The ROI of Loyalty: The Gig Economy

To my readers: This is the first in a series on The ROI of Loyalty - because loyalty comes from having good leaders and can, in fact, be measured in profits, revenues and innovation…among other indicators. If there are any aspects of this you’d like me to write about or questions you’d like answered, let me know by leaving a comment below. -L-

———

One of the things I’ve learned about myself is that when I’m wrong, I’m really wrong.

To be fair, I’m mostly right. But, about this one thing, I was so completely wrong that I still can’t get over how wrong I was.

That being said, though, the part I was right about I was actually right about - only that makes me sad, too.

And now you’re wondering what the heck I’m talking about.

It’s the Gig Economy.

Man, did I ever get this one wrong. Here’s how I know.

About twenty-five years ago, after a presentation I made to a State-wide civic group about executives and leadership, I was talking with one of the guys at the conference. Here’s my best recollection of how that conversation went:

Him: “Leadership is all well and good, but what’s really next for organizations is that there won’t be employees anymore. Everyone is going to be a contractor.”

Me: “No way. We’re already seeing the damage that outsourcing key functions is doing to organizations. How do you get to everyone contracting from there?”

Him: “No one is going to care. It’s an economic model that works for every company’s finances. The decision is going to be made based on how low the cost of labor will be. Nothing else.”

Me (getting desperate): “But what about intellectual property and proprietary information? If employees are all contractors then they’ll be moving from company to company. How will the executives protect their organizations?

He said (still calmly): “Oh, they’ll find legal ways to make sure what needs to be protected is protected. And if it’s not, they’ll either bring suit or have people arrested. People will learn not to ‘share’ really fast after that. It’s still going to be the economics that make this a win.”

I said (very sadly): “So what you’re saying is that we’re seeing the end of any real loyalty in organizations.”

He said (very calmly): “Yeah. So what?”

And there you have it. Me being very, very wrong and very, sadly, right at the same time. Because we now have a “gig” economy that works well for organizations - and not employees - and no loyalty. At all.

Which is why I’m still surprised when executives complain to me that employees aren’t loyal to their companies.

After all, they tell me, these are employees. Not contractors. They should be loyal. After all, they’re employees. Not contractors.

These same executives can understand - sort of - why contractors aren’t loyal. Sure, they’re not getting the benefits that their employee counterparts are getting. And, sure, healthcare is expensive. And, yeah, they know that not being paid on days off can be rough. And, yeah, okay, not knowing from week to week whether or how much work they have may have an impact on how they live their lives.

Yeah. Sure. But it doesn’t change their decision. Compassion only goes so far, you know? They have shareholders to report to. And, hey, if the Finance Department could justify full employment, they would. It’s not their fault.

All of which employees are seeing - and not happy about. Because what they see is that their company (in which they’re employees) has no real care about a large percentage of people who are performing exactly the same jobs.

Which leads them to wonder at what point the Finance Department will decide that their jobs could be done just as well by contractors and they’ll be in the same boat as their contractor-brethren.

And on yet another side of the equation are the contractors, themselves - which leads me to Anthony, a young man I know from my neighborhood.

Anthony is exactly the employee any company would be ecstatic to have on staff. He’s serious about his work, about learning, about building his career and he’s been looking - for years - for a company that will help him help them to succeed.

So what’s the problem? HR Managers are hiring contractors. Through contracting agencies. Rather than hiring employees.

Anthony still has to go through the same job fair recruitment, selection and interview process as a ‘normal’ employee - and he can even get paid a comparable amount to his employed colleagues. But that’s where it stops - because Anthony is forced to live from paycheck to paycheck not knowing when or if the next one will come.

With all the additional expenses that would come as parts of an employee benefit package coming out of his pocket.

And when there are holidays on the calendar, he’s screwed - because he’s not getting paid for all that mandatory time off.

But the company still expects him to be there whenever they want him, on time, performing at the top of his skill - just like his employee-brethren.

All of which has led him to move from company to company - much to the regret of the companies, but, still, with no action taken…even though in some cases, they’ve promised that his status would be changed to full employee.

Ask him about loyalty and you’ll hear the complete opposite of what those executives I talked about before are expecting. You’ll also hear almost the same as the employees.

What does this mean for you?

As leaders, it’s crucial that you take a holistic look at how your organization is operating - and the Gig Economy question is now a central part of that holistic look.

There’s a tendency to think about “gig workers” as Uber drivers. Some of them are. Most of them are not. Many of them are working both Uber and a contractor job just to keep themselves and their families afloat.

And do you really want an employee - or an Uber driver, for that matter - so exhausted because they’re having to work two jobs being responsible for your company’s success…or your life?

In future posts I’ll be talking about how - specifically - to measure the ROI of loyalty. This one is an easy one. Just look at employee churn, the cost of filling those jobs, the time lost in those unfilled positions and by the people doing the hiring, on-boarding and training, the productivity lost, the quality lost, the market position and customers lost….

You see where I’m going.

Loyalty is measurable and one of those measures comes from the contractor decision. I recommend - highly - that you take a look at your organization to see just how much you’re losing by saving money.

Then do the right thing.

Self-Respect and Self-Empowerment: When It's Your Right to Leave the Room

Women and Succession: What Happens When You Succeed a Legend?