Thought Leadership

The "Gig" Economy: Is It The Future of Work?

"The best way to predict your future is to create it" - Peter Drucker

There has been a great deal written about the "Gig" economy, highlighting its appeal to workers who desire more flexibility. Companies employing temporary or contract workers characterize the gig economy. In many ways the gig economy is the result of the death of the psychological contract of lifetime employment, which was brought about by the economic turbulence since the 1970's. Moreover, the 2008 great recession threw people out of work in mass and forced them to try different forms of employment. Companies like Uber and Lyft provided a temporary solution to unemployment. The reality of the new economy is the practice of hiring full-time employees who rarely change companies, and then quietly retire into the sunset is slowing fading away.

Today, the gig economy appeals to many different individuals, particularly the millennial generation. This generation is idealistic and socially conscientious, where the journey is more important than the result. Millennials are more interested in experiencing life through the accumulation of many different experiences, rather than achieving status and wealth. The gig economy can also appeal to employees who are nearing the end of their careers, and considering scaling back to part-time and/or consulting work.

The World Economic Forum's Future of Jobs report published in 2016 stated that 41% of all corporations had some form of contingent employee. These are workers that fall into the category of independent contractor and/or freelancer, often employed for project work and seasonal surges in demand.

As with any work arrangement, using gig workers has both benefits and drawbacks, when evaluated against traditional forms of employment. A 2016 Glassdoor survey suggested the biggest benefit for gig workers was flexibility, both for the employee and employer. The use of contingent workers allows companies to keep their overhead in check, as these workers are rarely offered employee benefits, like paid time off, retirement, health insurance, etc. For many workers this gigging lifestyle is a personal choice.

Is gigging the future of work in America? For some yes, but for many others my answer is a firm no.

In my recently published book, New Directions, I refer to the former Harvard Business School professor David Maister, who categorized employees into three distinct groups: cruisers, losers or dynamos. Perhaps a brutal way to label employees, but it does hit a nerve when it comes to success and motivation. Dynamos are "Type A" personalities, driven to succeed. Their identity is closely linked to achieving status and recognition through their job. They are the top 10% of any organization - the fast tracker. This employee is the jockey of winner of the Kentucky Derby - well trained and highly motivated. I don't see the gig economy attracting this type individual, as they want more out of working.

Dynamos come in all different varieties: the professional aspiring up the corporate ladder, the elementary school teacher working part-time of their doctorate degree in order to eventually transition into school leadership, the small business owner starting a plumbing business, the entrepreneur in silicon valley developing a start-up venture, etc. All these individuals want more out of work, including a more successful and rewarding future. There will always be a need, and a place for the dynamo in the workforce.

Individuals attracted to the gig lifestyle do not want to work 70-hour workweeks. Their identity is not so strongly linked to their job. Not every employee needs to be a dynamo, seeking the fast track up the corporate ladder or running his or her own successful company. Gigging employees are essentially a different king of worker; lifestyle is more important.

I think the jury is still out on how impactful the gig economy will be on the future of work. I believe that the future leaders of tomorrow are not individuals looking to work in a gig economy. Of note, the 2019 Glassdoor Job Market Trends Report points out that the gig economy is actually much smaller than people think, approximately 1% of total employment in the United States, a fraction of the total workforce. This report also highlights how the gig economy has fallen short of worker's expectations.

Yes, the future of work looks different. Profound changes in the workforce including technological enhancements, digital media and robotics are now part of the business landscape, and more importantly a critical part of the future of work. This change has had a real and lasting impact on jobs.

Generational population changes are also afoot. Baby Boomers have retired or soon will be retiring. Generation Y has arrived and Generation X are emerging leaders.

The world of work is continually changing. The gig economy in not for everyone! It exists out of need, demand and often lifestyle choice. The bottom line, there is a place for everyone in today's workforce, and the workforce of the future.

Until next time... Jim