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The Gig Economy Structure and Role of HR

Question:

Analyse and report on the HR Implications of Emerging working arrangements relating to the GIG Economy.

The upcoming change in the employment process where the companies employ freelancers and contractors to do their jobs is known as the Gig economy. It has large a impact on the traditional economic system of workforce as it focuses on better facilities at cheaper rates compared to the organizations based on the traditional economy (Huws, Spencer and Joyce, 2016). The Gig economy flourishes as in the modern society majority of the workforce wants flexible jobs.

As the traditional workforce is changing with the emergence of gig economy, the Human Resource Department of any organization, which offers gig economy-based workforce, has transforming role in the new culture (Kenney and Zysman, 2016). The HR department of any organization, which proposes freelance or contractual work, faces challenges and consumes benefits according to  gig economy. 

The purpose of this report is to analyze the HR implications of emerging working arrangements based on the gig economy. The leading organization in Australia taken as a subject for the report is 99designs. The report will identify and investigate the HR benefits and challenges for 99designs. It will further develop possible recommendations for effective operations of 99designs as a gig economy with a flexible work environment. The report will provide recommendations of how the organization might make best use of the gig economy in its organizational structure for a positive output.

The gig economy is an organizational structure which gives its employees the freedom to have flexible work schedule, ideal for freelancers and contractual employees. From the individual worker’s perspective, the gig economy gives them freedom to work from any location according to their chosen time (Kenney and Zysman 2016). However, the income from this type of economy is not consistent so the employees have to work continuously or shuttle between multiple jobs.

 For securing work in the gig economy, workers contribute labor, time as well as capital. In gig economy, the business organizations are light in assets.  In gig economy, business organizations connects providers and consumers and these business enterprises make money by providing access to services and goods, but the risks are imposed to individual gig workers instead of business organizations. The gig economy is the process of hiring labor when there is a demand. The websites like Uber, Amazon Mechanical Trunk, and Task Rabbit) helps in breaking down of work into components so that these tasks can be allotted to gig workers as per requirement. The advancement of digital and social technologies has changed the business process of an organization. The nature of work has evolved with the advent of Gig Economy and work has become modular and granular.  This shift in technology has made some topics of human resource highly relevant (Acquier, Daudigeos and Pinkse, 2017). These topics are the application of information technology for proper hiring decisions, the influence of technology on the structure of work and new arrangements for work, which become important with the advent of the Gig Economy. The management of highly fluctuating flow of work and project management is facilitated by self-employment and hiring of flexible labor. These are important aspects of the Gig Economy.

Case Study on 99designs

In the gig economic structure, freelancers or independent workers provide their services in a particular platform. The job could be wed-based as internet is one of the major platforms where the gig economy based businesses operate. In the modern digital world, the gig economy based working structure is increasingly becoming common as people prefer work from home comfortably. 99designs is an Australian company, whose global operations follow the gig economy employing freelance designers. This company has registered designers from around the world coming together through this platform (99designs.com, 2017).

Freelancers could make money on the web platform of 99designs in two ways. One way of making money from this site is participating in the competition organized by the clients. From this competition, the clients could select their favorite designs and respective designers. The payment is based on the package that has been chosen by the clients at the beginning of the package (Ahluwalia 2017). The workers have three levels with accordingly fixed payment options. For example, in gold package expert designers would provide the designs and bronze package would allocate creative designers for people with lower budgets.

Another way of making money in this platform is by means of private project. Either the freelancers find clients or clients would find the freelancers based on the portfolio. The freelancers in this way could work separately apart from the contests. In this way, the freelancers have a secure payment platform (99designs.com 2017).

As discussed in this report about the changing scenario of the workforce that shifted in gig economic structure, the changing function of the HR role and policy should be taken into account. As the gig economic structure is widely acceptable in today’s world and the study shows that by 2020 40% of the total population would accept it making recruitment a minor problem faced by the organization (Boatright, 2017). This is also applicable in case of 99design platform. The HR does not facing any problems regarding recruitment as many freelancers automatically register on the portal as the considering the nature of the work. Thus, the HR department of 99design is benefitted in the recruitment procedure (99designs.com, 2017).

The implication of Gig Economy provides many benefits for the Hr department. The Gig economy has resulted in lower overheads, the employment of full-time workers is costly and by recruiting a flexible workforce, the HR department of 99designs can cut unnecessary cost. The gig economy has provided a small and condensed pool of talent and this talent-pool can be easily defined and filtered by the HR department of 99design to search for the right candidate who will be a perfect fit to meet the strategic goals of the organization (99designs.com, 2017). The gig workers of an organization bear the cost of their own learning and development programs, thus the learning and development overheads are lowered by the implication of the Gig economy, which proves to be highly beneficial for the HR team of an organization. Gig economy is beneficial for the HR teams because when a project is required to be completed within a tight deadline or ad-hoc revisions are necessary in the project, the hiring of flexible workers can be highly beneficial for a HR team (Kenney and Zysman 2016).

HR Benefits of Gig Economy for 99design

In the staff selection process HR would be benefitted in the gig economic structure as discussed by Frenken and Schor (2017). According to them, gig economy provides much smaller and thick pool of talents that could be effortlessly identified, screened and explored by the HR team of any organization offering freelancing. This is kind of identifying the right people in the right place (Kenney and Zysman, 2016).  The gig economy is beneficial for the HR team because this economy can bring expert workforce in areas of business organizations which are strategically important. The downsized departments of an organization can flex resource levels with the advent of Gig economy thus increasing the effective functioning of these departments.  The flexible employment opportunity provided by the Gig economy also enhances the diversity goals of the HR teams of a business organization.  The Gig economy helps the HR teams to retain key experience and skills by offering employment as per requirement (Pompa, 2017).  The flexible hiring process of the Gig economy promotes creativity and agility because individuals with different work experience become a part of the workforce of a business organization.

The challenges faced by the HR for the implication of gig economy on the platforms like 99designs include managing remote workforce, training and meeting the consumer requirements from a shifting workforce. As the gig economic structure explores the opportunity to work for the freelancers from anywhere in the world, the HR team of this company faces challenges to reach employees from remote locations or work with the virtual short-term employees. Sometimes it is very difficult to connect directly to the freelancers as the communication is online and there may be barriers like time-zone difference or technological barriers. Any problem in the internet connection would disassociate the employer and the employee in the case of gig economy (Richardson, 2015).

As the 99design is portfolio based web platform, the HR department should focus on the talent portfolio management than the talent management, which is the older traditional way. In this type of talent portfolio management, the HR is facing some challenges. The 99design has some internal employees who work for the 99design. However, the HR has to assimilate the internal employees and external freelancers based on their talent portfolio. The HR should treat the external freelancers and internal employees equally for successful implication of the HR management, otherwise, the freelancers could move to the other platforms (Guest, 2017).

Challenges faced by the HR Department of 99designs

Other challenges include integration of the contract’s terms and conditions into a seamless, cohesive whole. The HR should notice about the rewards and benefits given to the freelancers or contract based part-time employees (Elstad, 2015). The HR team of the 99design should carefully avoid challenges that the team is facing regarding the contract’s terms and conditions of the freelancers.

As the gig economic structure is mainly web-based and includes freelancers across the globe, the HR sometimes faces challenges regarding technological application and implication (Pompa, 2017). The HR of the 99design faces a major barrier of training and the inculcation of the organizational goals among the employees. The online recruitment process does not give the chance to the HR to filter out the incapable employees in the organization. The HR of this kind of platform like 99design is facing the problems related to smoothness and ease in managing technology (99designs.com, 2017).

The social, ethical and sustainability challenges are faced by HR teams with the advent of the Gig economy. For instance, the gig economy results in disguised employment and thus the formal economy is hampered as a large number of work-force is excluded from social and labor protection(Friedman 2014). Workers in the gig economy are a part of intermittent workforce and they are not eligible for employment benefits like maternity leaves or paid holidays.  The gig economy has resulted in contractual agreements, which involve multiple parties. Thus there is lack of transparency in the platform and workers do not understand which party they should rely on and with which party they should discuss critical issues(Richardson, 2015).


As there are many freelancers in the platform of 99design, the HR is facing challenges in managing the quality control. This is related to the remote workforce management. As the HR has to manage workforce virtually with employees in remote areas, the HR sometimes faces challenges like work going to the inexperienced freelancers rather than most trusted and best designers.

The major challenges faced by the HR managers or line managers are they operate under the pressure of managing an inconsistent workforce. In this case, they are not aware of the minimum wage legislation, safety and health issues or working time. However, if the HR managers are unaware of these types of important information, the work in this cloud-based platform will be very difficult.

However, the challenges would be many as this type of working platform is new. The HR policies should be modified to overcome the emerging problems as many workers now days are much interested in gig economy.

Recommended Strategies for Effective Operation in Gig Economy

As the structure of the recruitment is constantly evolving and changing into hyper flexible mode that encompasses gig economy, accurate HR implication is also necessary. There is need to develop possible responses for effectively operating the gig economy as the flexible job structure to the freelancers. The HR needs to anticipate the changes resulting from the gig economic structure. It would be possible by conducting an HR agility audit process (Kuhn, 2016). The HR needs to focus on the work analysis of an employee whether full time or part time instead of job analysis. The management should think creatively about the possible environment in which the HR team could think about redesigning the HR policies, processes and structures that would be supportive of the gig economy (Pompa, 2017). The management has to take initiative to transform the older policies, processes and structures that only allow the internal full-time employees as organizational talents (Meister and Mulcahy, 2016). The HR needs to consider the external talents as valuable as the internal talents. According to this term, the HR needs to incorporate the necessary changes.  

The contractual agreements in the gig economy involves multiple parties like temporary agency workers and workers engaged by outsourcing practices and subcontracting.  The workers are unable to identify their employer for the purpose of collective bargaining or while complying with health and safety obligations, the workers can’t identify their employer. The growth of the gig economy is exponential but the impact of the economy on rights of labor is often ignored.  The gig economy results in commoditization of work as crowd-work, work-on-demand via apps are used in gig economy to match the demand and supply of work. For instance, the possibility of freedom of association is reduced in case of crowd-workers because these workers are dispersed on the internet (Richardson, 2015).There is high competition in crowd-work platforms and workers often display opportunistic behavior. Thus a healthy work environment recognized by the International Labor Organization can’t be promoted with the advent of Gig economy. The Gig economy has resulted in non-standard form of work because the workers can be terminated very easily by deactivating them or excluding them from a platform or app (Acquier, Daudigeos and Pinkse, 2017).

It can be concluded by stating that gig economy and possible implication on the HR issues have been discussed on broader sense with some references to the related literature. The gig economy is consuming the job market and it would be one of the best and accepted job opportunities by the end of 2020 (Kenney and Zysman, 2016). The gig economic structure and the related HR issues is discussed in relation to the Australia based web platform called 99design. The 99design is accepted the gig economic structure and offers freelancing jobs to the designers. In the context of the 99design, the benefits and challenges faced by the HR department of the 99desiogn have been discussed and possible responses to operate the gig economic structure in terms of HR policies and structures have been discussed. By discussing broadly the HR issues of the gig economy, it is recommended that the companies, which are offering the gig economic platform need to develop the possible HR strategies for accepting these changes. The 99design could incorporate the new HR policy of managing the clients from the remote areas as many complains is coming in this field. As the work force and work role is constantly evolving online training methods should be introduced. The HR roles and management should incorporate these changes; otherwise, it would be difficult for the companies to accept the new mode generational mode of working nature.

References

99designs.com (2017). Logos, Web, Graphic Design & More. | 99designs. [online] 99designs. Available at: https://99designs.com/ [Accessed 24 Nov. 2017].

Acquier, A., Daudigeos, T. and Pinkse, J., 2017. Promises and paradoxes of the sharing economy: An organizing framework. Technological Forecasting and Social Change, 125, pp.1-10.

Ahluwalia, R., 2017. CRITICAL APPRAISAL OF UBER BUSINESS MODEL UNDER “GIG ECONOMY”. INTERNATIONAL JOURNAL OF MANAGEMENT AND SOCIAL SCIENCES (IJMSS), 6(2), pp.62-65.

Boatright, J.R., 2017. The Vanishing American Corporation: Navigating the Hazards of a New Economy, by Davis Gerald F.. Oakland, CA: Berrett-Koehler Publishers, 2016. 222 pp. ISBN: 978-1-62656-279-0. Business Ethics Quarterly, 27(2), pp.315-318.

Elstad, B., 2015. Freelancing: Cool jobs or bad jobs?. Nordisk kulturpolitisk tidsskrift, 18(01), pp.101-124.

Frenken, K. and Schor, J., 2017. Putting the sharing economy into perspective. Environmental Innovation and Societal Transitions, 23, pp.3-10.

Friedman, G., 2014. Workers without employers: shadow corporations and the rise of the gig economy. Review of Keynesian Economics, 2(2), pp.171-188.

Guest, D.E., 2017. Human resource management and employee well?being: towards a new analytic framework. Human Resource Management Journal, 27(1), pp.22-38.

Graham, M., Hjorth, I. and Lehdonvirta, V., 2017. Digital labour and development: impacts of global digital labour platforms and the gig economy on worker livelihoods. Transfer: European Review of Labour and Research, 23(2), pp.135-162.

Huws, U., Spencer, N.H. and Joyce, S., 2016. Crowd work in Europe. Preliminary results from a survey in the UK, Sweden, Germany, Austria and the Netherlands. University of Hertfordshire and Ipsos MORI, in association.

Kenney, M. and Zysman, J., 2016. The rise of the platform economy. Issues in Science and Technology, 32(3), p.61.

Kuhn, K.M., 2016. The Rise of the “Gig Economy” and Implications for Understanding Work and Workers. Industrial and Organizational Psychology, 9(1), pp.157-162.

Meister, J. and Mulcahy, K.J., 2016. The Future Workplace Experience: 10 Rules For Mastering Disruption in Recruiting and Engaging Employees. McGraw Hill Professional.

Pompa, L., 2017. From the Unusual to the Useful: Digital Platforms and Co-Working Spaces as Instruments for Human Resource Management in Emerging Economic and Organizational Environments. International Journal of Business and Management, 12(8), p.143.

Richardson, L., 2015. Performing the sharing economy. Geoforum, 67, pp.121-129.

Scholz, T., 2016. Uberworked and Underpaid: How Workers are Disrupting the Digital Economy. John Wiley & Sons.

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