HR adapts to the GIG economy

HR is acutely aware of the radical changes that the employment model has undergone in the last few years. The gig economy has impacted all business sectors and the way HR interacts with talent has metamorphosed too: drivers have been ‘Uber-ised’, book sellers ‘Amazon-ised’ and travel teams AirBnB-ised’. As the nature of how we work changes, so too HR leaders are having to adapt.  We analyse key challenges for HR amidst this change and how they can adapt to survive and thrive.

Although most of us recognise the need for agility in the morphing employment landscape, deciding how best to actually respond to these changes and which areas need prioritising is still a hurdle to many in HR. A blended approach to talent management combining both traditional and gig workers, cohesive integration of new contractual obligations, and embracing the right technology to help with acquisition are all critical elements.  Alex Swarbrick, Regional Director—Asia Pacific, Roffey Park highlights the most challenging points for HR when formulating future-proof strategies in the gig economy.

Adapting to new blends

Gone are the days of simply ordering ‘a coffee’. Walking into today’s coffee shops we have had to adapt to a multitude of blends—and variations of such—on offer on the menu, with a fair few choices only available online via Instagram. It is a similar story in today’s workforce and HR is having to adapt to a rapid and ongoing shift from a permanent full-time workforce to a blended workforce comprising full-timer, part-time, permanent, temporary, employed and self-employed staff.

Today’s most successful workforces incorporate flexible and project-based teams and it is essential for HR to evolve talent management strategies to better accommodate gig workers within this framework. This is best done via mobile platforms—which tend to be most readily adopted by gig workers. Embracing mobile delivery mechanisms also provides HR with much greater flexibility in terms of managing teams in very fluid ways—allowing them to monitor progress and collaboration of diverse gig teams regardless of their location. Tom Vines, SPHR, director of talent at IBM Corp. commented, “The manager decides whether the team needs to be virtual or not. It’s the skills and talent that are important, rather than face time.” Technology allows HR to dip their toes into a much larger pool when utilising technology to interact with talent worldwide.

But utilising gig workers is not without its challenges and Uber has been and still is saddled with more than its fair share of lawsuits on a range of gig-related issues including accusations of paying below minimum wage, ignoring local regulations and having drivers’ privileges ‘deactivated’ —a circuitous way of saying they have been retrenched. Many of these challenges has arisen because Uber drivers and similar service providers are considered ‘independent contractors’, and for these workers HR departments are nonexistent. The only thing left for them to do when they have problems, then, is to file lawsuits against the respective businesses; this is not only time consuming, but increasingly weighted against the independent contractors.  This is likely to change soon and legislation is slowly being put in place to protect gig workers. In the UK, drivers under contract from Uber won a landmark case: Mr Y Aslam, Mr J Farrar v. Uber B.V, Uber London Ltd, Uber Britannia Ltd. that means Uber can no longer categorise gig workers as ‘sub-contractors’, but must now treat them as ‘employees’—making them entitled to a minimum wage.

Nigel Mackay, Associate Solicitor, Leigh Day, who represented the plaintiffs—two Uber drivers—said, "This judgment acknowledges the central contribution that Uber's drivers make, by confirming that its drivers are not self-employed, but that they work for Uber as part of the company's business. This judgement not only impacts Uber drivers in the UK, it now sets a precedent for all gig workers whose employers wrongly classify them as ‘self-employed’. Moving forwards, to foster belonging and reduce the risk of lawsuits, it’s prudent for HR to properly integrate gig workers into their organisations and afford them the same rights—if not the same benefits—as traditional employees.

So are gig workers actually happier than traditional ones? Regulation around the gig economy is still in its infancy. According to report To gig or not to gig: Stories from the modern economy by The Chartered Institute of Personal and Development (CIPD), HR should be concerned, as 57% of gig workers agreed that firms are exploiting loopholes in order to achieve immediate growth at the expense of the workforce. The survey further revealed that half agreed that sacrificing job security and workers’ benefits in exchange for greater flexibility and independence was a worthy trade. Overall, gig workers are just as likely to be satisfied with their work as people in traditional employment settings, at 46% and 48% respectively. Kate Bell, Head of Economic and Social Awareness Department, Trade Union Congress UK  suggests that HR may want to aim for a happy medium, in that the flexibility offered by the gig economy could be adopted within traditional employment models. She noted, “Choice is important, and the fact that people can fit gig work around their other commitments is good, so why can’t it be offered in standard employment?” Leaders are becoming aware that flexibility and independence can be offered in the standard work setting, inclusive of employees’ rights and benefits. This highlights the possibly of a ‘best of both worlds’ scenario.

One company making a great job of integrating gig workers into its existing framework is ZALORA. Foo Chek Wee, Regional HR Director, ZALORA, in a recent interview with Equatex, explained how she had gone about achieving this. She said, “There needs to be a common platform or narrative across an organisation; it doesn’t do us any good by separating or isolating non-permanent employees. At ZALORA, we have created a culture that is inclusive. We do not view someone as contracted or as a consultant; we see each other as serving the same cause.”

Adapting to engage & empower gig workers

Key personnel are now far less tied to one organisation than in the past, so HR has to work hard to establish longer-term relationships with gig workers and seamlessly integrate them within a blended workforce to better engage them. Empowering talent is a key driver for innovation and few know this better than leaders who are growing talent in organisations from start up. Kevin Kuo, COO and Head of Strategy for HelloToby designed a web platform specially to help connect gig economy talent with suitable work. He stressed the importance of HR giving talent sufficient responsibility to help empower them. He explained, “The work culture of Asia means often employees do not like to make their own decisions. Innovation needs to be given the right environment to expand in, and that requires careful development by HR. In our organisation we realise our staff have creative frames of mind, but they don’t necessarily have the right room to share those ideas. So we do our best to change that and help them develop decision making and communication skills.”

We realise our staff have creative frames of mind, but they don’t necessarily have the right room to share those ideas. So we do our best to change that.

—Kevin Kuo, COO and Head of Strategy, HelloToby

As the work culture and dynamic changes, so too do recruitment practices. Kuo commented, “Millennials are starting to pick up on this culture shift and in response they want to do something that is actually interesting, challenging and inspiring. So when we recruit, we proactively look for talent who match this culture because they are the ones we want to work with.”

Adapting to AI

The enabler of the gig economy has been technology. With differentiating strategic capabilities no longer simply being derived from human capital, HR must now adapt to better balancing and managing the increasingly interchangeable human and technological capabilities. Yet, the increasing use of AI and the potential near-term displacement of human capital with AI capital is a development many business leaders are still ill-equipped to manage. Getting the balance right between human and artificial intelligence within an organisation is a tricky one for HR to manage.

With businesses trimming the fat, we are witnessing a heavier reliance on contingent workforces and increased use of technology and employee self-service platforms over traditional HR models. However, while this helps the bottom line in the short-term, it is unlikely that AI will ever get close to replacing the HR function. As the arbiter between the upper echelons of a business and its talent, HR remains essential in humanising organisations and providing face-to-face interaction as one of its core roles.

On the positive side, when utilised strategically, advances in technology should mean that many processes can be streamlined and automated. This is where the balance must be struck, and HR must decide where time is best spent. An over reliance on automation will result in disgruntled workers who cannot speak to someone when they need to, leading to a massive breakdown in communication. On the other hand, not utilising technology to its full extent will mean HR is overburdened and unable to effectively complete its functions.

As an example, du—a telecommunications company in the United Arab Emirates—introduced a new Talent Acquisition System. This replaced the need for HR to sift through thousands of applications and CVs by introducing ‘disqualification questions’, ‘cognitive ability assessments’ and ‘situational judgement questions’. This ultimately led to the right calibre of students being put forward for consideration, who were then invited to do a video interview to sell themselves. The firm could then prioritise HR’s time on vital processes rather than sieving through CVs.

Adapting to be seen to be doing

HR should also bear in mind that it is not just about doing great work, it is also about creating increasing visibility, transparency and engagement so that they can ‘be seen’ to be doing great too. The Global Human Capital Trends 2015 study by Deloitte showed that employees’ perceptions of HR leaves a lot of room for improvement in this regard, with 58% of employees only believing HR to be ‘Adequate’ or ‘Getting By’ in terms of performance.  Antonio Ramirez, Senior Vice President of Human Resources, Sands China Ltd stated, “HR teams need to focus on the potential, think and raise the right questions regarding how the organisation can function better and to provoke thoughtful answers from the team.” Being proactive—rather than reactive—will demonstrate HR’s dedication and willingness to excel.

Adapting into the future

The gig economy looks set to continue to grow, but the tipping point may be a while off yet.  Future business leaders have now reached a fork in the road. They may either take the option of simply re-skilling HR to provide better tactical value through people processes and giving expert advice on people issues. Or alternatively, they may choose completely transform the function and leverage the full potential of its strategic contribution by defining and delivering strategic capabilities. Either way, HR must adapt to the new gig work landscape and demonstrate its ability to deliver true value to organisations. HR has to demonstrate to the board that their role is now more critical than ever as the population of gig workers continues to grow.

But, is HR really ready for this gig shift? A recent report by PwC—the Future of Work study— indicates that HR is not. It found less than one-third of those in HR base their future talent strategies on the developing gig economy, even though almost half of HR professionals expect at least 20% of the workforce to be comprised of contractors and temporary workers by 2022. If HR fails to rise to this challenge, then it may, if it has not already, become rapidly overshadowed by other functions such as IT or Strategy.