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How to De-Risk Hiring in the Gig/Sharing Economy

November 04, 2021 | By Accurate Background

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 Mitigate the risk of hiring gig workers by taking steps to properly vet and check the background of your top hires.

The growth of the gig economy has allowed companies of all sizes to fill a talent gap, bring on seasonal help, and take advantage of niche expertise without spending the time and money to hire a full-time employee.

The gig or sharing economy has become a mainstay since the pandemic; but, despite its popularity and benefits, there are risks involved with hiring independent contractors. Here’s how companies can overcome these risks and take full advantage of the on-demand workforce.

What are the risks of hiring in the gig economy?

The risks of hiring in the gig or shared economy range in severity. Some risks are inherent in any form of hiring — the recruiting costs associated with hiring the wrong person, for instance. Other risks are specific to your business. For example, if someone consistently doesn’t deliver as promised, or gets bad ratings on your app, you risk damaging your brand reputation. Research shows that taking customer trust for granted can have a big economic impact: lack of trust costs global brands an estimated $2.5 trillion per year; with $756 billion lost by U.S. companies, alone.

But, perhaps the biggest challenge is when a mistake in your vetting process puts your customers and your business at risk. Imagine hiring a part-time software developer who — inadvertently or otherwise — compromises the security of your customer data. Or, hiring a seasonal driver with a history of assault. Uber and Lyft have both come under fire in the past for putting thousands of riders at risk using opaque and inconsistent vetting processes.

Hiring a contractor is often more complicated than hiring a traditional employee. Gig workers don’t always interact directly with their employers. It’s often the customer who is likely to have the most to say about the worker’s conduct and expertise. For example, freelancers who divide their time between multiple employers — employers who never meet the worker in person, assigning tasks via the app — finding someone to speak to the individual’s credibility and experience is more challenging.

How to mitigate hiring risks of gig workers

Mitigating the risk of hiring gig workers takes a multi-pronged approach. The risks associated with hiring an inexperienced delivery driver can be managed with thoughtful onboarding, on-the-job training, and the oversight of a strong manager. Even the reputational risk of working with a delinquent caregiver can be overcome with a multi-step vetting process that involves job auditions or a trial period.

For bigger risks, however, such as those to your customer and company, a more consistent approach is needed. One of the biggest challenges to overcoming the risks of gig workers is their often unverifiable work history. It’s relatively straightforward to verify the background and talent of someone with one full-time job. But, for gig workers, employers need to be consistent and specific about vetting the worker’s background.

An easy way to do due diligence before hiring a gig worker is to perform a background check. Many of the risks listed above can be overcome with a criminal background check, a search of the sex offender registry, or reviewing someone’s driving history. Today’s modern background check tools make the labor-intensive process of having to track down multiple supervisors, verify key information, and corroborate details with federal registries more efficient.

The job market for gig workers makes it easy to find new employees fast. But, by investing a little more time and effort into checking backgrounds, providing training, and creating a rigorous hiring process, companies can de-risk hiring in the shared economy and protect their customers.

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