What Is the Gig Economy, and What Does It Mean for Managers?

As freelance workers in the 'gig economy' increase, learn how managers serve a critical role

At TSheets, we know that the word "manager" or "supervisor" means something a little different wherever you go in the business world. But whether it translates to keeping a construction crew on task and organized, helping a restaurant staff deliver top-notch service night after night, or ensuring that a sales team is meeting goals and acting as a cohesive unit, managers play a critical role in acting as a liaison between company objectives and employee needs.

In the 'gig economy', what it means to be a manager isn't changing as much as it might seem Tweet This

And while the "gig" economy, sometimes called the "shared economy" or "on-demand economy," is changing the face of business as we know it (and quickly – Intuit predicts that by 2020 the percentage of freelancers who offer contract services in an on-demand capacity will double in size, what it means to be a manager isn't changing as much as it might seem.

Getting to the heart of what the gig economy means for managers, as well as learning about how the rising on-demand workforce is changing the landscape for business owners and employees' relationship with corporate America is critical to empowering managers to make sound decisions and adopt best practices.

So, what does the gig economy mean for managers?

In a Nutshell

As a liaison between business owners and employees, managers find themselves couched between two groups that feel the most direct impact from the rising gig economy. However, a thorough understanding of the effects the growing gig economy has on these two groups is crucial for managers, who can then integrate this information into company strategy, culture, retention, recruiting, structure, and employee development.

Seeing the Big Picture

For managers and small business owners, gaining a big-picture overview of where a company is at, how things are shifting, and where the company wants to ultimately position itself in the on-demand economy is a necessary first step. Managers can work with business owners to get this bird's eye view through candid conversations with employees and key company stakeholders to understand why changes are happening, and whether the company wants to push back or embrace those changes.

Depending on the rapport within a given manager's team or company, this can be done through one-on-one conversations, anonymous surveys, and research into what employees (and previous employees) are saying about the company on sites like glassdoor.com. The key is to gather information that is as honest and comprehensive as possible.

Responding to Change

The on-demand economy means change for almost any company, whether it's shifting employee classifications or necessary adjustments to recruiting, hiring practices, or retention initiatives. Whether managers work with business owners to embrace a given change, push back against it or compete with it depends on the big picture view of the company's goals and strategy. How effective is the current strategy involved in striking the right the balance of full-time, part-time and contractor employees? How hospitable is the workplace environment to employees taking gigs on the side or working part time as the situation requires? Are hiring and retention efforts consistent with the type of employee the company wants to attract and keep? Is it important to the company to maintain a positive reputation and ties within the freelance community, and if so what efforts are being made?

Keeping an eye on the big-picture view of the company's goals while answering these questions and others that arise will help managers minimize knee-jerk reactions and avoid missed opportunities to adapt and adopt best practices that position a company favorably within the rising on-demand economy.

Key Areas of Change

In any company, there are several key areas where the gig economy is most likely to cause shifts. Keeping special tabs on these five areas can help managers stay ahead of the curve in making decisions and gathering information to keep the company in good health.


The adage "culture is king" still rings true, even in an on-demand economy where an increasing percentage of employees might participate in a company's culture, only indirectly. Cultivating culture purposefully and checking in often as to whether the company is on-target can catch more nuanced ways where course correction is needed or where something is working well. What perception do outsiders (and prospective employees) have of the company? What do company insiders value most? Are contractors being treated like people with skills to offer, or "hired help," as Brian Kropp, analyst with research firm the Corporate Executive Board puts it:

"Organizations need to rethink their approach. If you treat them as 'hired help,' then they will behave as 'hired help'."

Understanding and cultivating a unique cultural value proposition from the inside out will attract (and keep) the employees that are right for the company.


The reasons employees are staying (or leaving) is another key element that is likely to shift in a growing on-demand economy. Understanding why – and then nailing down a clear value proposition of why employees might be incentivized to stay when given other options – will be key, whether a company employs primarily W-2 employees or a workforce of 1099 contractors.

Many contract employees moonlight at various gigs rather than taking gig-work full time. Is the company a safe place to do both? Why or why not? What changes could be made to be more accommodating or attractive to employees who want to spend some portion of their time developing additional skills or earning extra cash with various gigs on the side.


Directly tied to retention, recruiting efforts are likely to shift significantly in the on-demand economy. With more choices available, a "buyer's market" for employees will increasingly become the norm. Hiring managers should be prepared to take a more proactive approach in showing prospective employees the perks, benefits and advancement opportunities a company has to offer as stacked up against the competition. While this might seem like a drawback at first, the benefits of employees being more selective and finding the best fit bodes well for overall company retention efforts.

It's a huge value proposition to tell employees your career concept isn't limited by industry Tweet This

Managers should also be prepared to think outside the box when it comes to evaluating potential employees' availability, skill sets and degrees, while working with business owners to advocate for and onboard the best fit for the job. In the on-demand economy, valuable experience and skills may come from some unexpected and nontraditional places. As John Boudreau, professor and research director at USC's Marshall School of Business and Center for Effective Organizations has said,

"It's a huge value proposition to tell current or prospective employees that your 'career concept' isn't limited by your industry. There are people who don't work for you, but may want to work on a specific project for you. On the other hand, there are employees who want to work for you, but you can't give them everything they need or want to learn."


Managers should be prepared to evaluate (and reevaluate) whether the company structure is working in terms of employee satisfaction and corporate goals, and particularly how contract employees are being utilized. For example, are there opportunities for the company to use contract employees more effectively within the company? Could certain needs be met more cost-effectively with freelancers than by hiring another traditional employee? Is the structure hindering or helping retention and recruitment of employees? What shifts are happening in traditional hierarchies and communication structures? Managers may see particularly significant changes in this last area. As Noah Smith, Assistant Professor of Finance at Stony Brook University says,

"In a way, [the on demand economy] will make our society a more equal one . . . since it will replace vertical management hierarchies with horizontal webs of contracts among equals. The gig economy probably won't create greater income equality, but it will almost certainly increase status equality."

Employee Development

The dynamics and scope of employee development is another area managers should be prepared to monitor and help adjust as needed. Contract employees in the gig economy are often attracted to the opportunity to use underutilized talents and develop new skills in an environment with a low barrier to entry. Do employees have opportunities to learn new skills, shift roles, and grow within a company, either through a continuing education plan or through reliable channels of career growth? Where do recommendations for new opportunities and paths for growth make sense within the company?

While it can be tempting to label some aspects of the new economy good or bad, helpful or threatening, in general the most propitious approach managers can take is to think descriptively and keep an open mind. Be ready to embrace and roll with changes, and recommend solutions when roadblocks or new situations arise. Before jumping the gun to either embrace or shun the rising tide of the on-demand economy, dig into research and determine what makes sense for you.

The gig economy isn't a trend that's going away anytime soon. But the way it dovetails with your business is to be determined – in large part by managers and businesses owners themselves.

Back to Resource Center