We’ve heard a lot about the gig economy in the last few years, but what is it exactly? The gig economy is a labor market where people are working under short-term contracts or as freelancers as opposed to long-term employment. For example, Uber is part of the gig economy, whereas taxis are part of the traditional employment model. At this point, the gig economy hasn’t taken over traditional business models but it is having an effect on the business environment. How should businesses respond to it? Is it a threat or an opportunity?
How the gig economy is affecting businesses
The gig economy is affecting businesses in several ways, some negative and some positive. Here are two of the biggest effects:
The gig economy means that more workers are willing to work for short-term contracts or to provide one-time services, without benefits. Reducing the number of full-time employees frees up business capital to spend on other business investments. This allows small businesses to be more agile so they can compete with larger businesses without coming up with money up front. Businesses that need help with occasional projects, need the help of an expert from time to time, or want to provide a service every now and then can benefit from the gig economy by hiring workers as needed.
Another advantage to the abundance of short-term workers is the ability to hire someone on a contract with the idea that if they are a great addition to the team, you can offer them a full-time position. It’s like a trial period for new-hires.
The competition for top talent has intensified
It turns out that many workers like the flexibility and work-life balance offered by the gig economy. Many people in today’s workforce are looking for employers to offer some of the perks they could get if they worked as freelancers. As a result, many employers are finding that in order to attract and hire top talent; they have to offer perks such as the option to work from home, flexible start times, unlimited PTO, and mental health days. The interesting thing is that gig workers often get paid less than traditional employees but will choose it because of the work-life balance that it can offer. The indirect consequence of this is that workers who give up these freedoms expect to be compensated well by their employer; potentially driving up compensation for top talent. In addition to pay and flexibility, small businesses need to offer a great employee benefits package to attract and keep great workers.
Partnering with Makai HR
We understand that competing in the gig economy means offering great benefits packages to your employees. When you partner with Makai HR, your small business gains access to benefits packages that are normally only available to large companies. This allows you to compete with the big players for the best employees that can help you grow your business.
With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet or phone. We can truly improve your employees work benefits while freeing you up to run your business.
What are you waiting for? Companies who partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. ,Contact us today to get started!