The Gig economy is an environment in which temporary positions are common and organizations 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.
Considering the implications for payroll, one would believe that the biggest task would be for HR to address the issues of legislative alignment. With this new style of employment, one must ensure that the required benefits and taxes as dictated by legislation, are accurately applied to these employees. This is of vital importance and will most certainly increase the administrative burden but is this all HR must consider when applying the Gig economy to their payroll and associated administrative roles?
What is required now, is innovative, out-of-the-box HR Payroll strategies and practices 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”.
We noted in our first installment on the topic that for HR to become effective in this new environment the move from an operational or administrative role to that of a strategic partner to the business would be imperative.
The operational factors which must be implemented would include inter alia:
It is easy for one to state what needs to be addressed from a high level perspective however, putting this into operation in an effective manner is a far more daunting task. This is made difficult considering that Payroll departments worldwide must combat an ever-changing technology, economic, political, social and legal environment.
Payroll has a silver bullet at its disposal to adapt into the environment, in the form of technology enhancements. The administrative technology innovation that is now available creates not only threats but also opportunities for HR. Technology enhancements are enumerated below:
- Payroll and HR systems have become web-based to increase visibility, security and redundancies.
- Employee self-service and automated claims processes have automated many of the administratively burdensome and manual tasks.
- Payroll and HR systems have merged in many cases into single database solutions, with integration at a bare minimum, to decrease duplication of work and maximize accuracy.
- Business intelligence is the order of the day and the payroll and HR databases hold a wealth of knowledge to assist in business decision making.
- On-boarding of employees has become an automated technology driven process to ensure contract alignment and uniformity in the employment recruitment process.
- Recruitment is becoming more effective with the use of open source technology platforms such as LinkedIn which dramatically expands the pool of talent available to the recruitment function.
These are not just advancements in the industry but rather forms the very foundation of the HR function in the Gig Economy; by decreasing manual work and leveraging systems.
The effective implementation of the operational factors is contingent on ensuring that the HR function (and concomitantly, Payroll) leverages off the technology advancements in the best possible way, for their specific business environment.
As the technology in the HR space drives automation, the obvious consequence is that this leads to redundancies. This line of thinking is what has prevented many HR teams from transitioning to a more strategic role for fear of what comes next.
For HR to transition into a strategic partner role it must let go of the administration tasks, embrace the advantages offered by technology to change their roles into more cognitive demanding one. This will not ensure the transition of HR to a strategic role; these simply must be done to enable HR to concentrate on the following:
As HR tools improve, technology magnifies HR’s leverage and increases the importance of HR expertise, judgement and creativity. It is these strategic skills which will prove invaluable in the Gig economy.