The Future of Business: Contract Workers and the Gig Economy

The dynamics of running a business have evolved remarkably over the last decade, due to a stunning onslaught of technological advancements, a change in buying preferences and of course global economic trends due to the pandemic. One of the biggest transformations, which can be attributed to the convergence of all these factors, is what we are seeing in the employment sector. As a business owner today, who and how you hire is quite different than what it was just 10 years ago, with the standard W2 full-time employment model giving way to contract, freelance and one-off project work. Yes, we are living in a “gig economy”, a labor market characterized by the prevalence of short-term, freelance, and temporary jobs that sometimes found through digital platforms or apps.

According to a statistical survey conducted by University of Chicago’s National Opinion Research Center, there were approximately 20 million independent contractors, consultants, and freelancers working in 2013. Today, that number has nearly tripled to about 58 million Americans who consider themselves independent workers (McKinsey). While many chalk up this dramatic jump to workers’ preferences for work-life balance and other personal considerations, that is only half the equation. Business owners have a lot at stake too. And although this new employment dynamic can be challenging for employers, it may also provide some very substantial benefits for those looking beyond the standard employment model.?

Why Business Owners Might Hire Gig Workers

In today’s gig economy, contractors are often hired on a project basis. This talent model offers numerous advantages to business owners, particularly considering the continued volatility in the employment market.

There are a number of reasons why hiring contract workers just might make sense to an SMB owner.

The Pros of Hiring On-Demand Workers:

• Flexibility: Contractors provide businesses the opportunity to easily scale their workforce up or down depending on workload.
• Cost Savings: Hiring gig or contract workers eliminates the financial cost of employee benefits and long-term employment contracts.
• Expertise & Specialized Skills: Hiring contractors gives business owners access to talent that would likely not be available to them within the standard employment model.
• Innovation: Gig workers and freelancers are less influenced by things like company protocol and history than employees who are more entrenched in the organization. These workers may offer innovation and outside perspectives that advance both work product and company culture.

What Is the Downside of Contractors?

While there are clearly plusses and opportunities related to supplementing an organization’s workforce with gig or contract workers, business owners also face some challenges when considering non-traditional talent options.?

The Cons of Hiring Contractors

• Lack of Loyalty: Contractors may lack allegiance to a company that is more often found in full-time employees. Not having long-term skin in the game might translate to lower-level work product.?
• Communication Issues: The nature of contract, remote or gig work limits communication opportunities and face-to-face meetings, which may negatively impact quality, productivity, and a collaborative work environment.
• Employment Law & Compliance: It is essential to understand the compensation model associated with the type of worker you engage. A business can’t simply hire a worker to take on the exact same work duties and dynamics as an employee, but only compensate them as a contractor. Doing so may expose a business to lawsuits and massive fines.?
• Security & Confidentiality: Contract or gig workers may require access to proprietary data, private information or secure systems. Allowing this access might pose security and confidentiality risks.

While there are pros and cons surrounding the gig economy and on-demand work model, this business trend has been evolving for years and isn’t expected to go away anytime soon, if ever.

TAB Boards are business owner peer advisory groups that meet monthly to support each board member’s journey to business success. Hiring and HR issues are common topics presented by business owners at board meetings. TAB Board Members ask questions to gain understanding of the business owner’s specific issue, then share their individual insight and experiences to help build a smart solution to the problem.

Reach out for expert guidance at Nirmako.com and TheAlternativeBoard.com also please feel free to reach out, comment, or DM me. Together, we can build a resilient backbone for our economy and prevail.

Lets build a better tomorrow now! Fill in a short, focused digital questionnaire and get your business data analysis directly to your email https://nirmako.com/iron-sword