How Startups Can Reduce Risks & Accelerate Growth In A Gig Economy

The 21st-century understanding of the gig economy is rooted in the context of macroeconomics and labour market dynamics. However, it is intriguing to know that the gig economy has a long history, with roots dating back to the early 1900s. 

Jazz musicians of the time often worked on a per-performance basis, earning the nickname ‘giggers’ as they moved from gig to gig. Today, the term casts a wider net and is much more synonymous with fields such as technology, healthcare, and finance, among others. 

Over the past decade, conversations surrounding the gig economy have been thrust to the forefront of public discourse. This is in large part due to a free-market system that has propelled the growth of a contingent workforce and led to a rise in the number of businesses that employ independent workers for short-term engagements. And most importantly, the pandemic has played a key role in this expansion as more people found a way to monetise their hobbies and turn them into professions and second/parallel sources of income. 

The gig economy uses a task-based approach to work and offers immense amounts of flexibility to workers and companies. For instance, a 9 to 5 banker can now also be a voice-over artist post their working hours or a PR professional could be producing content for Netflix on the weekends. 

While we cannot be sure of the exact numbers, it is estimated that nearly 1.6 Mn workers worldwide derive their income from the gig economy. This includes freelancers and those who hustle after their 9 to 5 jobs. However, despite its vast expansion, the gig economy system is not without its faults and the entire system has a significant risk component attached to it that needs close scrutiny and management. 

A Look At Both Sides: The Element Of Risk In The Gig Economy For Workers & Companies

30 years ago, taking up a second job in addition to your primary job or the idea of commercialising one’s hobbies would be considered quite out of the ordinary. However, millennials and Gen Z have ushered in a whole new attitude towards work — one that is bolstered by a shift in generational work ethics and blurred the line between passion and profession. However, this new-age attitude brings along its own set of risks. 

The Ethical Dilemma

While there is nothing fundamentally wrong with taking on a second job, there is an ethical angle begging to be explored. One of the primary concerns is loyalty to the organisation. 

Traditional workplace ethics would demand that employees have a responsibility to be committed to their primary job and to prioritise the interests of the organisation. Taking on a second job could potentially distract them from their primary job responsibilities and lead to a situation of divided loyalty. 

Another ethical concern is time management. Employees have a responsibility to manage their time effectively and to ensure that they can meet their job duties and responsibilities. For instance, if a budding investment banker is also a professional photographer during their free time, there is a risk that a great chunk of their time that could be spent acquiring new skills in the banking industry or keeping track of industry-relevant news, could be spent editing photographs, ultimately leading to a loss of productivity. 

Furthermore, there is the added risk of physical and mental exhaustion that comes with the territory of working multiple jobs. Thus, those who participate in the gig economy run the risk of being more tired and less focused, which can impact their ability to perform their primary job duties to the best of their ability.

Overall, if an employee takes on a second job, it could potentially impact their ability to manage their time and meet their obligations to their primary organisation, which is the source of their main income, bringing into question their loyalty, ethics and bond of trust with their employer. 

Similarly, employers too are not excluded from the risk paradigm. While the gig economy has made it easier for employers to hire the occasional skilled employee for a specified task or project, there are several risks that can have organisation-wide ramifications. 

For companies, in addition to the evident risks of employees’ conflict of interest and potential decreased productivity, there are also the following considerations.

• Legal risks: Depending on the nature of the second job, there may be legal risks for the organisation. For example, if an employee’s second job involves working with sensitive or confidential information, it could potentially compromise the organisation’s intellectual property or create other legal liabilities.
• Reputation risks: If an employee’s second job becomes public knowledge and is perceived as conflicting with the organisation’s values or mission, it could damage the organisation’s reputation. 
• Talent retention risks: If employees are working multiple jobs, they may be more likely to leave their primary job in search of new opportunities. This can create challenges for organisations in terms of talent retention.

In order to mitigate these risks, companies need to forge a new path that is characterised by transparency and a framework of policies related to working outside the company. There are several ways that companies can mitigate the risk of employees working second jobs outside the organisation:

• Encourage transparency and communication: Companies can encourage employees to inform HR about any second jobs they are taking on. This can help to identify any potential conflicts of interest or other risks and allow the organisation to address them in a timely manner.
• Develop clear policies: There should be clear policies in place related to outside work. These policies should outline the expectations for employees who are considering taking on additional work and should address any potential conflicts of interest or other risks. For instance, if an employee has availed of a certain opportunity outside the organisation due to the reputation and brand equity associated with the company they work for, then, the organisation could deploy a fair revenue-sharing model. 
• Promote work-life balance: There should be a focus on promoting work-life balance by providing flexible work arrangements and encouraging employees to prioritise their own health and well-being. This can help to reduce the need for employees to take on additional work and may also improve employee retention.
• Consider the Environmental Social and Governance (ESG) agenda: Organisations must also consider the social element of employee well-being when developing policies related to outside work. This includes ensuring that employees are not overburdened and are able to manage their time effectively. Companies can also consider offering resources and support to help employees manage their workload. 

Overall, it is certain that the gig economy is poised to change the world of work and may even become the dominant mode of employment in the future. In India, the latest surveys suggest that there are close to 15 Mn freelancers in India who contribute to about 40% of total freelance jobs offered worldwide and that the country is home to the second-largest market of freelance professionals standing next only to the US (nearly 53 Mn). 

Keeping these numbers in mind it is imperative that the government of India and the Ministry of Labour, in conjunction with a consortium of industry bodies, work to formulate a national framework for gig workers and the gig economy at large. Such an initiative would help both companies and employees navigate the challenges and risks of the gig economy and help build a resilient Indian economy.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.