“Where giggers were once responding to market conditions, they are now creating the conditions, disrupting the traditional workforce as we know it.” Korn Ferry Institute

With a name appropriated from performance culture where musicians play a limited engagement, or a “gig,” the gig economy describes the expanding labor market comprised of contract workers, freelancers, crowdsourced workers, and others who are hired for limited engagements, as well as platform-based systems—think ride sharing, delivery, and property rentals. Independent work is growing with the internet, and expanding from developed to developing economies as more of the world becomes digitally connected.

Many workers who engage in the gig economy choose independent work, and others do so out of necessity. Organizations that employ independent workers are finding the gig economy a valuable resource for addressing short-term needs and filling temporary skills gaps in their organizations.

Managing in the Gig Economy

“When companies started to think about outsourcing or out tasking their work to offshore software development companies, everyone thought this was a fantastic opportunity: there are thousands of well-educated software developers in India,” says Hansjörg Meine, Managing Partner for AltoPartners in Darmstadt.

However, managing complex, offsite projects can be complicated. Meine explains, “You have to think, how do you package this? A lot of companies learned this the hard way— you must have the local contact, local knowledge, and an understanding of the local culture to make sure client and contractor understand each other.”

For example, Meine says, “In my own experience, we outsourced a project and wrote everything down, but using the same words doesn’t necessarily convey the same meaning. There was a complete disconnect between what we needed to have, and what they understood and delivered. The lesson here is you need to have very tight links between your external workforce and internal workforce. If you don’t, things can develop in different directions.”

The contingent workforce is also an important consideration within workforce planning. Signium UK’s Paul Surridge sees “an opportunity for CHROs to get ahead of the curve and redesign their organizations for the future. One thing everyone is fairly confident of is that roles in the future will be different. We are going to have a blended workforce.”

Agile businesses increasingly turn to external talent when they can’t find the competencies they need in the traditional marketplace, and managing relationships with talent not bound to the organization is highstakes. “The war for talent is a war for skills that are in real shortage,” Surridge says. “Those organizations that struggle to connect and engage with the contingent workforce will find them more scarce.”

For example, Eileen Finn, president and founder of Eileen Finn & Associates in New York, describes “someone working in a company for someone who they may not like, may decide to put up with it because the benefits are great, they’ve been there for a number of years, they are invested. A contractor who works for a person they don’t care for can choose to make a change. And especially because if they are building a consulting resume it doesn’t matter how long you are in that role. They can say ‘I was brought in for three months’ and that’s it—no questions asked. A permanent person is going to wonder what quitting is going to do to their resume—that’s the difference.”

People working in the gig economy have the freedom to choose when and how they are going to work, and with whom. And those with highly regarded skills have more choices.

“People are going to become much more selective,” Surridge says. “How you engage employees, how you motivate employees, how you create a sense of purpose, those things are as important if not more so with contingent workers. Organizations neglect that at their peril.”

He adds, “The resources and skills organizations need in the future may not be available to them, because they failed to effectively lead that workforce.”