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Surviving and thriving in the gig economy - part 1: how did we get here?

Nigel Purse

04 March 2018

Today's employment market is becoming increasingly fractured and dysfunctional. They call it the "gig economy". But employee engagement still matters - for the sake of quality, customer satisfaction and innovation. However, this radical change means that conventional, top-down approaches to building engagement are doomed to failure.

The concept of employee engagement took root in the 1990's, propelled by Gallup's research results, 012 survey methodology and the opportunities these created for other survey providers to create a market for engagement surveys. Since then, measuring employee engagement has become an industry in its own right and virtually every large organisation invests in such surveys at least every couple of years.

And there are good reasons for this; countless research studies show a positive correlation between high levels of employee engagement and superior business performance. This has been proven across almost every business metric - sustained profitability, revenue growth, customer satisfaction, returns to shareholders and so on.

What is important, is to appreciate how dramatically the employment market has changed since the 1990's, and the implications of these changes for how employers can sustain high levels of engagement. Employee engagement is difficult enough to foster and promote in a stable, traditional organisation of full-time, permanent, co-located staff with secure employment contracts, let alone in today's fractured employment market.

Let's get nostalgic for a moment and review how significantly things have changed and why staff are increasingly jaded and difficult to engage. Although the murmurings of change were getting louder in the 1990's, the majority of people in the workforce had full-time, permanent employment contracts. The idea that there were "no jobs for life" was being preached, but most people had yet to feel the implications. Employee engagement was therefore about the conditions that employers created to enable their employees to feel proud to be part of the organisation, go the extra mile and commit to building their career within it.

Fast forward to 2017 and, for at least half the workforce, that concept is a relic of the past. Nearly one million people in the UK (903.000 in 2016) are on zero-hours contracts where from week to week they don't know when, or if, they will be earning a living. Millions more are on part-time contracts, or work in sub-contracted roles.

Still more people don't even have an employment contract at all. Despite a recent court ruling, the reality is that if you work for Uber, Deliveroo, or deliver parcels for Amazon you are virtually self­employed. Sure, the backbone of the economy are the 4.5 million self-employed people and 5.4 million small businesses whose owners choose to be self-employed. But the very description "gig economy", and its connotations of struggling artists, is an apt way to sum up the precarious existence of those who rely on unpredictable work assignments to earn a living. 

Even those still lucky enough to have conventional employment contracts understand that their employer will not show them loyalty in the face of a squeeze on business performance. I doubt there is anyone left in the workforce who hasn't experienced a corporate "re-structure" or "change management" process.

Back in the 1990's chances were that you were co-located with your colleagues. Now, out-sourcing and "off-shoring" means that you probably work in teams and with colleagues on other continents, on different terms and conditions, from regions where pay and conditions are a fraction of your own.

The overall economic environment has deteriorated too. Thirty years ago, you could expect that your real earnings would be on a slow but steady upward trend. For the past decade, even those in full-time employment have seen their real earnings stagnate and their employment terms eroded. In the 1990's membership of the EU was promoted as an opportunity for British workers to move abroad to find higher paying jobs. As the divide between London and the rest of the UK has increased, sentiment has grown against the increase of inward migration from the EU, fuelling the feelings which led to the Brexit vote in June 2016.

And, of course, technology and our ability to be connected 24/7 to social media have changed the work environment, and how people experience it, out of all recognition. Employers used to expect their employees to be passive, compliant recipients of their employment conditions with controlled, one-way communications. Today, any such deference to authority or corporate righteousness has been destroyed by a series of corporate failures and scandals. People's trust in banks, government and media are at the lowest they have ever been - and they are being vocal about it on social media. Many fear things will only get worse as the so-called fourth industrial revolution automates the jobs of white collar workers who, up until now, believed their "professional" roles were safe from automation. Taken together, these changes demand that organisations have a total re-think to find a new approach to engaging their employees. One where front line managers are empowered and inspired to make their own decisions to engage their people; especially where they are not in conventional employment relationships.

Furthermore, employees themselves - especially the self-employed or non-employed (think zero-hours contracts) - need to adopt a new mind-set to build their own engagement conditions. This process can't start too soon, ideally while our next generation of workers is still learning and in full-time education.

Depressing reading, yes. But my next article will look at practical, positive ways that organisations can approach their need for engaged front-line workers by meeting the two major challenges above.