The Gig Economy and the impact on HR

The Gig Economy and the impact on HR

What is the Gig Economy?

In bullfighting there is a term called querencia. The querencia is the spot or space in the ring to which the bull returns time and time again. Individual bulls have a different querencia, but as the bullfight continues, and the animal becomes more threatened, it returns more and more often to this spot. The importance of this action is that each time the ferocious bull returns to his querencia; he becomes more predictable and consequentially, the matador has a competitive advantage because of this predictability. The bull can thus easily be defeated as instead of trying something new to attempt to defeat the matador, it returns to what is familiar; his comfort zone or querencia.

The reason for the introduction above, is that increasingly we are observing companies continuing to formulate Reward, Benefits, Retention and Compensation Policies which were applicable to the workforce in the past – but certainly not the future. They are returning to their querencia rather than accepting that the workplace, and the policies governing it, has changed and will change even more dramatically in the next few years.

The Gig Economy is here - accept it!

What is the Gig Economy? It is an environment in which temporary positions are common and organisations contract with independent workers for engagements. A gig may be a 5-month contract; a gig may be someone working for 2.5 days per week for the next 5 years; a gig may be an interim CFO for a 1-year period, or it may be a gig employee who only works when the company has overflow work on an ad hoc basis. The emergence and growth of the Gig Economy is indisputable, and it is not a fad that will disappear in a few years, rather, it is a revolution which will govern how we work in the future. Some facts pertaining to this new and exciting trend:
  • The Freelancers Union, 2014 study found that:
    o 53 million or 34% of the US workforce are now independent workers; and
    o 90% of these workers stated they would not return to a traditional job.
  • Intuit predicts that by 2020, 40% of US workers will be independent workers.
  • A McKinsey study found that about one third of working Americans work independently and 70% do so by choice.
  • Uber, Airbnb, and other unicorns with valuations more than $1bn are built around an employment philosophy of maximising independent workers and minimising permanent employees.
  • Millennials matter to most companies and thus it is important to understand their position in the Gig Economy. Research indicates that millennials embrace the Gig Economy. They consider this arrangement as normal and welcome the fact that it provides a work-life balance while furnishing them the opportunity to be their own boss. The study by Freelancers’ Union found that 32% of millennials believe they’ll be working mainly flexible hours in the future. reports that 70% of millennials believe that freelance employment will play a role at some point during their careers.
In the past, one associated gig with musicians or desperate unemployed people who could not find a permanent position. This has now changed.

Who wins in the gig economy? Diane Mulcahy in her article, “Who wins in the Gig Economy, and Who Loses”, opined that it would be,

“Workers with specialised skills, deep expertise, or in-demand experience win in the gig economy. They can command attractive compensation, garner challenging and interesting work, and secure the ability to structure their own working lives. Workers who possess strong technical, management, leadership, or creative abilities are best positioned to take advantage of the opportunity to create a working life that incorporates flexibility, autonomy, and meaning”.
Is this not exactly the type of talent that HR executives have traditionally attempted to recruit and retain by implementing talent retention schemes and “locking in” targeted employees, using long term incentives and superior benefits to be seen as an employer of choice? The traditional attraction and retention schemes will no longer be effective. Nor will the normal pay mix philosophy of a market related base salary, an attractive short term incentive scheme, generous benefits and a superior long term incentive scheme be effective in ensuring your company can attract the winners in the Gig Economy.

Return to your querencia and the comfort zone of the conventional reward tools and continue to formulate time-honoured retention strategies and you will be defeated - no bull.

What is required now, is innovative, out-of-the-box HR Reward strategies to ensure that your company does not fail to embrace the change. Kjell Nordstrom and Jonas Ridderstrale summed up what is required in their book, Funky Business, when they stated that, “Future success will be about challenging current wisdom and moving your pawn from A2 to E7 in one move”.

What will be the role of HR professionals in the Gig Economy?




We are of the opinion this is like a binary option – there are only two outcomes. Either HR will be relegated to an unimportant operational role OR HR will become an important strategic partner.

However, to become a strategic partner, a mind shift is required – do not return to the querencia by doggedly persisting with the current outdated HR practices and policies. PwC in their report “The future of work” discovered that despite HR believing that 20% of their employees would be independent workers by 2020, less than 33% of employers were basing their strategies on the emergence of the Gig Economy. This presents HR with an amazing opportunity to guide and counsel management thereby proving their strategic value.

Each company, sector and industry is unique and the Gig Economy will affect each in a very different manner. There is therefore no panacea or magic bullet to guide HR professionals however operational factors which must be implemented would include inter alia:

Operational Factors

Operational Factors

The implementation of the Operational factors detailed above will not ensure the transition of HR to a strategic role; these simply must be done in addition to the following:

The Gig Economy will be demanding for HR professionals however if they are to play a strategic role in this new and exciting future, they cannot return to their querencia. Further, this is an ideal opportunity for HR professionals to elevate their position from a transactional role to a strategic partner of the Exco.


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