Here’s a question for you – what is the “gig” economy? There seems to be no standard definition, but it’s a shorthand reference to the growing numbers of Americans who no longer hold a regular “job” with a long-term connection to a particular organization. The phrase appears to be borrowed from the music industry. In this new economic model, people work “gigs” – a particular task or a role for a defined period of time.
From my perspective, every employee is a “microentrepreneur” in the “gig economy.” I suppose if the Supreme Court has ruled that corporations are “people”, then it is not a far stretch for every employee to be a corporation. It is essentially the “Uberization” of the workforce. (For more on the magnitude of the microentrepreneur economy, check out the piece Pixel & Dimed: On (Not) Getting By In The Gig Economy in Fast Company.)
I’m not sure what I think about the gig economy as a model for the broader, U.S. economy – and for the health and human service field in particular. I have 20 years of experience managing an organization where half of our labor pool is based on a microentrepreneurship model – and I know firsthand that it has big implications for both manager and “microentrepreneur” alike.
On the management side of the equation, the microentrepreneur model requires your organization and your executive team to have a very different relationship with your talent pool. This is not the paternalistic or maternalistic environment that is found in many non-profit health and human service organizations – it is based on a set of assumptions and obligations on both sides of the relationship. It is completely market driven. Managers and microentrepreneurs make the on-going decision of whether to continue working together.
In this relationship, management teams need to have a compelling story for why team members should be part of the organization. Part of that compelling story are well-developed systems for remote management, real-time quality control, and proactive planning regarding tax rules. Because “microentrepreneurs” are often workers who don’t want to work full-time, you will likely have more of them, working in environments where supervisors aren’t physically present. This means setting up the tech-based systems for job dispatching and management, communication, real-time on-demand training, and remote supervision.
Quality control is the greatest challenge with a pool of microentrepreneurs – who by their very nature want to do it “their way.” But to have a corporate brand, the guidelines for performing the work according to the “brand” need to be clear and rigorously enforced. Last but not least, the IRS is very specific about the definition of “employees” and executives need to assure that the organization structures the work of “microentrepreneurs” to meet those guidelines. (For more on Uber’s issues with employee status in California, check out Uber Probed By U.S. Judge In San Francisco On Driver Employment Status.)
On the microentrepreneur side, I think there are great benefits and some tremendous problems. The benefits are obvious. Work with the organizations that you want, when you want. There are tax advantages. There is no office to go to. But, you are on your own, a “hired gun” without the security of the “next job.”
Benefits aside, there are a host of problems with “team member as entrepreneur.” In my experience, most people in the workforce lack one of the four key elements needed to succeed as an entrepreneur – self-organization, self-motivation, financial planning expertise, and financial independence. To succeed, microentrepreneurs need great personal and professional organizational systems and the self-discipline to work without prompting. And, microentrepreneurs need to be debt free – and have a cash cushion – in order to thrive. Finally, there is the issue of financial planning. For better or worse, employment status assures (for the most part) that your Social Security contributions and estimated tax payments are made, subsidies for health insurance are provided, time off is paid, and that there are opportunities for retirement savings. Many “microentrepreneurs” fail to address these issues, and fail to factor these costs (as well as costs of equipment and their overhead) into their equation. And, they mistakenly think they are “making more” as an entrepreneur than they are as an employee. (For a flavor of what is required, see my article, So You Want To Be A Consultant).
A great everyday example of the challenges of the “microentrepreneur” unfolded before my eyes yesterday on a taxi ride in Philadelphia. When I got in the taxi, the driver asked me to use cash instead of a credit card. While not a problem, I did ask him why. He said the City of Philadelphia taxi authority – in order to compete with Uber – has set up a new system where riders can pay for their taxi rides using their smartphones. And yesterday, every one of his fares had paid with their smartphone – and he didn’t have the cash to pay the $15 he owed on the taxi rental at the end of the day. That is a challenged “microentrepreneur.”
What does all this mean for health and human service organizations? Who can be microentrepreneurs within traditional service delivery systems? Almost any staff position that has the ability to work independently with their own “equipment” and “office space” (a key IRS requirement) can meet the definition. I see some clinical specialists falling in this category, along with community-based team members, and select tech and marketing positions. For the sake of management, continuity, and consistency, the key is finding the optimal balance between team members who are employees and those who are microentrepreneurs – fundamental to productivity targets and balancing fixed and variable costs.
What to learn more? For the “pro” side of the gig economy, check out:
- The Rise of the Gig Economy
- The Freelance Surge Is the Industrial Revolution of Our Time
- The Gig Economy: The Force That Could Save the American Worker?
And for understanding the “dark side”, don’t miss:
- In Sharing Economy, Workers Get Stuck With The Scraps
- The Gig Economy Won’t Last Because It’s Being Sued To Death
- Cut-Throat Capitalism: Welcome To the Gig Economy
- Growing Voices Say Gig Workers Need Protections, Benefits
Outsourcing (whether domestic or international) is not a new concept. The gig economy and the proliferation of microentrepreneurs just takes this one step further. While I don’t know what the “optimal” model will be, I’m certain that executives of health and human service organizations will need a strategy to compete with organizations that are willing to take the gig economy to its most extreme applications. The “Uber” model is at our door.