My concern in this post is how the transient nature of a “gig economy” workforce could impact customers. The gig economy is “a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.” While employees naturally expect benefits such as choice, job satisfaction, and flexibility, a wide variety of recent literature indicates that such an economy is not necessarily healthy for employees (e.g. this article from Wharton).
Before addressing the customer impact, what about the impact to the company? To the company, using gig economy employees (who I’ll call “taskers”) can seem attractive because it may appear to reduce operating expenses and can reduce full time employees (FTE). In service businesses, Opex and FTE costs go hand-in-hand and are tracked closely.
But the lure of financial savings may have a deleterious impact on the overall business. Simply put, a myopic focus on costs may inadvertently neglect customer impact. Because of this possibility, companies that plan to adopt the gig economy should first consider what happens to customers.
To do this, to determine the suitability of taskers to the customer experience, I find it helpful to consider the relationship between the type of work and the type of labor.
Type of Work
- Heterogeneous – this type of work is highly specialized. It is difficult to describe or duplicate and often requires large degrees of creativity. An easy example of heterogeneous work is computer programming. There are many ways to enable machines to perform tasks, but the way one software developer writes code is likely to be different from another.
- Homogeneous – as the name implies, this work is similar with limited variability. If asked to do homogeneous work, my work product will look a lot like yours (e.g. pumping gas). In homogeneous work, labor is highly fungible.
Type of Labor
- Full time employee (FTE) – these employees are hired with a defined scope of responsibility and are expected to devote their time at work to the job and various coordination (e.g. management) activities. When the work is complete, the FTE may be expected to find innovative ways to streamline or otherwise improve the job.
- Gig economy employee (Tasker) – Taskers can be employed briefly to carry out a defined piece of work. By definition, the work itself requires a defined beginning and end. At the completion of the work, the worker is no longer needed.
Using these brief descriptions, here is my assessment of impact of Taskers on the customer experience.
- For heterogeneous work, using a FTE is no different than business as usual so it will have no impact on customers. If a company uses a Tasker prematurely, however, the customer experience will decline.
- For homogeneous work, using a Tasker is a good strategy because the work can be broken up into discreet parts and is similar enough that a good description of the work will enable different people with the same skill sets to deliver the same output. If a company doesn’t use a Tasker on homogeneous work the costs will be too high (i.e. an opportunity).
From the customer perspective, only the Heterogeneous/Tasker quadrant is fraught with risk.
From the company perspective, the Heterogeneous/Tasker quadrant represents a risk in the short term and the Homogeneous/FTE quadrant represents an opportunity to decrease costs. (In many ways, this last quadrant is the one where automation is raging across industries and upsetting labor markets.)
When determining the impact of the gig economy on customers, the pivot point is to consider the Type of Work along with the Type of Labor. If the work is highly unique, then companies should stick with FTE to minimize adverse impacts to customers. For standardized work organizing into piece parts will have little to no impact on customers.