How the on-demand economy is changing the meaning of work

Rachael Brown, HRM Online


written on August 13, 2015

It’s hard to ignore the effects of digital technologies on today’s workplaces – there are apps for gauging employee engagement, software that can recruit ideal candidates and even pieces of wearable technology that track productivity. But one thing that flies under the radar is the shift in traditional workplace relations caused by the boom of tech-based markets that connect companies and consumers directly with freelance and contract workers.

Companies such as Uber, Eden McCallum and have come to exemplify the rise of the work-on-demand economy, and it’s not unusual to hear something referred to as ‘the Uber of X’. Do you need quick legal advice? Axiom can connect you with a lawyer in your area. Does your company need new IT help? Rather than hire computer programmers, that work can instead be divided down into its component parts and subcontracted to specialists anywhere around the world.

While many praise this ease of access to sourcing and hiring new talent, it does present some unique challenges for HR departments. The Productivity Commission recently released its workplace relations report, and if you give the document a read (warning: it’s about 1000 pages long), there are zero references to freelancers or the sharing economy.

The sharing and on-demand economies now include recruiters, management consultants and everything in between. Although the report does mention contractors and “alternative forms of employment”, share economy advocate Rachel Botsman thinks the rhetoric doesn’t go far enough.

“It’s a 20th century way of thinking about jobs and the legacy issues associated with that rather than thinking about the future of labour and what that would look like,” Botsman said in a column for the Australian Financial Review.

Contingent employees – or freelancers – account for roughly 8.5 per cent of the Australian workforce, or about 1 million workers. It’s far from a majority, but this number is expected to only grow in coming years. Why? Because the perks that more and more workers are looking for from traditional job markets are built into the fabric of the sharing and on-demand work economies.

Earlier in 2015, Stanford University polled 1300 workers who participate in the on-demand economy. Perhaps not surprisingly, 75 per cent of participants listed flexibility as the number one reason for choosing this type of work; second was increase in income.

So what does all this mean for HR? Well, one of the first things to consider is how using freelance workers affects employment relations. One benefit of outsourcing tasks is that capacity gaps can be filled easily with temporary labour. But not doing work in-house means that HR professionals have to consider the implications of employee safety, quality control and risk management, and maintenance of command chains. Not to mention the law is still hazy about legal repercussions and an employer’s obligations to freelancers.

HR departments can also be the source of change within an organisation. There are myriad forms that freelance work can take, and many of the functions of human resource professionals can be affected by the growth of this sector. Here is just a short list of things to consider:

  • Company culture: The more freelancers you employ, the more scattered your workforce will be. This can have implications for establishing coherence among staff and a company culture, and employee engagement levels could suffer.
  • Health and wellbeing: One function of HR is to create workplace health and wellbeing programs. The job is made easier, though, particularly when there are industry professionals looking to whip workplaces into shape?
  • Legal: This is a two-part problem. First, what are the legal implications for hiring a freelancer as opposed to a full-time employee? Second, can your HR legal functions be outsourced? There’s a potential loop here where the legalities of hiring freelancers are handled by … freelancers who deal in legalities.
  • Management: This field already has its share of consultants, but when bringing in outside help, HR needs to consider the potential for conflict. Who will have ultimate decision-making authority? And how will command chains be reorganised or structured?
  • Training and development: HR performs or outsources much of the training and professional development functions, but how can you be sure that a freelancer has received appropriate training and certification to perform a job?

These points only scratch the surface, and unfortunately we don’t have all the answers for you. But the thing to remember about the sharing or on-demand economies is that they are constantly changing – the stats and insight here might not be as relevant to you in 10 years’ time, five years, maybe even one year from now. If businesses want to stay on top of these emerging labour markets, think like a freelancer and be flexible.

What are your thoughts? Let us know in the comments section.

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2 thoughts on “How the on-demand economy is changing the meaning of work

  1. There are many reasons to love a freelancer and the problems are not as prevalent as the benefits. Provided the deliverables of a project are clearly set down and agreed to (documented, that small matter so many businesses are bad at) there’s not a lot of downside. It reduces politics amongst your core staff and if you need to terminate one for underperformance it will all be in the agreement. Save on premises, save on management time…I could go on. Bring it on is my comment as both an HR manager and an employer.

  2. An interesting article with potentially huge implications for the business sector. With the rapid increase in the Gig Economy there are questions that will need to be answered. How do businesses manage these people as Independent Contractors (IC)? Under current normal practice the workers, and companies engaging them as contractors will undoubtedly be required to comply with Australian Tax Office (ATO) legislation PSI legislation and the raft of IR issues which is somewhat daunting to say the least, not withstanding the Fair Work Commission requirements. SHAM contracting is an easy trap to fall into. This whole scenario might sound difficult to deal with but it’s not really. Issues like contractor safety, quality control, the command chain,legal repercussions, contractor obligations are all taken care of including payment of individuals Tax obligations.
    Now to the solution. There is a better way and it’s simple, legal, robust, and tested at law. It’s called Common Law Contracting. This engagement method takes away ALL the PSI requirements, the majority of IR and FWC issues. The IC does not need an ABN there is no GST to remit and no BAS returns to complete. The person is engaged as a natural person working for themselves.

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