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Managing A Total Talent Workforce – The Impact Of The Gig Economy

June 21, 2022 | By Accurate Background

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Organizations that wish to gain a competitive advantage in today’s candidate-driven job market must embrace a total talent workforce.

This article investigates how shifting workplace culture and the rapid rise of the gig economy are driving an increased need for a total talent workforce management strategy. As well as outlining the benefits associated with a total talent workforce, this piece will advise on the best way to ensure all workers are hired and onboarded efficiently and compliantly. 

 

Following the outbreak of COVID-19, workplace culture shifted dramatically and irreversibly. Now, two years on, as many as 59% of U.S. workers who say their jobs can mainly be done from home are working remotely all or most of the time.

Employees are enjoying the opportunity to embrace flexible working, better balance their personal and work lives, and pursue their passions. With more time (and more cause) to reflect on what makes them happy, many people are re-evaluating their career paths and exploring less traditional forms of employment, including contingent, contract and “gig” work. Indeed, the phenomenon of 47.8 million workers quitting their jobs in 2021, in pursuit of more meaningful or more enjoyable careers, became known as The Great Resignation.

The gig economy is certainly not a new concept. In 2017, for example, the Bureau of Labor Statistics reported that 34% of the U.S. workforce were gig workers. But there’s little doubt that the workplace changes brought about by the pandemic have accelerated the trend. By 2023, it’s estimated that 52% of the workforce will have worked or will be working independently.

 

What is the gig economy?

The gig economy refers to the hiring of freelancers and independent contractors to fulfill short-term or flexible positions. Rather than being recruited as full-time or contracted employees, these workers secure individual and on-demand “gigs” – a process that very often happens via an online platform or mobile app.

Gig economy workers benefit from flexible working hours, diverse and plentiful employment opportunities and the option to supplement income with additional paychecks from a variety of sources.

Employers, meanwhile, benefit from reduced recruitment and staffing costs, access to a larger talent pool of skilled workers, and the option to scale the workforce up and down as required.

Uber, TaskRabbit, and Airbnb are good examples of the gig economy in action – and it’s plain to see that these companies have benefited enormously from such a system. Nonetheless, managing this segment of the workforce is not without its challenges.

How is the rapid rise of the gig economy necessitating the need for a total talent workforce strategy?

What is a total talent workforce and what benefits does it provide?

A total talent workforce integrates the full range of talent sources, including full-time employees, contracted employees, and independent contractors (i.e. gig economy workers).

This strategy promises huge benefits to the employer, not least when it comes to ensuring accurate worker classification.

Several organizations have run into trouble as a result of misclassifying their workers. Participants in the gig economy have historically been considered independent contractors, which means they are not typically afforded the same legal rights, healthcare provisions, retirement benefits and anti-discrimination protections as full-time or contracted employees.

However, the criteria by which gig economy workers are defined is a little hazy, and complicated further by the fact that different U.S. states are enacting various legislation to both definitively classify gig economy workers and offer them additional protection by law. In New York, for example, a 2019 law requires ride-hailing operators to pay drivers a $17.22 per hour minimum wage.

Employers can consult the IRS classification rules to help determine whether the individuals providing services are employees or independent contractors. But a good rule of thumb is that the greater the control an employer has over a worker, the more likely they are to be considered an employee.

The streamlined processes, increased transparency and more sophisticated data management associated with a total talent strategy mean organizations manage their workforce holistically and achieve significantly better visibility. Indeed, a report by ManpowerGroup revealed that 89% of HR leaders recognized the value of taking a more holistic view of their workforce.

When HR professionals know exactly what their workers are doing, on what basis they have been hired, and the details of their compensation and benefits packages, it reduces the likelihood of hugely costly worker misclassifications. For example, in 2016, a judge approved a $27 million employee misclassification lawsuit settlement brought against the ridesharing company, Lyft. In this case, the company’s California drivers claimed they had been misclassified as independent contractors rather than employees.

Improving worker classification accuracy is not the only benefit of a total talent workforce. Other positives include:

  • Cost reductionThe ability to hire a portion of the workforce when they are needed will dramatically reduce overall labor costs. Furthermore, organizations are less likely to rush into poor hiring decisions for fear of missing out on top talent. 
  • Addressing skills shortages– It’s not always viable to hire full-time employees to perform highly-specialized roles. Because organizations with a total talent workforce recruit workers for specific projects or a set period of time, they can tap into a highly skilled talent pool and address skill shortages as soon as they arise. In the meantime, organizations can work to upskill their full-time employees.
  • Improved agility – A total talent workforce strategy enables organizations to quickly respond to changing business objectives. As circumstances and priorities change, or there are shifts in customer demand, organizations can quickly pivot their workforce planning strategy and hire the people they need right away.

Onboarding a total talent workforce

A key challenge that comes with managing a total talent workforce is the need to efficiently and compliantly onboard workers, no matter what their classification. Whether you are hiring a delivery driver, a software engineer, or a freelance writer, you must be aware of the specific onboarding and screening requirements based on the responsibilities of each job role. This could include credit checks, criminal background checks, drug and health screening, driving history, I-9 form verification, and social media background screening.

There’s a lot to consider, and the process can be long and arduous. Organizations must be conscious of which platforms their candidates engage with and ensure communication is streamlined across these platforms to remove the pain points of duplicate data and document collection. That’s not to mention the compliance complexity that results from multiple employment types and the related need for a background check that takes both the employment classification and position requirements into account.

Leveraging the expertise of a background screening partner can help you to address each of these obstacles, ensuring the screening process is compliant, efficient, and agile to support your flexible workforce. 

At Accurate, we optimize pre-employment background checks and employee monitoring services that fit every hire, providing a seamless and efficient solution for your total talent workforce.  

Manage your entire workforce with Accurate.

Get in touch with us today to find out how we can help you mitigate risk in an ever-changing legislative landscape.

 

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