Why the gig economy may not be the workforce of the future
Permanent employees are the most ‘flexible friend’ of growing businesses, not the gig economy or artificial intelligence, according to a new report.
19 October 2018
Growing businesses are still more focused on the recruitment of permanent resources than they are on short-term or gig-economy-type recruitment, or on turning to artificial intelligence (AI), according to a report on business agility from technology law firm Boyes Turner.
How to build a successful, agile business in a fast-changing world?
The findings in the 'Building agile businesses in a changing world' survey reveal:- 62% of firms say they either predominately or exclusively recruit long-term, permanent employees, with only 4% saying they favour short-term resources and contractors – none are exclusively turning to this type of short-term resourcing
- 49% of firms say they see no benefit from the gig economy, and 47% see some benefit, but only 4% say their firm benefits greatly from it
- 91% of firms say change-ready people were most important to growing an agile business, while only 9% say AI or other technologies are more important
- Three fifths of employers (60%) also say they’re investing in training and coaching their existing workforce to maximise agility and resilience to change
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Mark Blunden, partner and head of the commercial and technology group at Boyes Turner, said, “The gig economy and AI capture the public imagination, but our report shows businesses still value recruiting, retaining and developing long-term employees and training and developing them in preference to more transient types of employment types or technology and AI solutions.“Agility is critical in today’s fast moving, ever changing world – but businesses tell us that agility comes from having a loyal and change- ready workforce, not turning to the gig economy or technology as a quick fix,” he explained.Despite this vote of confidence in long-term employees to drive growth, firms do face constraints on agility caused by both their workforce and their workspace:
- Only 35% of companies say workforce and workspace go hand-in-hand in supporting agility
- 30% of companies say their office space is a constraint on the agility of the business
- 35% say flexibility of employees and their capability to handle change is a greater constraint on agility than the physical workspace
Why won't the gig economy be the workforce of the future?
“The majority of fast-growing firms are based in leasehold properties,” explained Mr Blunden. “In our experience, though, far too many assume leasing office space is as simple as moving into your first shared flat.“In reality, there are many inflexible contractual rules that can make your office more of a straightjacket than a launchpad. A flexible workforce needs an adaptable working environment to deliver on its growth potential,” he added.Read Ruth Holmes' latest think piece about the Gig Economy:
Although the initial popularity of gig workers and AI in the economy prompted speculation that they would soon occupy a steadily larger portion of the workforce, the Boyes Turner report casts doubt on that likelihood.The report offers practical advice to businesses at the start-up or new funding stages of growth on how to ensure contract or investor constraints don’t inhibit growth.
Top tips for start-ups and businesses seeking to fund growth include:
- Ensure you capture all your intellectual property from the outset – without it your business may not be a business at all
- Be wary of investors putting in ‘pay-to play’ provisions (where all investors must invest in future rounds or lose their rights) or conversely ‘co-sale’ rights (where one party selling can give all parties the right to participate in the sale – risking a flight of capital)
- When taking external investment, look out for punitive multiplier liquidation preferences, which can give early investors a leveraged ability to extract their money first on exit – one early investor doing this can lead to a ‘snowball effect’, diluting founders’ investment
- When leasing property for your growing business, look out for contract terms that could turn your office into a business straitjacket – taking particular care over break clauses, rent reviews, automatic renewals or uncapped service charge provisions
The full report from Boyes Turner, Tech be nimble, tech be quick, tech don’t forget the legal bit: Building agile businesses in a changing world is available to download at www.techbequick.co.uk
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