Why it could be payroll that stops you harnessing the gig economy
Guest Blog by Jerry Chilvers, managing director, Zalaris UK&I
We are witnessing the rise of the freelancer. Freelance trade body IPSE said in 2016 that there were 1.77 million full-time freelancers, whilst People Per Hour has predicted that half the UK workforce will be freelancing by 2020.
This explosion is being driven by several factors, from the end of jobs for life to the arrival of technology enabling remote working (and thereby freeing people from roles commutable from homes). While there are risks of unscrupulous businesses exploiting gig economy workers, there are also benefits in the opportunities for employers looking for high quality talent, particularly as they look to equip themselves for the digital era. One of the characteristics of this new way of working is the ability to execute fast and cost effectively – experienced freelancers offer both to organisations looking to scale up teams rapidly.
With 67% of HR leaders believing the war for talent will be one of the most pressing issues for their workplace in the near future, freelancers or contractors offer ways to plug short term skill shortages, as well as offering cover for longer absences – all without requiring significant expenditure beyond salary.
What’s stopping employers from hiring short-term talent to deliver quick results? Increasingly, it’s becoming clear that new ways of working require new systems and processes. For organisations set up to acquire, onboard and utilise permanent employees, that could mean a significant rethink. From mobility and ease of access, to accommodating own devices without compromising security, being able to accommodate contractors requires a different approach to the ones used to deploy permanent employees.
Payroll as the new frontier in the gig economy
Take pay, for example. Just over half (56%) of UK private sector decision makers and little more than a third (39%) of their public-sector equivalents believe their payroll can meet the challenges of paying gig-economy workers (in this context, that’s freelancers), according to a recent survey we conducted. Why’s that? Because new types of working require new systems and processes – if new starters cannot be added to payroll until a new cycle starts, unfortunate staff might wait up to six weeks to be paid. For permanent employees that can be extremely inconvenient – for contractors relying on timely payments from a variety of income sources, that could leave significant gaps.
Yet there is awareness that change is required – 74% agreed that changing staffing models require innovative approaches to payment.
So what are the barriers? Legacy systems, the unsuitability of current technology and a general lack of resource to pay people more frequently were cited as key obstacles.
Rebuilding from the ground up
This isn’t a coincidence that these are the sort of challenges organisations will be experiencing across all areas of the business as they embark on their digital transformation. At the heart of everything is infrastructure – if it isn’t fit for purpose (i.e. can’t handle the demand for agility and speed without compromising security), then it needs to be changed.
The solution depends on the organisation, but for many, that means a move from on-premise to cloud computing. To give you a sense of the shift we’re seeing, just 16% didn’t have any mission critical applications hosted in a cloud computing environment.
Increased flexibility (61%), reducing resource requirements (64%) and reducing payroll reconciliation cycles (41%), a key factor in delaying payments, were some of the reasons given for switching apps to a cloud environment – all solutions, in turn, for the challenges faced when updating payroll for new ways of working.
Removing barriers to future success
Businesses that are serious about going digital need to understand that it starts with a reliable foundation, a fresh approach to business and being committed to moving fast and delivering results faster. Freelance, or gig-economy, talent can help organisations build teams quickly without huge investment, but to secure the right talent, employers need to make sure that they are set up to embed and remunerate contractors quickly and accurately. If they can do that with legacy systems, fantastic – the evidence, however, suggests that without change the ability to access top talent will be undermined.