In the UK, there are a staggering five million gig economy workers – myself included! And in the US, the gig economy accounts for around a third of the workforce. With so many people working in the gig economy, businesses really need to get to grips with the changing nature of work and employment.
In this article, we take a look at what the gig economy actually means – and, crucially, how it impacts performance management.
What is the gig economy?
The term “gig economy” is used to describe people who work independently, often for a number of different companies. From people like me consulting with businesses, to the Uber drivers who take you from A to B, more people than ever are engaged in independent or freelance work. For some, the gig economy provides a way to earn a bit of money on the side. For others, it’s their sole source of income.
I spoke to Marion McGovern, author of Thriving in the Gig Economy, to pin down a more detailed definition of the gig economy. “Some journalists define it more narrowly, saying the gig economy only includes those who secured the work through a digital platform like Uber,” she told me. “I disagree with that narrow definition and look at it as all independent work. Similarly, others will include the sharing economy in the gig world, citing Airbnb as a gig company. I don’t see that either; I rent the condo in Colorado because it is near the lifts, has the right number of bedrooms, is available and is at the right price point. I don’t do it because John is a great host and I want to give him the gig.”
For McGovern, the definition would however include the whole eco system of services and facilities that support independent workers, such as digital talent platforms, collaboration tools, staffing companies, co-working spaces, and so on.
Why is it so big now?
The gig economy has been around for a long time. Indeed, when she founded her company M Squared Consulting in 1988, matching independent consultants with suitable projects, McGovern was effectively starting a gig economy company long before we were all using the term.
So if independent work has been around for such a long time, why has the term “gig economy” suddenly exploded? The answer can be summed up in one word: technology. Digital talent platforms like Upwork have made it easier and more efficient for individuals to find projects – and for businesses to connect with flexible talent. Plus, the internet, smart phones, laptops, cloud technology and tools like productivity apps mean we can work whenever and wherever we like. As McGovern puts it, “Technologies that have created the on-demand portion of the gig world, the drivers and delivery folks, have fundamentally redefined how that type of urgent but commodity oriented work is procured.”
What this means for employers – and HR teams in particular
Many businesses will have taken on contingent workers or freelancers at one time or another. But as McGovern points out, “The advent of the digital platform world has altered the talent supply chain.” And rather than pushing out traditional staffing agencies, “digital platforms are becoming sourcing engines for them. Upwork, for example, might secure the needed candidates for a technical staffing firm, who would then interview, vet and present them to clients. Big companies may use both the staffing firm and then for urgent or unforeseen projects, turn to the platforms for options.”
So companies have multiple channels to source talent through, depending on how urgent or specific their needs are. You might argue this allows hiring managers to circumvent in-house hiring procedures, and just go online to find the freelance talent they need without coordinating with their HR colleagues. McGovern has a different take. “In these situations, HR can become a great partner, helping those managers navigate the platform world.”
HR also has an important role to play in creating the right company culture and mindset for the gig economy. “Twenty years ago, the move to deploy independent workers was largely a cost play. Now it is a talent play. Companies need freelance talent because they need their skills and experience … HR needs to take the lead in showing well-deserved respect to this cohort of workers.” HR can therefore model the mindset and culture of freelance workers being just as much a part of the team as in-house talent.
And from a strategic perspective, HR can also act as an overarching head of the company’s gig economy talent pool. This means the best talent can be identified and deployed in other areas of the business as required, instead of being limited to working with one hiring contact in one department.
Aligning performance measurement to this brave new world
The old-fashioned way of measuring and managing performance was to break down employees’ roles into specific tasks and monitor how well they did those tasks. These days, I’m happy to see that we’re shifting more towards performance measurement as a way of adding value to employees.
To get the best out of people, you have to engage them with the company’s goals. Modern performance measurement is therefore about identifying and measuring the skills, values and behaviours that will best help the individual develop … and the company succeed. Continual feedback (as opposed to the annual performance review) is playing an increasingly important role in this supportive system, allowing employees to give and receive feedback much more frequently.
This more supportive approach to performance management fits well with the gig economy, where workers are not in the same physical location as the person they’re reporting to. There’s little point trying to break down and measure every little task a freelance worker does during their day. And an annual performance review with someone whom you’ve probably never met would be pretty much meaningless. But a system whereby the freelancer is engaged through regular reviewing and feedback, where they’re engaged with the project’s and company’s goals, is much more suitable.
So, as well as measuring obvious project and results-based metrics for your freelancer, it might also be helpful to measure metrics that indicate how well the individual is engaged with the team. Communication metrics would be a good example of this, measuring whether the individual communicates well with the team and keeps stakeholders informed.
Managing the performance of your independent workforce
When we spoke, McGovern set out some key tips for managing independent workers successfully. These include:
- Build a respectful relationship. A freelancer wants and deserves respect but they also want to feel there is a connection with the business.
- Understand the motivations and needs of gig workers. Most freelancers choose this career path because they want flexibility and control over their hours and the work they do. Flexibility can be a powerful negotiating tool for your business.
- Decide quickly. Recognise that you’re not the only option the freelancer may be considering. If you wait too long, he or she may get another gig.
- Give regular feedback. Although compliance folks would warn against employment-oriented feedback sessions due to the risk of co-employment, feedback can be given against the project deliverables as outlined in their contract.
- Be clear on reporting relationships. Who has the authority to give more or different work to a contractor? Similarly, it should be equally clear that new work may mean a revision of the contract terms.
- Pay freelancers quickly. Because you want to be seen as a good client, who pays on time and in full, in order to become a “client of choice” – a designation McGovern believes will be important in the gig economy future.
Thanks to technology platforms and advances in performance measurement, companies are better able to tap into the global talent pool and get the very most out of their gig workers.
Where to go from here
If you would like to know more about KPIs and performance measurement, check out my articles on:
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