The fast growing gig economy is changing the way companies run their businesses and manage their employees. On paper, the gig economy model – in which workers take on temporary work to perform specific tasks or projects – looks like a win-win for the company and for the employees.
From a company perspective, the gig model offers more flexibility, reduced fixed costs, and the capacity to react much faster to market changes. It is also an opportunity to tap into a new talent pool (experts who might not wish to join the company on a permanent long-term contract) and access expertise on demand.
From the employee perspective, the gig model can offer more flexible work hours, a better life balance, and more autonomy. It also creates job opportunities for those who struggle to access the traditional job market. The rise of the gig economy coincides with a change of generation: millennials are much likely than their predecessors to join the gig economy. Technology developments are allowing workers to market themselves and are reinforcing the trend.
The term “gig worker” covers two very different types of employee. Highly skilled and mobile professionals willing to market themselves globally – historically, contractors in the oil and gas industry have fallen in this category. However, the trend is now expanding beyond the highly experienced engineers as more professionals try to monetize their skills internally and bypass the traditional employment channels. Managers with extensive international experience, consultants, designers, and IT professionals are – among others – an increasing portion of the gig economy. This is an opportunity for companies to access talent and skills that are not available in-house or would be difficult to recruit. It also a challenge, as highly qualified gig workers are in high demand and recruiting them can be a difficult and costly exercise.
At a more local level – and at the opposite end of the skill spectrum – the gig economy is about temporary workers trying to boost their incomes with part-time work or who are simply unable to find full-time employment. This model, exemplified by Uber, offers new opportunities for workers but also raises issues in terms social security, benefit coverage, and employment law.
Gig workers may have different contractual models: freelancers and contractors who remain independent from the company or workers employed by the company for a short duration. Mobility policies designed for in-house employees are not always aligned with the requirements of the gig workers.
More generally there is a disconnection between the expectations of companies and their degree of readiness to manage international gig workers. The capacity to attract and retain this new type of flexible and mobile talent will become more important for companies and will force HR and mobility managers to review their policy, compensation models, and processes.
Areas of risk
That the concept of a gig worker is not always well-defined and encompasses different realities means that companies risk operating in gray areas. Legal definitions and contractual agreements vary by country. Gig workers are not necessarily free-lancers or contractors; they can also be temporary employees entitled to minimum wages, paid annual leave, etc. If the contractual obligations have not been clearly defined or if the local employment law is subject to interpretation (due to rapid changes and new questions brought up by the gig economy), companies could find themselves facing legal complications.
This lack of a well-establish framework also leads to benefits issues. The traditional benefits model is very much designed for in-house employees with a clear career path. Expatriates traditionally suffer from fragmented pension history and the risk of incomplete coverage. The risk is even greater for international gig workers. Governments and companies are exploring ways to increase the portability of benefits that workers can take from job to job. It is a complex issue to solve at a local level and becomes even more challenging in an international context where the impact of tax, legal, and currency issues (among others) can limit the usefulness of these portable solutions.
Mobility packages and policies need to be adapted for gig workers. Managing an international gig worker is less about moving someone from one country to another and more about dealing with the consequence of a move that already happened. Highly skilled international gig workers are more likely to be either locally hired foreigners or on virtual assignments, rather than fitting in the traditional long-term assignment model.
Career management questions should not be underestimated. The sum of all gigs doesn’t always constitute a career. There is a need to differentiate between different types of skilled gig workers: some of them are highly experienced professionals who have been working within multinational companies and have a large part of their career behind them. The new generation, on the other hand, might have far less in-house experience and could work exclusively as gig worker going forward. We need to question the choices made by these millennial gig workers at the beginning of their careers. In some cases, it is a leap of faith, not a carefully planned move, and this could lead to unintended financial, career, and retirement consequences. And yet, HR teams are not equipped to follow the careers and evaluate the performance of this new category of professionals. This raises questions about the relevance and consistency of performance review and career management processes.
Training consideration and future skill development need to be taken into account. Replacing developmental moves with project-based assignments done by gig workers and more generally a greater reliance on gig workers, as opposed to building up the internal workforce, could lead to a less skilled talent pool in the long run. This is one of the paradoxes of the global gig economy: it allows companies to tap into new talent pools without helping replenish them. This could be making competition for top talent even fiercer in the near future.
Engagement & communication
Engagement and communication. Companies need to avoid having a fragmented workforce with employees on one side and the gig workers on the other side. We often hear tells stories about expatriates talking to each other and comparing their packages. In this case, we have two very different groups with highly skilled gig workers and employees not sharing the same work experience and not having the same relationship to the company. In this context, how does one motivate a gig worker to go the extra mile, convey the official messages, and uphold the values of the company? Gig worker engagement is important because a company’s reputation influences its attractiveness to top gig worker talent. A company can have a good reputation overall but be perceived more negatively by international gig workers if it doesn’t manage them well.
Addressing the challenge
Understand your gig workers population. Distinguish between the experienced ones with a career behind them who seek the autonomy of freelancing and the mobile millennials with more limited experience.
Evaluate what type of packages would be more suitable for gig workers. Possible options to consider include various forms of lump-sum payments to reflect the preference of gig workers for cash amount over benefits in kind. The basic relocation package itself might be irrelevant as international gig workers might already be in the host location or prefer to make their own arrangements. The per diem approach commonly used for short-term assignment can be tailored for gig workers on project assignments. For longer projects, different forms of local plus packages include a competitive local salary, various incentives, and, whenever possible, portable benefits could be provided.
Consider having a point of contact with HR or the mobility team for the expat gig workers and who can deal with their specific issues. Try to bring a degree of consistency in gig worker management practice within the organisation.
Consult with a service provider about the tax and legal implications of international gig workers to anticipate problems. Do not automatically assume that a gig worker is independent from the company or the company has no liability and duty of care towards the gig worker. Explore different employment models that could be applicable for gig workers.
Focus on onboarding and integration. Management and HR need to be involved in the integration of gig workers. Whenever possible, incentivise top talent to perform recurring gigs for the company with the objective to position it as an employer of choice for gig workers.
The gig economy will have a profound impact on the globally mobile workforce and companies need to prepare to have a mixed assignee talent pool that will include a growing proportion of international mobile gig workers. The rise of the gig workers will reinforce the trend to adopt more flexible approaches and processes but what’s the limit to flexibility? The next dilemma is precisely about balancing the need for flexibility with the imperatives of duty of care.
DavidsonMorris’ global mobility specialists work with global employers to support development of high-impact talent mobility strategies and programmes. We understand the challenges of overseas assignments facing both the employer and the employee and can work with you to provide expertise and insight into effective management of assignments to avoid expatriate failure.
Last updated: 2 February 2020