The on-demand economy is growing rapidly thanks to companies like Uber and Lyft. It is commonly thought that people join the on-demand workforce for supplemental income, but new research suggests otherwise.
Kevin Rockmann, associate professor of management at George Mason University, and co-author Gary Ballinger, University of Virginia, studied loyalty among professional on-demand workers. Their research, featured in the Journal of Applied Psychology, is one of the first published studies of on-demand work.
Rockmann describes on-demand work as a matchmaking service between customer and client. Websites and apps allow for matches to be made easily.
Firms are drawn to on-demand workers because they’re not actual employees. Rockmann explains, “Firms love using contractors and freelancers, because you don’t have to hire them. You bring people in for their expertise and you’re able to control your costs.”
“The business model suggests the only thing that would really drive loyalty for these people is more money,” Rockmann said. But, he notes, “the effects of money are very short term.”
“It turns out a lot of people do this work not because of the money, but because they enjoy the work, specifically the increased autonomy social connection.”
On-demand workers are able to control their own schedules, giving them a sense of autonomy. If they’re missing social connection in their day jobs, they might also take up consulting on the side.
“The firms that realize those reasons are actually going to end up doing much better because they’re going to have workers who are more loyal, meaning they’re going to work harder, stay longer, and not go to a competitor,” he said.
The research provides implications for how firms select workers. They usually choose based on availability, skills, qualifications, and whether workers are legally able to do the work.
“While we understand why you may need to look at the legal and skills component, there’s a whole other component about how you may go about selecting these workers to raise your competitive advantage,” Rockmann said.
A study by Intuit, shows that most on-demand workers average 40 hours per week. Their income, on average, is 34 percent from on-demand work and the remainder coming from a traditional full- or part-time job, contracting and consulting, or running a business.
Firms should select on-demand workers based on what they’re looking for in a job, and what they’re missing in their current job. This “completely changes the equation,” as Rockmann states, by selecting for factors that will help workers build loyalty to the firm.
The research might also help break the stigma that on-demand work is just for those who need money.
“This work is not just about money, which to some people might sound degrading,” Rockmann said. “If they can be happier and have a more fulfilled professional life by broadening out the kinds of tasks they’re doing, then they’re going to be better off and so will the organization.”
Rockmann notes that the employee-organization relationship “is much more similar to what we see in traditional firms than we typically think it is.”
But, he says, the on-demand economy is reshaping the workforce in other ways.
“I think the potential for these companies is to change not only how we book hotels and how we book taxis, but how we think about work. Maybe in 20 years, it won’t be working for one firm, but having a portfolio of firms that workers can choose to use their skills at and manage their own careers.”