The Board's Role In Leveraging The Gig Economy

AUG
2
2017
AUG 2, 2017

How Evolving Work Habits Need To Be Integral To Your Strategy

(Originally appeared in the August 2, 2017 'Across the Board' Publication Reaching 22,000+ Savvy Business Leaders In Over 65 Countries - sign up here)

An underlying component of the most effective and successful business strategies typically include a dedicated focus in the Human Capital space - attracting, developing and retaining the absolute best talent. If yours doesn't, it should. ...But the historical working order and landscape of the staffing world is going through a major paradigm shift that is not only affecting how companies make initial contact with great talent, but also how the best talent is increasingly marketing themselves. And the HR world is taking notice. Welcome to the Gig Economy.

Gig Economy: A labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs (Fig. 1)

             

So why has the Gig Economy had so much traction in recent years? For skillset providers ('gig-workers'), it supports what many believe is an alternative to 'cubicle life' and the '9 to 5 grind' - something that arguably started with the millennial generation and was quickly adopted by others with the proliferation of easy-access gig websites for posters and searchers alike. For consumers (companies), it offers up much-needed flexibility and the opportunity to potentially find someone extremely skilled in a specific knowledge area. As these gig websites have matured (along with further acceptance of this hiring model), so have the levels of skillsets and experience of their members. In my recent experience in leveraging gig workers for a project (non-Board related), I experienced the following:

  • Unlike hiring a full-time employee with the requirement of assessing many skillsets for multiple long-term company duties (what could be considered a jack of all trades, but master of nothing), I could laser focus my efforts on someone with specific expertise and experience. I recognized their passion and deep knowledge in their area of expertise immediately.
  • I realized that I did not have to prioritize the gig worker's focus or time among other competing role priorities as I would have had to do in a full-time position - a task that most companies struggle with and have mediocre results.
  • Forecasting and budgeting for the project became a breeze, especially in the area of lump-sum (not hourly) engagements where I could apply this engagement model.

Knowing how much of a company's success is dependent on engaging (and hiring) the right people,...

...it is the duty of a CEO, along with strategic Board guidance, to ensure that the proper resourcing strategies are being explored, researched and implemented. The Gig Economy model should not be ignored.

"Boards need to understand their governance role and responsibility related to human capital deployment – an area traditionally in the Board’s 'blind spot,'" mentioned Dr. Solange Charas, CEO of Charas Consulting and Adjunct Professor at NYU. "The Board, in conjunction with the CEO, needs to understand the current level of efficacy of human capital assets deployment in the organization before determining how (and when) tapping into the gig economy could be beneficial. Some questions the Board should ask include: How efficient is the current human capital in creating economic value creation? What has been the average productivity of employees and how has this changed over time? What has been the average profitability per employee (EBITDA performance) and how has this changed over time? If these indicators have decreased in the past several measurement periods, then it’s time to consider how to align a contingent (gig economy) workforce to business strategy across the company or in selected areas of the company. By creating benchmark metrics, management can monitor human capital efficacy and determine how employing gig economy workers could contribute to economic value creation for shareholders/stakeholders. Transforming HR data into financial metrics is the best way to measure and track how effective your employees were in the past, are today and can be in the future. These are easy ratios to calculate and are critical for Boards and C-Suite executives in governance and informed decision-making."

If your current company resourcing strategy is simply to search and place ads on traditional job boards, leverage existing relationships or hire a placement agency - all under the umbrella of a 9 to 5 full-time position offer - you are likely running the risk of not attracting (or even reaching) the most capable or skilled talent.

"The go-to solution is often the 'gig economy,'" states Elizabeth Eiss, the CEO of ResultsResourcing. "Businesses tap into the gig economy when they hire temporary workers through staffing firms, or independent contractors by referral. Usually, this is a stopgap measure intended to fill urgent or temporary needs rather than a deliberate and enduring strategy. What if, however, it could be used to solve workforce issues on an entirely different level? Enter, the next evolution of the gig economy — the 'human cloud.' Staffing Industry Analysts (SIA) defines the human cloud as an 'emerging set of online/digital platforms that enable managers to complete (typically contingent) work.' This cloud is full of freelancers, consultants, contractors and experts who seek new employment models for various reasons. The emerging difference is that the human cloud combines gig economy efficiencies with the opportunity for rewarding, long-term work engagements."

The Relationship Between the Gig Economy and the Human Cloud (Fig. 2)

 

Granted, not all hiring scenarios will warrant gig-workers, especially when looking to certain ongoing operations portions of your business, but this is where the emerging Human Cloud concept may take over. Either way, many opportunities exist for making significant progress on your strategic plan with the experts you require. Why not do it in a disciplined and passionate way?

What will you consider when creating your Board strategy?

Reach out to solution your Board strategy challenges.

 

Mark A. Pfister
Chairman & CEO
Integral Board Group

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About the Author: In addition to sitting on numerous Boards, Mark A. Pfister is a certified Board Director and advises public, private and non-profit boards in efficient and effective operations. He is the inventor of the 'Board as a Service' (BaaS) engagement model and an expert project/program manager frequently consulting on strategic global initiatives in their initiation and operational phases....... << read full bio here >>

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Here's Some Additional Reading

'3 Common Struggles of Private Company CEOs'

'The Evolution of the Private Company Board'

'Unleashing Your Inner-Entreprenuer (+ Certification Course)'

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