Sharing Economy Model in HR: Have Gun Will Travel
Who hasn’t heard of E-Bay, Uber or Airbnb?
A number of peer-to-peer markets have emerged as alternative suppliers of goods and services now colloquially known as the sharing economy. A customer uses an IT platform to share and use the excess capacity of the owner of things like cars, rooms, etc.
The mantra is “What is mine is your’s for a fee.”
A car pool or bed-and- breakfast have existed for ever. However, technology has reduced the transaction costs, making sharing cheaper and making it easier to do things done on scale. As proponents of this model like to put it, access trumps ownership.
The model emerged during the 2008 downturn, However, the model is continuing to gain traction and is likely to grow rapidly because of the win-win results it produces. The owners makes money from underused assets, the user pays less than ownership or traditional means of usage. The emotional benefits of being environment friendly is the icing on the cake.
Traditional users, like me, were slow to adapt this model because of concerns of the risk of unknown providers. However, background checks carried out by platform owners, online reviews and ratings- usually posted by both parties to each transaction, make it easy to spot the bad apples. Having made successful purchases from, say, Amazon, now the web is a source of trust for people like me.
Regulatory uncertainty is still a concern. Are the Uber drivers employees? The emerging model is now big and disruptive enough for regulators and competing companies to have woken up to it. That is another sign of its immense future potential.
Time magazine listed the sharing economy to be one of “10 Ideas That Will Change the World.” A Presidential candidate is presently sharing the rise of these companies as a sign of the transforming economy ( Although no policy statement yet from him!).
It is time we all start caring about sharing.
Recently a spate of corporate downsizing, mergers and acquisitions and corporate relocation overseas has shaken the confidence of many full time employees in my home town. Similar events are taking place all around.
This is the perfect opening for the sharing economy to accelerate in the area of employee-employer transactions. My fearless forecast is that any individual who is not looking at the alternatives to a full time job is shortchanging their own options. If someone loses their full time job, it behooves them to, at least, consider this option. It may turn out to be a preferred choice.
Temporary Help companies, like Kelly Services have been around just like Hilton and other hotels have been there. But the sharing economy model is different. Recently I used Fiverr for developing a company logo and other sundry services to help a start-up company. They bring a whole new dimension to the concept of “temporary assignment”. Various common services are offered at standardized prices and connected to willing individuals who may provide those services in their spare time or even as a power supplier, working full time. The whole transaction is covered with lots of “assurances” and quality control interventions. There is no other way the startup could have got all this done in time, cost and quality. With the lower transaction cost, just like in other sharing economy services, the employee gets to keep more and the employer pays less.
Both as an employer or as an employee, we need to be up on the emerging trends, driven by the sharing economy, as it penetrates the arena of shared assignments. What are the pros and cons:
Shared Assignments: A person works in a shared capacity with several employers.
Employer
Pros:
- Flexible staffing. Lower unproductive labor hours.
- Quick response to changing needs.
- Richer experience of employee from variety of engagements.
- Higher caliber employee.
- Reduced on-going liabilities.
- Reduced cost of HR.
- Opportunity to try before hiring FT.
Cons:
- Effort required to analyze work load.
- Start up time may be slower.
- Perceived lack of loyalty.
- Cost of turnover related to training.
- Lack of company knowledge.
Shared Employee
Pros:
- Flexibility of time, hours and scope.
- Possible FT hire.
- Opportunity to try before committing to a company.
Cons
- No employment guarantees.
- Uncertain work schedule.
- Fewer/No benefits.
- Possible lower income.
- May not be included in full time activities, social events.
- Uncertain career path.
Obviously we need to have somewhat standardized units of work and scope to make the Shared Assignment more efficient. It will emerge. We will see many more models that link company needs with individual providers.
It has only just begun! Oil your gun and get ready to travel!
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Dr. Rajiv Tandon is an Entrepreneur, Educator and Mentor. He facilitates peer groups for CEOs of fast-growing companies in Minnesota. To learn more, sign up to get the email newsletter.
