Predictions suggest that gig workers will represent a third of the workforce by 2020. What does the gig economy mean for procurement?
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The Gig Economy – an overused buzz phrase, refers to the growing number of people who work on a contingent basis. These people are not on a company’s payroll; they provide services on a consulting, freelance or temporary basis, either full-time or part-tine.
The number of people taking this route, because of a tight job market and pressures on the global economy, has risen dramatically in the past few years.
Millennials love the opportunities it brings and some over 55s are reinventing themselves in a new role. This is the new world of work. It is projected that gig workers will represent a third of the workforce by 2020.
Benefits of the gig economy for companies
Companies are struggling with rising labour costs and they need a workforce that can quickly adapt to market conditions. the benefits of a gig economy include:
- Easily source skilled workers and experts for projects via on-line platforms or using third party staffing agencies
- Scale their workforce up and down quickly to meet business demand
- Increase speed of hiring and mobilisation due to simpler recruitment and faster budget approvals
- Invest less in training and employee benefits
- Reduce the cost of administration, office space and facilities
However, this attractive solution to the talent management headache comes with challenges for both Human Resources (HR) and Procurement.
What does it mean for the procurement function?
The procurement function is already benefitting by engaging contingent or temporary staff for its own use but has not fully explored the potential of the gig economy for filling job roles that are not repetitive or are not project-based. CPOs can ramp up their procurement savings and process efficiencies through using contingent workers more extensively.
Procurement also has a role to play in the wider business, along with HR, to manage this growing trend. The ways of engaging with suppliers of services will change; potentially simpler contracts but using more specialist suppliers and even engaging with individuals.
What does it mean for the HR function?
Line managers will have staffing requirements and demands that HR has not experienced before, attracting and engaging a diverse workforce to satisfy their internal clients will require an adjustment in mind-set. It may help HR to engage with procurement professionals to apply tried and tested stakeholder management techniques.
- HR strategies for recruitment and retention will have to change.
- Policies for non-permanent employees must be more flexible
- Performance management measures such as key performance indicators (KPIs) will have to be adapted to suit the new ways of working
- More attention is needed to benchmarking market pay rates
- Additional effort is required to engage and motivate people working remotely
Risk and compliance
A bigger contingent workforce means increased risk. How do you manage to control hundreds or even thousands of workers that have access to your systems and technology?
It can become an HR nightmare to ensure compliance with policies and procedures and, at the same time, handle the administration. Specialist recruitment companies and HR service providers are relishing the opportunity and taking up the slack. They have experience in the legal and compliance issues in HR and have more capacity and energy to handle the day to day issues. Who sources and manages the outsourced services? Why, procurement of course!
Experts and advisors
There are also interesting developments among the more experienced and specialised independent consultants offering their services, especially in procurement. These people are not to be found through conventional recruitment channels, they are mobilising themselves into small professional services firms that network and collaborate to provide skilled professionals to commercial companies and government.
Success factors for managing gig workers
- Managing a remote and mobile workforce means providing the right collaboration tools and technology to ensure that they can honour their deliverables. Connectivity is the key: wireless links, video conferencing, internet access and suitable work spaces.
- An organization needs to be agile enough to mobilise new teams and scale operations up or down to adapt to changing business needs. Inflexible polices, fixed locations and traditional office hours do not suit this solution.
- A robust administration system is needed to manage a contingent workforce – external support may be the answer.
There’s no question that the benefits of the gig economy to an employer are many but it also comes with complexity. Procurement and HR both need to play roles in this process but can they work together on the best solution?
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