day their task is assigned to them.”

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, so I do see that as an advantage, whether it comes through turnover or a gig economy.”

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.”

Kithio Mwanzia president  and CEO of the Guelph Chamber of Commerce
The Ontario-based group has nine employees

When it comes to defining the sharing economy, there doesn’t have to be a singular definition, according to Kithio Mwanzia, president and CEO of the Guelph Chamber of Commerce in Ontario. It can be about peer-to-peer networks, robust co-operatives, using community bonds as a financing tool, shared initiatives or leveraging app technology to bring it all together.

“Sharing economy really is the utilization of multiple tools to be able to draw value out of particular products and services that haven’t existed before,” he says.

Technology along with a tougher economy could be behind the growth.

“Technology has really enabled this type of outreach and expansion,” says Mwanzia. “There’s also a great interest in a pluralistic approach to financing. Crowd-funding was probably one of the biggest starts to it, now community bonds are a valuable component.”

And when it comes to the sharing economy, the consumer is highly empowered.

“A lot of it is based on ratings, ratings that are provided and how the consumer responds to a particular service has lots more equity than perhaps it did before, so it’s the empowerment of consumers and the expansion of technology,” he says.

And from the perspective of Guelph, there’s a community aspect to it where people feel greatly connected to their community because they have the chance to invest in it, says Mwanzia.

Citing examples such as Rover, where people can share parking spaces, or Dozr, where people share construction equipment, “it’s just a different way for ingenuity and technology to add value,” he says.

As for the people involved, it’s less about contact or temporary work and more about people being entrepreneurial, says Mwanzia.

“It’s spurred on a very interesting sense of entrepreneurship in the actual players in the shared economy.”

When it comes to a person working for Uber, for example, “you have an entrepreneur in their vehicle by virtue of the agreement they have, so there isn’t that contractual employee relationship. It’s an entrepreneur within the specific network of the technology that’s offered, to be able to share this resource,” he says.

And looking ahead, there will probably be more hybrid approaches. 

“You look at the sharing economy as a network connector, essentially, and how you participate in that network is going to have to be a hybrid beween old and new. I don’t think it’s possible to overlay old principles on a brand new model, and that’s OK — it’s OK for the model to evolve, there’s value in that, there’s value to the model being a hybrid of both old and new. Business model innovation is one of the most important ways that we actually make significant progress and that’s what happening right now, it’s business model innovation, the extent of which that network is able to connect all of those elements together,” says Mwanzia.

And this growing entrepreneurship brings many benefits.

“The capacity, the power of entrepreneurship to think nimbly about challenges and how to solve those challenges, to operate beyond… conventional thinking, to be creative, all of that emerges out of a sense of being entrepreneurial. That principle is now applied, you’ll have people who are serial entrepreneurs, constantly thinking creatively and strategically and so on and so on, and that culture is bred through what we’re seeing now in the new model,” he says.

But there is a need for a level playing field for both new entrants to the market, through business model innovation, and incumbents.

“That can’t be overlooked. But we can’t also overlook the fact that there is an opportunity for more nimble, more creative, more risk-taking and out of that emerges significant benefits when it comes to economic capacity, new inventions, new business process, all those things,” says Mwanzia.

And the role of human resources is a big one.

“We can’t take this leap without the guidance of people that have expertise in thinking about this, have thought about a variety of both risks and challenges and opportunities. So the profession, the HR profession, will play a very important role in helping to guide that level playing field,” he says.

“When it comes to policy informing that is well-balanced, the HR community will play a very important role in designing the right framework to actually make sure that we’re not cannibalizing but we’re actually advancing, so they’ll play an important role in ensuring that there is progress versus having an adverse impact.

“We (don’t) want to get caught up in the excitement of a new and innovative approach but forget about the fact that sound public policy still needs to be established to ensure that there’s a level playing field when it comes to business opportunity and the fact that we want this to be a net positive, not see a cannibalizing versus this being a net positive from the perspective of this community.”

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