Management and the Gig Economy

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The “gig-economy” was a term originally coined in 2009 to describe the push of workers toward more contractual work on an individual job basis as opposed to the traditional 9-5 employment model. While gig work has been around for over a decade, the pandemic pushed many organizations, as well as many individuals in the workforce, to examine less traditional models of work structure and flexibility in the day-to-day.

As the gig workforce continues to rise, so do the questions and challenges surrounding this movement. Gig work essentially is defined as contract work, but most often tends to be piecemeal projects that workers take on one at a time. Flexibility in schedules, based on current research, seems to be a large driving force behind the gig-economy growing trends.

While many tend to believe that the gig economy is mostly based on increased technology, the initial rise was post the 2008 financial crisis when a large portion of workers turned to “gig” jobs in order to close the gap on lost income or lack of other job options. (Myhill et al., 2021).

I will examine the perceived pros and cons of the growing gig economy, and identify future areas of research pertaining to its impact on how management within organizations may need to shift in the future to accommodate changing work environment expectations and resources.

In all the ways that we can proactively bring these items to our clients’ attention, we set ourselves apart as true advisors instead of necessary services that clients don’t always see as a value add to their bottom line.

Another widely unanswered question looks at how gig workers are managed, specifically how fairness and equality in a gig work environment might be monitored or even considered and how management may be affected in their decisions related to pursuing equality in a gig workforce.

In line with the entrepreneurial perception, management should also consider worker motivation in the gig economy. Management assumptions that all gig workers are self-motivated in line with an entrepreneurial perception may not be accurate when we consider the attractiveness of gig work to the traditionally underemployed or unemployed. (Jabagi et al., 2019).

Current Trends

Current research focuses mostly on what is considered gig economy “platforms” meaning the current companies and work environments that are lending themselves to employing gig workers. For example, Airbnb, Uber or even Amazon. The most popular gig economy platforms are “digital on-demand platforms” (Burtch et al., 2018). These platforms essentially are able to provide an on-demand service or product primarily by leveraging a flexible workforce.

Because Uber, for example, does not need to pay drivers while they are not actually conducting a drive, the company can easily control the costs of not having idle staff. The idea of the on-demand driver however means that the workforce can be extremely large because only those looking for an immediate “gig” can clock in and accept a ride, providing the on-demand service.

Flexibility is perceived to be one of the largest driving forces behind the gig economy trend although research has been done to determine how much flexibility gig workers retain depending on the platform with which they work. (Lehdonvirta, 2018).

With advances in video conferencing, file sharing and internal direct messaging systems for staff, it is easier than ever to keep your team connected throughout the day without being in the same physical location.

The idea of the piece work gig environment offering flexibility was such that it reduced conflict between work hours and family life and allowed for pursuits outside of the work environment. Meaning workers could go to school, start a family, pursue other career trajectories all while earning an income on their timetable.

As is pointed out in flexibility in the gig economy: Managing time on three online piecework platforms more research needs to be conducted as to the true flexibility that occurs. As may be imagined there can be a power struggle between management’s timetable and flexible workers timetable in terms of job and project completion.

No research has yet been done to tie this question to the notion that gig workers may be more fueled by under or unemployed individuals which may give rise to research around how they manage their time.

Future Research

To be effective to management in the future, more research should be done to define exactly what gig work is in its varying states and more specifically who are the people that are doing it.

We know two primary characteristics as defined by “Looking at the Gig Picture: Defining Gig Work and Explaining Profile Differences in Gig Workers’ Job Demands and Resources,” which notes in its research that gig work is defined first by the project-based compensation and second by the fact that the work is temporary. (Watson et al., 2021).

But for management, if all gig workers are projected by project and not permanent employees, relationships between gig workers, managers, and an organization in terms of loyalty all look very different than your traditional 9-5 staff.

If not, every gig worker is self-motivated and entrepreneurial, how will managers contend in the future with procrastination, lack of motivation, and timetables when gig workers are looking to manage with less control?

The idea of the piece work gig environment offering flexibility was such that it reduced conflict between work hours and family life and allowed for pursuits outside of the work environment.

And can these gig workers if they do not lack the fundamental self-management skills to maximize productivity be successful in these environments or will project-based work need to continue to provide a more traditional job-like structure in order to sustain employment?

Also, as the percentage of the workforce continues to rely on these models for income, will there be other impacts to the economy as household finances no longer rely on your standard weekly paycheck?

Researching and answering these questions are going to be critical to management teams in the future who want to be able to pivot quickly and address workforce changes to not find themselves in a situation where their business models are un-sustained with a lack of staff.

Leveraging the Gig Economy in Your Firm

Unlike the traditional CPA firm model of the large office spaces, large printers and large staff, the changes in how the workforce is working give more flexibility and cost savings to firms. Talent now can be sourced from essentially anywhere in the world.When considering hiring and talent needs, firms should consider whether positions they’re hiring for can leverage technology to form fully remote positions.

With advances in video conferencing, file sharing and internal direct messaging systems for staff, it is easier than ever to keep your team connected throughout the day without being in the same physical location. Limiting talent searches by geography can not only limit the pool but also potentially impact costs.

In addition to remote positions, more job candidates than ever are considering contract work instead of full-time employment. Considering these options as well can further extend a firm’s talent pool to choose from, but also takes many costs like payroll taxes, insurance, and equipment needs and passes them off to the contractor they’re hiring.

In exchange, contract workers get more flexibility in their schedule and workload which may be more desirable for their lifestyle and work/life balance needs.

Flexibility in schedules, based on current research, seems to be a large driving force behind the gig-economy growing trends.

In addition to our own firm operations, considering the changing needs of your clients proactively can set your practice apart when it comes to value add services. More and more of our accounting and tax clients will start leveraging many of the gig economy changes noted here, including the potential that they themselves are taking more contract work, leading to significant tax planning and income changes for the clients we serve.

As practitioners and advisors, we should consider keeping our clients apprised of planning techniques most pertinent to them. Items like, when to consider switching their Schedule C business to an S Corp can guide clients and provide us with an opportunity to upsell advising services.

Additionally, content like when they should hire a bookkeeper, commonly missed self-employment deductions, how to document their home office are all commonly asked questions that we can provide support on. Also, consider adding support services for 1099 preparation.

As more businesses consider contract work in place of employees for certain services, those businesses will also need best-practice suggestions for tracking payments to contractors and compliance with 1099 reporting at the end of the year.

In all the ways that we can proactively bring these items to our clients’ attention, we set ourselves apart as true advisors instead of necessary services that clients don’t always see as a value add to their bottom line.

References
Burtch, G., Carnahan, S., & Greenwood, B. N. (2018). Can You Gig It? An Empirical Examination of the Gig Economy and Entrepreneurial Activity. Management Science, 64(12), 5497-5520. https://doi.org/10.1287/mnsc.2017.2916
Jabagi, N., Croteau, A., Audebrand, L. K., & Marsan, J. (2019). Gig-workers’ motivation: thinking beyond carrots and sticks. MCB University Press. https://doi.org/10.1108/JMP-06-2018-0255
Lehdonvirta, V. (2018). Flexibility in the gig economy: managing time on three online piecework platforms. New Technology, Work and Employment, 33(1), 13-29. https://doi.org/https://doi-org.ezproxy.liberty.edu/10.1111/ntwe.12102
Myhill, K., Richards, J., & Sang, K. (2021). Job quality, fair work and gig work: the lived experience of gig workers. Null, 32(19), 4110-4135. https://doi.org/10.1080/09585192.2020.1867612
Watson, G. P., Kistler, L. D., Graham, B. A., & Sinclair, R. R. (2021). Looking at the Gig Picture: Defining Gig Work and Explaining Profile Differences in Gig Workers’ Job Demands and Resources. Group & Organization Management, 46(2), 327-361. https://doi.org/10.1177/1059601121996548

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