Jun 01, 2018
Technology is causing some dramatic shifts in the workforce and work economy. With each quarter that passes fewer employees are staying loyal to a single job, choosing instead to transition between places of employment or – as the data is now showing – switching to embrace the freedom of freelance/contract labor as part of the on-demand or “gig” economy.
According to Pew Research Center, 24% of Americans report earning money from the digital ‘platform economy’ in the past year. The extra income they make is a luxury for some, but a necessity for others.
There’s been genuine concern in recent years about this shift from a traditional workforce to an on-demand economy, especially since freelancing and contract work accounted for nearly a third of all jobs added to the economy from 2010 to 2014.
In addition, 100% of the net employment growth in the US from 2005 to 2015 occurred within non-traditional work arrangements.
In addition to traditional freelancers like content writers, marketers and consultants, the economic shift includes professionals across industries that rely on Atlas for credential verification for their on-demand and represented workforce, including:
Key concerns were that platforms like Uber, for example, would disrupt industries in such a way that traditional employment would ‘go away’, and that business models would be forced to shift.
But the on-demand economy isn’t undermining traditional employment. It is, however, the next iteration in an existing trend where people use available technology and opportunities for more flexibility and to take greater control of their careers.
Intuit released relevant data in 2016 by studying more than 4k workers across nearly a dozen on-demand platforms. In it’s study, the company found:
“This data shows that employment as we know it has shifted,” writes Intuit’s VP of Self-Employed Solutions Alex Chriss. “It’s not black or white — employee or contractor — it’s a rainbow of options. Instead of trying to categorize workers, it’s time to focus on how best to enable on-demand companies to grow and thrive, while also protecting and enabling workers to find the flexibility they need to be successful.”
Of those participating in the on-demand economy (25% of Americans), 56% indicate the income is “essential or important”. The popular shift toward freelance, contract, or on-demand work promises income, but it can also encourage those without appropriate skill, credentials, or certification to try to find a place within the economy.
In some workers it spurs the “fake it until you make it” approach, and there’s no shortage of stories shared by successful contractors, freelancers, and entrepreneurs who talk about how they shoe-horned their way to success or lied about careers to climb the ladder.
The Freelancers Union even shares content intended to guide contractors on how to take on work you can’t do yet.
The shift toward an on-demand economy is driven by a few factors. According to data from Upwork’s Freelancing in America 2017 report, the key drivers are:
And 63% of freelance/contract workers believe that a diversified income is more secure than working with a single employer, echoing data from a study by Aspen Institute.
But this drive could put freelance workers and contract employees in an uncomfortable position where they chase freedom and income, forcing them to compromise in areas of honesty and integrity i.e. the “fake it till you make it.”
This can create a precarious position for workers as well as employers.
Maryam Kouchaki, a professor of management and organizations at the Kellogg School, provided insight into how the ‘fake it till you make it’ approach – striving to meet income goals and needs as a contract employee – can take its toll.
“Our chronic phoniness comes at a cost,” said Kouchaki in her latest research with Francesca Gino of Harvard and Adam D. Galinsky of Columbia. “Being inauthentic actually makes us feel immoral. We shouldn’t overlook the psychological distress that comes with inauthentic behavior. Just as an immoral act violates widely accepted societal moral norms and produces negative feelings, an inauthentic act violates being true to oneself, and it can take a similar toll.”
Inauthentic behavior exists among those who press into contract gigs without the appropriate skill, credentials, or certifications. Instead, they aim to learn as they go which poses risk not only to the companies who hire those workers but also to the contractor.
That behavior doesn’t just create moral dilemmas in workers – it impacts how they work. According to a 2016 Gallup poll, only 13 percent of employees worldwide are engaged at work. Those who eventually leave a contract behind or quit a job cite issues such as frustration, burnout, and misalignment as the cause.
In her study, Kouchaki cites that this disengagement is likely caused in part by moral distress.
For businesses, the impact of this type of behavior is very real. While the intentions of contract employees may not be malicious in nature when it comes to misrepresenting their experience or credentials, a business owner or brand may feel they’ve been duped or scammed.
A 2017 survey by Manta found that a staggering 85% of business owners had no intention of hiring contract workers for reasons including:
For businesses, the on-demand economy has created a substantial disruption on traditional structure and how work gets done. In that shift we’ve seen how the drive for earning more money and gaining greater freedom can drive people to make moral compromises.
But that’s no reason to hold off on embracing the on-demand workforce. Companies across a variety of industries stand to largely benefit from this workforce shift in a number of ways:
Cost – even at higher hourly rates a business stands to save as much as 30% annually on labor cost when working with on-demand or contract workers.
Risk – Risk is reduced, not increased. While you may be concerned about fraudulent activity or credential claims, a contract worker requires no training and onboarding costs, no unemployment compensation or workers’ comp benefits, and no liability associated with termination if agreements aren’t working out. A contract can simply be terminated. If you’re concerned about compliance, you can use a real-time automated credential monitoring service like Atlas to ensure you’re always compliant with regulatory requirements around employee, partner and freelancer licensure and certification status.
Access – Short of on-site contractors for physical labor or similar needs, you can access a global talent pool to work with contract employees without borders. Tapping into a massive talent pool dramatically improves your chances of finding the right credentialed, certified contractor whether it’s a designer, marketer, research associate, accountant, academic professional, IT pros, lawyers, physicians, and more.
Quality – Contract workers live by the quality of their work. When there’s no work, there’s no income. They’re more likely to strive to put their best work forward at all times to maintain the relationship. Direct hire staff are known for having peaks and valleys in performance and engagement, with many disengaging often. Contractors will work to make sure that agreement is renewed.
Risk is a real concern, and there’s certainly risk involved in working with freelancers and contract employees. In one study from Time magazine on the new on-demand and sharing economy, 58% of those who offer services (and 47% of the general population) agree that there is a distinct lack of regulation to control the way brands and on-demand contractors work together. At the same time, roughly 50% of those actively engaged as contractors or freelancers are opposed to regulations coming down from government authorities.
The recent and rapid growth of this work economy does raise questions on how to regulate work relationships, and until some form of regulations beyond standard contract labor classifications and requirements at the federal level are introduced, it’s up to businesses to determine how to assess the quality of on-demand workers, their impact on operations, and how working with contractors and freelancers is regulated.
The easiest approach to mitigate risk with the on-demand workforce is to verify represented credentials, licenses and certifications. Claims of experience and prior work records should be verified.
Unfortunately, many organizations gather this information manually which can be costly and time consuming. That manual data gathering is subject to human error as well as gathering outdated and static information from public records that may not provide sufficient data to make an informed decision.
There is also difficulty in accessing the countless certifying organizations and platforms necessary to verify represented credentials, licenses, and certifications, all of which lack consistency in how critical information is shared and obtained.
Thankfully, Atlas Certified is solving this big problem. Atlas technology has grown alongside the on-demand workforce movement. Automated credential verification, monitoring and critical alerts provides a proactive solution to substantially mitigate risks associated with hiring professionals, allowing businesses to take advantage of the benefits of contract employees.
Manual credential verification is eliminated through automated credential review to verify certifications and licensure. In addition, a single platform for credential verification can also notify businesses of changes in licensure status.
Constant monitoring of this nature not only ensures organization have licensed, appropriately skilled employees onboarded, but all members of the staff – including contract employees – maintain licensure and certification to avoid compliance issues.
Our global economy is entering the next iteration of the work force: on-demand and skill-based. Employees are progressing to a freelance lifestyle in search of more freedom and more control over their career growth. Businesses require flexibility and access to specific skills, which means accepting new innovations and changes in the work force. Change of this magnitude is wrought with many challenges, but technology is available to verify the critical and represented credentials of your workforce continuously, which mitigates risk and allows organizations to benefit from the shift to on-demand talent.
The glory days of traditional jobs is behind us. It’s time to celebrate the population’s desire to grow and its willingness to take charge of their careers. The next step is to reach into that rapidly growing talent pool to find the best of the best and leverage those skilled professionals to grow your business.
Smart Screening, Intelligent Hiring, Proactive Alerts, Effective Compliance and Peace of Mind.