The gig economy is growing at a rapid rate. According to Upwork, freelancers represent 35 percent of the workforce — at 55 million in 2016. Technology has helped fuel this growth and make it possible for people to work for businesses from virtually anywhere.

A Range of Freelance Types

The real import of this study for finance leaders is that most freelancers prefer to do this work on the side, while employed at other organizations. Upwork places freelancers into the following categories:

  • Independent contractors (35 percent)
  • Diversified workers (28 percent)
  • Moonlighters (25 percent)
  • Freelance business owners (7 percent)
  • Temporary workers (7 percent)

More than half of those taking on side jobs, according to Upwork, also hold full-time jobs elsewhere. In addition, Fast Company reports that 81 percent of employees would do additional work outside of their primary job if it was available and enabled them to make more money.

What Does This Mean For Businesses?

If more of your workers are taking on second or third jobs, what are the implications for their focus and productivity with your company? Should you be considering ways of discouraging these potential side job distractions, perhaps by paying employees higher salaries to encourage them to work with your firm exclusively?

Helene Segura, author of The Inefficiency Assassin, says that employers may not be able to control what other jobs employees take outside of work hours, unless their activities involve moral turpitude that affects the organization's reputation — or there's a noncompete agreement in place. What they can do, though, she points out, is focus on output. "Employers need to decide what a realistic output is for each position in the organization and rate each employee based on their output," she says. If they're meeting those expectations, whether or not they have a side gig (as long as it doesn't negatively impact the organization's reputation or violate a noncompete agreement) should be irrelevant.

Create Clear Expectations

Bob Shoyhet, CFO of Melillo Consulting, recommends addressing the issue of employees' potential interest in moonlighting through clear employment policies. While businesses may not want to attempt to restrict employees from taking on freelance gigs, they should establish some boundaries, he suggests. "It is critical that policies dictate that other jobs should be limited in nature to a specific maximum amount of hours per week and not interfere with performance of their essential job function." The key, he says, is to clarify and communicate your business' expectations.

Take Advantage of the Trend

Tom C.W. Lin is a business law professor at Temple University in Philadelphia who researches in the areas of corporate law, finance and technology. Lin points to two trends that are emerging as more people seek work outside of their primary jobs. "Many businesses are getting more creative in engaging their employees to become more dedicated to their primary jobs through higher compensation, better perks and also a greater sense of place and purpose," he says. "Firms are also experimenting with their labor force, mixing dedicated full-time employees with more flexible employees from the gig economy."

Shoyhet also points to the potential benefits that a gig economy can hold for organizations. "It's the way of the future and it's here to stay. It is an excellent option that helps businesses save money. Rather than hiring more full-time help and paying for their benefits, managers should consider whether certain functions could be outsourced altogether," Shoyhet concludes.

While a focus on ensuring your workforce is committed, engaged and productive is critical, there may also be opportunities to leverage the gig economy to provide added value and benefit to drive business strategy.

Stay up-to-date on the latest human capital management insights for finance leaders: subscribe to our monthly e-newsletter.

Tags: Compensation Talent contractors