The leadership implications of the gig economy

In recent times, advances in technology and social transformation have fuelled the emergence of the gig economy, changing the employment landscape for businesses and workers alike

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People typically associate companies like Deliveroo and Über with the gig economy, but all organisations must be willing to adapt to this new age of working

Over the last few decades, social and technological changes have pushed us into the age of the ‘gig economy‘, which is radically changing the way we work and how businesses organise themselves.

There are two key manifestations of this shift. Firstly, rather than having rigidly segmented workplaces, many organisations are now thinking in terms of ecosystems, blurring the lines that used to separate employees from external contractors, suppliers, and partners. Secondly, rather than having permanent, fixed roles for employees, many organisations are now moving to more flexible, project-based assignments. This changing context calls for a new style of leadership that can get the best out of a broader set of relationships, more distributed talent resources, and more complex career progressions.

This article focuses more on external ecosystems than on internal role fluidity, but many of the leadership implications apply to both.

To gig or not to gig
The first question an organisation needs to face is the extent to which their business will benefit from moving to a less rigid operating model. Key considerations here include competitive differentiation (a premium brand may want to exert greater control over customer touch points), degree of industry disruption (a company in a fast-changing sector is likely to need specialised skills from external parties), and investor expectations (a family-owned business may be willing to carry additional fixed costs, while a publicly-listed one may not).

Organisations then need to decide to what degree they differentiate their treatment of employees versus contractors. While clear-cut outsourcing models that initiate transactional relationships between a company and its customer-facing gig-workers may be more cost-effective over the short term, they carry greater reputational risk over the longer term. This could be, for instance, because of a mismatch between publicly stated values and the reality of the customer experience, or due to societal outrage at the employment conditions of third-parties.

While risk management is one consideration, there are also pronounced advantages of positively involving peripheral partners in an ecosystem. In many instances, gig-workers are the public face of a brand. If they feel part of the organisation and bought into its mission, they are more likely to make an extra effort when interacting with customers, and more likely to be loyal to the company over its competitors. This is also true for non-customer-facing workers, where greater levels of engagement can also generate significant value.

New leadership terrain
While each organisation will embrace this in different ways, the reality is that this is a significant new terrain that leaders need to master, irrespective of whether the rationale is focused on operating model, risk management or partner effectiveness. There are two key elements here.

Firstly, leaders need to be better skilled at making strategic decisions around which organisational boundaries need to be fixed and which need to be fluid, and also more prepared to shift this over time as circumstances change. A classic example of this would be identifying what part of an IT employee base needs to be out-sourced versus kept in-house. Intellectual flexibility is key here. Leaders need to become more willing to let go of previously successful paradigms that have run their course. Fostering open-mindedness is something that will require significant shifts in terms of how we think collectively about education, selection, and development.

Secondly, leaders need to take a more broadly inclusive approach to orchestrating and motivating across boundaries. They need to be able to connect with a wider audience in order to build collective meaning and purpose and draw out discretionary effort. They need to ensure that the right technology, structures and processes are in place to make it easy for third-parties to plug into their organisation. They also need to nurture a culture which supports the operating model, rather than undermines it. Key to this is having a ‘breadth of perspective’, being able to move between the high-level systemic view and the felt experience of the individual, as well as an ‘interpersonal range’, authentically adjusting communication style to fit a particular audience. In too many cases, current organisational career pathways inadvertently prioritise technical mastery and the ability to influence within a company culture, over a broader set of attributes.

Time to act
As with every shift in a strategic context, there will be winners and losers. The winners will be the leaders who take a dynamic view on what is core and non-core, who see the positive opportunities of embracing third-party workers, and who create a shared sense of identity and purpose in a more dispersed constituency base. The losers will be the ones who thought that this only applied to Über and Deliveroo and was not something they needed to get their own heads and hearts around.