In this five-part series to understanding the gig economy, we'll look at a number of topics:
- What is the gig economy?
- How to integrate freelancers into a talent acquisition strategy
- The challenges of managing a freelance workforce
- Address skills shortages with talent pools and the hidden workforce
- Gig economy: what's its place in the future of work?
This is the fourth part of a series on understanding the gig economy. So far in the series, we've addressed what the gig economy is, clarified some of the misconceptions about gig workers, looked at how to integrate freelancers in a talent strategy, and some tactics to help overcome common visibility and management challenges.
This part of the series expands on the challenge of resourcing and availability by looking deeper into addressing skills shortages with talent pools and tapping into the 'hidden workforce'.
Who are the hidden workforce?
In general, a 'hidden worker' is anyone outside the reach of traditional recruitment methods. In other words, they are not available for a full-time, location specific permanent job. We believe there are four main groups that make up the hidden workforce:
1) Professional mums and dads who are at home looking after families
According to IPSE, there were 287,000 stay at home mums freelancing in the UK in 2015. Add the stay at home dads, and there is a small army of professionals able to help.
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2) Highly skilled professionals freelancing as 2nd jobs
250,000 freelancers in the UK are professionals who freelance as a 2nd job. Removing the exclusive employer-to-employee relationships introduces potential resources previously out of the scope of traditional recruitment.
3) Retired professionals
Figures from Mintel suggest that around 650,000 people retire every year. That's a wealth of knowledge and expertise leaving the traditional workforce every year. Short, flexible freelance contracts are a viable way to access this part of the hidden workforce.
4) People with disabilities
A disability should not prevent a skilled professional from offering a great service to a business. If you're a great developer, you're a great developer. Full stop. The flexibility of remote, freelance projects helps businesses work with skilled professionals regardless.
How the hidden workforce can address the skills gap
Mark Channon, Managing Director of Bloc Recruitment, says, "The need to identify, engage and entice top digital talent is becoming ever more challenging in today's market. According to the recent 'Mayoral Tech Manifesto', the UK's digital economy is the largest and fastest-growing in the G20 and already employs more than 1.4 million people. But this could be seriously stymied by the fact, according to the manifesto, that nine out of 10 of London's new digital businesses are being held back by skills shortages. Indeed, a separate survey conducted by techUK found that 93% of tech firms felt a skills gap was having a negative impact on their business."
But is it a skills shortage? A skills shortage would imply, as a country, we don’t have the skills to create apps, code web services or build hardware. And that’s not true. The UK has an abundance of talented people. It's just these people are outside the scope of traditional recruitment methods.
In reality, what the UK has is a resource shortage - there aren’t enough people available at the time they are needed. Changing how HR teams think about hiring could be a solution to the resource shortage.
The concept of a full time employee assumes there is a one-to-one relationship between the person who does the work and the business that has the work to do.
The one-to-one employer-employee relationship is one of constraint. Location must be convenient for both, employee salary and payroll budget must align and there must be a mutuality of obligation.
By removing the traditional constraints on location, salaries, and mutuality of obligation it opens up significantly more resourcing options.
When you consider your business can only effectively attract permanent staff within a 90 minute commute, it severely limits your ability to access talent across the length and breadth of the UK.
For example, if your business is based in Bristol and you expand your search to a 90 minute commute, you are covering only about 0.5% of the UK.
It's widely accepted a person's salary expectations increase with their level of expertise, until they reach the accepted market cap. It's likely your budget for full-time salaries will often limit the level of expertise you can attract.
'Buying' freelance expertise for smaller, shorter gigs is much easier to budget for. For example, a mid-weight website developer will cost £40-60,000 in the first year. In comparison, finding a freelancer to build you a 'mid-weight' website as a one-off project for £5,000 saves you a significant amount of money and widens the reach of your recruitment methods. In other words, you remove some of the budgetary constraint that's limiting your traditional recruitment methods.
Mutuality of obligation
A one-to-one relationship creates a zero sum game. With a finite number of workers, when a business hires an employee, that person is no longer available to other businesses.
By definition freelancers and gig-workers have many clients and enjoy a one-to-many working relationship, which makes their skills and experience to more than one business at a time.
IPSE estimate there to be 255,000 freelancers in the UK who freelance as a second job, so for example, with a shift of mindset, HR teams can access a highly skilled, extremely experienced workforce by offering their notoriously hard to resource tech projects to people who work from another location or at slightly irregular hours.
Using talent pools to reduce your time to hire
As discussed in part two of this series, the REC say the average time to hire is now 68 days. But with onboarding, it can take up to five months for a new employee to start generating a return.
In comparison, hiring a freelancer from the open gig economy takes three days on average, and using talent pools in conjunction with the gig economy can further reduce your time to hire.
Explaining the freelance talent pool concept
Talent pools are essentially cohorts - groups of people with similar characteristics. For example, Java developers with fintech experience. HR teams have worked by grouping and segmenting people for years, so whilst the concept is not new, the gig economy opens up a whole new application for the concept.
Traditional talent pools, black-books, shortlists are reactive. Without there being an open position, the traditional talent pools is simply a paperwork exercise.
Freelance talent pools, on the other hand, are proactive. A freelance talent pools can be used to proactively build a 'bench' of vetted, qualified freelancers.
For HR teams, using proactive freelance talent pools means you can shortcut the resourcing process by finding, shortlisting and interviewing potential freelancers in advance.
This has a number of advantages:
- Being proactive means you can ensure all freelancers meet a minimum standard before a project is in-flight
- You'll find it easier to resource projects in a hurry
Is the gig economy the future of work?
In the next, and final, part of this series on understanding the gig economy, we'll explore what impact the gig economy has on the future of work.