Will the 'gig economy' be the death of HR?
As freelancing, interim management and the ‘gig economy’ continue to grow, the question becomes, are we looking at the impending death of the traditional HR function?
In a recent CBI report entitled ‘Mapping the Route to Growth’, the employer’s lobby group noted a recent increase in the number of temporary and self-employed workers making up the labour pool and pointed to their contribution to the overall flexibility and resilience of the UK economy. Business intelligence firm Experian also calculated that, over the last five years, there had been a 181% growth in the number of micro-firms supplying business and management services, while last year, the Professional Contractors Group estimated that there was a total of 1.4 million freelancers in the UK, generating combined revenues of £82 billion. And this trend towards organisations using more and more contingent labour in all of its shapes and forms only seems set to continue. Much of the media coverage of this trend to date has concentrated on individual freelancers, however. The focus has been on issues such as: Can a wave of energetic solo-preneurs offset the economy’s current failure to create jobs? What are the attractions of a portfolio career? How do I become an interim manager? But there has been little consideration of the impact on the organisations that are using these non-traditional staffing methods in a bid to boost organisational agility. Of particular interest is the question, if the market moves to a model whereby a number of suppliers provide employers with ‘expertise on demand’, what is the role of HR? And should forward-thinking organisations be refocusing their attention and investment away from HR in favour of procurement instead? Future scenario Here is a not-so-radical future scenario: As HR services are increasingly provided by individuals who operate under the auspices of independent businesses and as tenures in traditional forms of employment continue to shorten, employee-employer relationships necessarily become less relationship- and more transaction-based. What relationship-oriented HR remains will be supplied by a smaller core of well-qualified, well-rewarded but hard-pressed professionals who will, necessarily, number among their skills a high level of proficiency in project management. In the main, organisations will invest less time on learning and development activities. This is because they will have fewer employees to develop and more of a need to hire greater numbers of individuals who will work on larger numbers of short-term projects. These individuals will be highly skilled in their own particular areas of expertise and have a broad set of experience under their belt from having worked in a wide variety of organisations and scenarios. As a result, they will be able to hit the ground running, be comfortable with change and adept at side-stepping the all-too-common re-organisation routine of ‘forming and storming’ that never quite reaches ‘performing’. At the same time, the attractions of independent working will continue to grow. As the illusion of corporate paternalism continues to evaporate, those entering the workforce in the shape of Generation Y will have different attitudes towards work-life balance, working styles and job loyalty. At the other end of the scale, ageing but healthy Baby-Boomers will either wish or need to stay in employment later into life, but on terms that meet their needs at that stage. Opportunity or threat? As Institute of Interim Management co-chairman Ad van der Rest observed, several of these factors are starting to swell the interim ranks already. “Because the job for life has gone and business is subject to greater and more frequent change, individuals are increasingly selecting flexible career choices. Shorter role tenures also legitimise flexible choices: the ‘leap’ to independence is not so great,” he said. But other factors such as “being your own boss, taking control of your career and not being locked into a long-term relationship on the basis of a 60-minute interview” are also just as appealing, van der Rest added. Indeed, the IIM’s ‘Interim Management Survey’ found that 70% of prospective interims were attracted to it as an option because of life-style factors. In the scenario outlined above, however, the skills shortage will intensify as members of the skilled and experienced Baby-Boomer bulge retire. This, in turn, could see members of the skilled, globalised, disenchanted and disenfranchised Generation Y shrug off the tax-debt burden bequeathed to them by their profligate parents as they take flight to low-tax jurisdictions. Such a situation would result in organisations being forced to adopt a more flexible approach to staff resourcing whether they wanted to or not in a bid to remain competitive and maintain bottom line growth. So would a ‘gig economy’ of this type pose an opportunity or a threat to HR? I would suggest that there is an enormous opportunity for HR directors to take a strategic lead in creating new levels of business agility by embracing new thinking and new models of employee resourcing. The IIM’s van der Rest who is also an interim HR director himself, said: “Interim management is still flying below the HR radar. Generally, HR directors are not embracing the opportunity that interim management offers unless they have already had first-hand experience of the benefits that interims bring.” So how can HR leaders best exploit this model? Here are five recommendations:
- Optimise resourcing plans by abandoning the assumption that all full-time equivalent posts must be filled and make agile, interim resourcing your first consideration rather than a fire-fighting, fall-back option.
- Work with the finance department to ensure that rules relating to headcount and payroll versus contingent staff do not lead to high levels of fixed cost, which can result in unintended rigidity and lock-in.
- Optimise and speed up the interim hiring process by maintaining a register of past, current and potential candidates with the correct mix of expertise and an ability to fit in culturally. Also build relationships with specialist interim management supplier firms that have a pool of known staff as well as suitable due diligence processes that can shorten the hiring cycle.
- Use learning and development budgets to furnish core managers with strong project management and ‘management by objectives’ skills.
- Invest in developing formal and informal networks such as those created by LinkedIn in order to create pools of ‘on-demand’ expertise that have worked at the company before and know its requirements. The IIM’s ‘Interim Management Survey’ indicated that, even today some 51% of assignment positions are filled as a result of direct contact between client organisations and interims.