The employee experience and its impact on motivation at work

In the past, employees have been seen as resources, treated as a cost to be reduced and kept down

at every opportunity. Whereas more recently there has been significant discussion about people as

assets to be tended and nurtured, so they blossom and as a consequence are more self-motivated

and productive. Overlay the impact of technology and the changing world of work and it is clear

that some of our “old” ways of thinking around how people develop and achieve, and therefore

should be managed, are no longer fit for purpose. This article considers the various trends in

approaches to what is now known as the employee experience and the impact it has on motivation

and productivity.

The theory

We are all familiar with Maslow’s hierarchy of needs and have used it in many circumstances to

explain human behaviour. It is a commonly held belief that the needs in the lower part of the

hierarchy (hygiene factors) all have to be satisfied before we can move up to the higher levels of

growth and full satisfaction. The basic hygiene factors of the environment and feeling safe are

satisfied at work through pay and the working environment. While the psychological needs of

belonging and esteem, including the need to achieve, are met through being part of a team and

achieving goals, it is only when these needs are satisfied that we move onto self-fulfilment and

start achieving our full potential and becoming truly creative. Maslow argued that the hygiene

factors were deficiency needs, and that only the highest level of self-actualisation was a growth

need. The significance of this is that the deficiency needs arise due to deprivation and are thought

to motivate people when they are unmet. When a deficit need has been more or less satisfied it

will go away and our habits and activities are then directed to the higher order need. In contrast,

growth needs do not stem from a lack of something, but from a desire to grow as a person. These
ideas are fundamental to many of our approaches to motivation at work. The ideal has been to

provide environments where individuals can achieve and grow and feel fulfilled; that way they

will reach their full potential and become truly high-performing employees. It is true to say that

this is a little simplistic, and people move up and down the hierarchy according to factors both in

and outside of work, but the general tenets still hold that once the basic needs are satisfied, people

aspire to feeling a sense of belonging and purpose.

McGregor’s X and Y theory has some similarities to Maslow, but it divides people into two

categories. In one category people are generally thought to have little ambition and be inherently

lazy — they are seen as individually motivated and happy to work for a sustainable income (Theory

X ). This belief has led to managerial approaches based on close supervision and managers who

are likely to use rewards or punishments for motivation. This may be seen as a very old-fashioned

view, but there is evidence to support that this theory of human behaviour is still alive and well in

many workplaces. However, this approach leads to hostile workplaces and minimally co-operative

employees, characterised by a lack of trust. The more enlightened managers, who still believe that

individuals generally have low motivation have adopted a softer approach. This is characterised

by greater leniency and less strict rules in the hope of improving morale and encouraging more co-

operative employees. However, this muddle of thinking often leads to an entitled, low-output

workforce and less consistency of approach. McGregor’s Theory Y school of thought is more

closely linked to Maslow’s hierarchy of needs and the belief that people aspire to self-actualisation.

Theory Y managers believe that individuals are internally motivated, find satisfaction in their work

and will achieve without the need for external rewards. These managers relate to their employees

on a more personal level and allow them greater autonomy in their work, leading to greater
creativity and discussion. Some commentators think that this approach is limited, as it leaves room

for error in terms of consistency and uniformity and is only suitable for the higher order jobs.

While these ideas may seem somewhat dated, they are significant in that they form the bedrock of

much of our managerial thinking today. We have all come across Theory X and Theory Y

managers, and seen at first hand the impact of such strict ideas on what motivates people, resulting

in either significantly demotivating them or allowing them so much freedom that chaos ensues.

These ways of thinking have led to the promotion and demise of badly designed performance-

related pay schemes, rigid management by objectives, poorly thought-out self-managing teams

and the like, and consequently have significant relevance for our learning about appropriate people

strategies for today.

Fred Fielder’s research on leadership, known as contingency theory, led to the thinking that the

combination of the two theories is what is required. Managers should evaluate the workplace and

choose their leadership style according to both internal and external factors. The trick, of course,

is to use appropriate tools and approaches depending on the circumstances, and more recent

thinking is asking for a much greater level of sophistication, which encourages managers to see

everyone as an individual and adjust their style accordingly.

Other theories emerged around the same time, including Herzberg’s two-factor theory, which

postulated that satisfaction and dissatisfaction were two different factors and could therefore not

be measured on the same scale. They are as follows.

 Hygiene factors relate to the job and comprise of supervision, interpersonal relations, basic

pay, work conditions and organisational policy. These factors cannot produce motivation;

they can only serve to satisfy or dissatisfy.

  Motivational factors include recognition, a sense of achievement, growth or promotion

opportunities, responsibility and the meaningfulness of the work itself.

The thinking is that the motivational factors will only come into play once the baseline of hygiene

factors are achieved. This is similar to Maslow’s hierarchy, but differs in that they are seen as two

separate scales.

During the 1960s, David McClelland built on Maslow’s work in his book The Achieving Society.

He identified three motivators that he believed we all have: a need for achievement; a need for

affiliation; and a need for power. He argued that people will have different characteristics

according to their dominant need, which is largely dependent on their culture and life experiences.

The achiever is motivated by the need to set and accomplish challenging goals and likes to receive

regular feedback on their progress and achievements. They will tend to take calculated risks to

achieve their goals and often like to work alone. The affiliator likes to be part of a group, and wants

to be liked. They will often go along with what the group wants and favour collaboration over

competition. They don’t like high risk or uncertainty. Those individuals who are motivated by

power want to control and influence others. They like to win arguments and enjoy competition.

Status and recognition are important to them. McClelland also observes that those with a strong

power motivator can be divided into two groups: personal and institutional. People with a personal

power drive want to influence others, while those with an institutional drive like to organise the

efforts of others to achieve the organisation’s goals. This view of motivation is helpful in that it

begins the debate around the individual and how it is important to recognise individual

motivations, rather than viewing employees as a homogeneous group.

In the 1970s, Theory Z was developed by William Ouchi, which is explained in his book Theory

Z: How American Business Can Met the Japanese Challenge (1981). Theory Z is known as a
participative style of management, which assumes that employees are motivated by a strong sense

of commitment and the need to be part of something worthwhile (the self-actualisation need).

Individuals crave the opportunity to advance and learn and will seek out opportunities for

responsibility and advancement. The underlying theme here is lifetime employment with one

employer, and individuals are happy to work up the ranks slowly, and that is how the organisation

gets the best out of them. While the need for self-fulfilment may still be there, a job for life is no

longer a realistic expectation (or desire for many) in the current environment of fast-changing

services and organisations.

However, recent psychological research has claimed to disprove this “conventional” wisdom

around what motivates people at work, and there is a new approach based on the “power of small

wins”. In a study of employee motivation, Harvard Business School professor Teresa Amabile and

psychologist Steve Kramer asked hundreds of employees to maintain a diary of peaks and troughs

in their motivation at work. After analysing 12,000 entries they discovered that it was not money,

safety or security or pressure that drives employees at work. The most important motivator for

employees is what Amabile and Kramer call “the power of small wins” — employees are highly

productive and driven to do their best work when they feel as if they are making progress towards

a meaningful goal. They also discovered that, of the 600 managers they asked what they thought

was the single most important motivator at work, 95% got it wrong. While this is powerful stuff,

it doesn’t tell us if Maslow’s hygiene factors had already been met and that therefore there was

arguably no longer a deficit need requiring to be satisfied.

In a more recent study of highly engaged employees by psychologist Susan Davis, she asked them

what made them so engaged and excited about work. Ninety-five per cent did not mention pay at
all. What she found was that they all “highlighted feeling autonomous and empowered, and a sense

of belonging in their teams”.

These theories give us a baseline to consider the vexing issue of what motivates and engages people

at work, but does not provide the whole picture. Some of the research below gives us a more

practical and thoughtful approach to taking us forward in our thinking on work and motivation.

More practical theoretical approaches

In his 2005 book The Enthusiastic Employee Dr David Sirota, an organisational researcher and

consultant, concluded that the way to enthuse employees is to give them what they want. Probably

not a startling conclusion, but he based his work on surveys from over four million workers around

the world, as well as interviews, case studies and informal observations. He then developed his

three-factor model of human motivation in the workplace, which is based on three fundamental

principles.

1. The organisations’ goals are not in conflict with the individual’s goals.

2. Workers have basic needs that organisations should try and meet.

3. Staff enthusiasm is a source of competitive advantage.

The three factors, which together build the enthusiasm, have clear practical implications for the

changing world of work and include the following.

Equity and fairness

People are motivated by fair treatment and they want their organisation to provide basic conditions

that respect their physiological, economic and psychological needs. These include creating a safe

working environment, fair compensation, a reasonable work-life balance and a reasonable level of
job security. Fair pay includes some variable pay for performance and allowing employees to share

in the organisation’s success. Psychological health is about creating an environment of respect,

where power is used fairly. Individuals are treated similarly, regardless of how much power they

have and status distinctions are minimised — eg avoiding differentiated parking arrangements or

canteen facilities. Independence and autonomy are important, as are positive feedback and

recognition. Paying attention to what staff say they need and want, together with showing an

interest in them, are all important factors in achieving an engaged workforce.

Achievement

People want to be proud of their work and have their achievements recognised. They also want to

be proud of what the organisation achieves; so individual and collective achievement are both

important. Sirota identified four specific things an organisation needs to do to give individuals a

sense of achievement. They are as follows.

1. Provide an enabling work environment, ie give people what they need to do the job well.

This includes using teams effectively, encouraging participative leadership, eliminating

bureaucracy and hierarchy, delegating effectively and avoiding micro management.

2. Provide challenging work by allowing people to do interesting work that makes good use

of their skills and abilities. Employ people based on fit (values and goals) and design jobs

for enrichment and satisfaction. Communicate how each role contributes to the

organisation’s overall goals and provide training and opportunities to develop.

3. Use feedback, recognition and reward — simply put, let people know how they are doing.

The elements here are establish and agree priorities, communicate clear expectations, use
 tangible rewards to acknowledge achievements, balance criticism with praise, and promote

from within where possible.

4. Be an organisation of principles and purpose — people want to work for an organisation

that they can trust and be proud of. To provide this, there needs to be a clear vision which

makes employees proud, which is communicated and modelled by the leaders. Ethical

leadership is hugely important, as is the provision of a high-quality service or product.

Camaraderie

When people go to work they want to enjoy themselves; inter-personal relationships are very

important. A culture that supports and encourages co-operation, communication, friendliness,

acceptance and teamwork is critical in maintaining enthusiasm. Many managers see this “touchy-

feely” approach as superfluous, but it is vital in ensuring that individuals feel a sense of community

and teamwork, which maintains enthusiasm and engagement. The following activities are

important to encourage such an environment to thrive — make people skills a priority, demonstrate

empathy, respect and consideration, and expect the same from everyone. Reward positive team

behaviours and encourage cross-functional interaction and teamwork. Ensure consistency in

messaging and organisational practices. Use team charters to develop ground rules, encourage

collaborative conflict resolution and win-win negotiation techniques.

It is a commonly held belief that high enthusiasm at work usually means an eagerness and a

willingness to work hard, but somehow we are continuing to fail in generating that enthusiasm.

We have often seen this when people begin new jobs. They start off with lots of enthusiasm and a

keenness to contribute, but appear to lose motivation over time. This leads me to believe that

people inherently want to achieve and we are failing to create working environments that enable
them to do so. As individuals become indifferent, more unco-operative and unproductive, we fall

back on traditional managerial tools — close supervision, motivational speeches, reward

programmes and as a last resort disciplinary action. However, as most of us have discovered, these

are not effective.

In their article in the Harvard Business Review, July 2008, Nitin Nohria, Boris Groysberg and

Linda-Eling Lee considered what they called “a powerful new model to employee motivation”.

They have taken their research from across disciplines including neuroscience, biology and

evolutionary psychology, and attempted to learn more about the human brain. The synthesis of

their research suggests that people are driven by four basic human needs, which are a product of

our evolutionary heritage. In their book How Human Nature Shapes our Choices (2002), Paul

Lawrence and Nitin Nohria argue that these drives (or needs) are the following.

1. Need to acquire — obtain scarce goods, including intangibles such as social status.

2. Need to bond — form connections with individuals and groups.

3. Need to comprehend — satisfy our curiosity and master the world around us.

4. Need to defend — to protect against external threats and promote justice.

It is argued that these drives underlie everything we do.

Nohria, Groysberg and Lee took these four drivers and tested them with the employees of 300 of

the Fortune 500 companies, plus nearly 400 employees from two global business services — a

financial services giant and a major IT company. To define motivation, they majored on four

factors — engagement, satisfaction, commitment, and intention to quit. They considered

engagement to be the energy, effort and initiative the employee brought to their job. Satisfaction
was defined as the extent to which the organisations met employees’ expectations at work,

including explicit and implicit contracts. Commitment captured the extent to which employees

engaged in “corporate citizenship”, and the intention to quit was a proxy for turnover.

These studies strikingly showed that an organisation’s ability to meet these drivers accounted for

about 60% of the variations of employees’ motivation. The researchers also found that some

drivers had a greater influence on motivation than others. Fulfilling the drive to bond had the

greater influence on commitment, whereas meeting the drive to comprehend is more closely linked

to employee engagement. They also discovered that it is important to achieve on all four drivers

— the whole is more than the sum of the parts, with a poor outcome on one substantially

diminishing the effect of the other three. The interesting part of this research showed that, while

the organisational norms are important, employees understood that managers had “wiggle room”,

and individual managers could have as much influence over motivation as an organisation as a

whole. As a consultant working in the sphere of employee engagement, I find this particularly

encouraging. We all know it is particularly difficult to turn around a whole organisation, but it is

possible to influence individual managers to enable them to engage their teams more effectively.

These drivers are hard-wired into our brains and as such the degree to which they are satisfied

affects our emotions and by extension our behaviours. It is therefore arguable that all

managers/leaders need to understand how they work in order to influence behaviour.

1. The drive to acquire — we are all driven to acquire goods to bolster our sense of wellbeing,

and we experience happiness when we acquire things and feel thwarted when we don’t. In

addition to goods, this relates to social status at work and could be something significant

such as being promoted or something smaller such as that better office or a reserved parking
 space. This drive is relative and therefore we compare ourselves with others, which is why

the feel fair nature of pay is so important.

2. The drive to bond — when this drive is met we feel strong positive emotions such as love

and caring, but when it is not we feel negative emotions such as loneliness and anomie. It

explains why individuals find it difficult to break out of their divisional or functional silos.

At work this drive accounts for positive motivation when people feel proud of the

organisation they work for, and can be extremely damaging for morale when individuals

perceive a betrayal.

3. The drive to comprehend — we want to make sense of the world, and produce theories and

principles to help us make events comprehensible, which enables us to have a reasonable

response to them. At work this manifests itself in our need to solve problems, and

employees are motivated by jobs that challenge them and enable them to make a

meaningful contribution, and to grow and learn. We are very demoralised by tasks that

seem monotonous or pointless.

4. The drive to defend — we will naturally defend anything that is important to us, and this

is manifested by fight or flight, or in the workplace aggressive or defensive behaviour. We

want to build organisations that promote justice and have clear goals and intentions that

allow people to express their views and opinions. If this drive is fulfilled we feel secure

and confident, but if it is not we feel strong negative emotions such as fear and resentment.

This drive to defend tells us a lot about people’s resistance to change.

The researchers argue that each of these four drivers are independent; they cannot be ordered in a

hierarchical way or substituted for one another. So, for example, higher pay will not make
individuals feel enthusiastic about their organisation if relationships are not fostered, or they feel

their work is meaningless or they feel threatened. To fully motivate employees, it is vital to address

all issues.

Organisational levers of motivation

1. Reward systems — assuming that the basic pay is reasonable and felt to be fair, it is

possible to use pay to increase motivation. Many schemes, particularly in the public sector,

have failed because they are not backed by sufficient investment or they are not understood,

or seen as fair or transparent. Any such scheme needs to clearly discriminate between good

and poor performers, and the application of criteria must be clear and consistent.

Individuals who need external recognition find the link with pay particularly powerful,

because it clearly recognises the work they have done. Some researchers would argue that

pay is a hygiene factor and therefore a demotivator if the need is not satisfied. I believe this

is dependent on two factors — first the pay is seen as reasonable, and second it is perceived

as comparable to those of people an individual sees as their peers. The perceived fairness

of any pay system is more relevant than the actual fairness.

2. Culture — the most effective way to fulfil the drive to bond is to engender a strong sense

of camaraderie. The organisation (leaders) needs to create an environment that promotes

teamwork, collaboration, openness and friendship. Managers need to openly show that they

care about their teams through actions, not words. These behaviours are closely watched

by individuals, who note how a manager deals with a difficult HR issue or a colleague who

is suffering from stress. This is not about being soft, but genuinely caring for another

human being. These behaviours pay dividends, as employees are prepared to go continually

the extra mile for an organisation/manager they think really cares.

3. Job design — the drive to comprehend is best met by designing jobs that are meaningful,

interesting and challenging. Backed by strong development opportunities and a

commitment to ensure employees have the right skills, this is a powerful incentive for

individuals to remain engaged and enthused.

4. Performance management and decision-making — as with pay, any performance

management scheme must be seen as fair and robust. Transparent decision-making together

with the removal of bureaucratic barriers mitigate against the natural instinct to defend. It

is important for people to be able to see the link between decisions and the organisational

goals. All too often I have seen decisions made on the whim of senior leaders, which do

not appear to accord with the publicised values and visions. Leaders underestimate the

impact of such behaviours on the morale of the workforce and their continued engagement

with the organisation. A prime example which HR practitioners see regularly is on

recruitment, where the espoused values are ones of diversity and equal opportunity and

then a senior appointment is made without any regard to due process. While this may seem

a small action in itself, it does little to maintain the trust employees have in their leaders.

5. The role of the direct manager — we have seen earlier in this article that managers can

have a significant impact on their teams’ motivation, even despite organisational norms.

Some managers hide behind ineffective systems, while others make the most of an

imperfect model. While pay systems often leave a lot to be desired, managers can provide

recognition through praise and non-pay rewards, such as a choice assignment or extra

support on training. Managers can promote camaraderie in teams and design interesting

roles even in a “cut-throat” environment. Many individuals find their direct manager
 motivating, even in an organisation that falls short. Equally a manager can create a toxic

environment, even in a highly motivating organisation.

It is my belief that the emerging theories of what motivates people serve in part to support

the changing world of work, where people value flexibility and organisations are

encouraging greater mobility — working from home or other locations. As we know, the

drive to push down costs has led to organisations reducing their estate, encouraging hot

desking and flexible/mobile working. People initially resisted this move, with managers

arguing that they would be concerned that employees would not be working if they couldn’t

see them or manage them closely. These ideas are based on McGregor’s Theory X that

people are inherently lazy and need to have their tasks and work defined for them.

However, if we are more of the view that employees are motivated by the values and goals

of the organisation, that they want to feel proud of the work they do and need to see small

steps of achievement, it doesn’t matter where they work from as long as they feel valued

and recognised, and their goals do not conflict with those of the organisation. Many

employees report that the flexibility of being able to work from home or variable hours

improves their work-life balance, although this requires a level of discipline (both from the

employer and employee) to ensure that work does not take over. We know that technology

enables many jobs to be done at any place and any time. However, this does also mean that

there could be a tendency to never switch off. An employer who has the ability to meet its

employees’ needs has a better chance of engaging and retaining their talent.

The need to achieve is deemed by many commentators to be a fundamental requirement for

enthusiasm and engagement. The ability to achieve is not so much affected by where people work

from, but whether the work is meaningful and interesting. This is accommodated in the design of
jobs, and new technology should remove those mundane tasks, freeing up time for more engaging

and creative work. The need for human intervention is on those more complex tasks, or those to

do with relationships, negotiations and creativity.

The area in which this changing way of working brings concern is the one of needing to belong

and have a sense of community. This is often difficult to achieve when workers are not based

together. Employers have attempted to address this by ensuring that team meetings continue and

physical attendance is mandatory — even though dial opportunities exist. Employees often find

their own way to ensure that camaraderie still exists through informal mechanisms and social

events. However, this is an issue that will continue to evolve over time and as yet our responses to

it are somewhat embryonic.

The expectations on job security are changing, as are the way people engage in work. The rise of

gig economy, characterised by short-term contracts and freelance work, has led to a different

approach to employment and the world of work. While there are the dangers of exploitation of

low-paid workers and lack of security, many people choose that way of working because it better

suits their lifestyle and needs. The higher-skilled workers can command reasonable pay, but they

are also motivated by interesting projects and the flexibility such work affords them. This is also

interesting in the light of the younger workers, who no longer see the foot on the property ladder

(since the price of houses, and the need for a significant deposit has priced them out of the market)

as the main reason for getting a steady job. It is argued, for example, that millennials are

intrinsically motivated and therefore not motivated by money. In a research carried out by Forbes,

a remarkable 50% said they would be prepared to take a pay cut in order to secure a job that aligns

with their values and ambitions. They want to feel like they are making a difference and would be

prepared to move on to pursue something more rewarding. They are ambitious and determined,
seeking out advancement and opportunity, and as many as 65% state that personal development is

the most important factor in their career. It is argued that millennials strive for independence and

as many as 72% have said they would like to be their own boss. For those that had to have a

manager, they say they want them to act more as a coach than a boss. This generation is more

likely to change careers, forego promotion or relocate in order to have a flexible lifestyle.

Companies such as Virgin and Evernote have taken notice of this and introduced “unlimited

vacation” in order to attract and retain talented staff. In addition, millennials are looking for regular

high-quality feedback including constructive criticism as well as praise.

These criteria point towards a more sophisticated, grown-up workforce of the future. One that is

motivated by values and meaning, a desire to grow and learn and to be engaged in meaningful

work. In return they are looking for flexibility, career development, work-life balance and a

manager who can coach and guide. If all this is to be believed this is a very encouraging picture

— the trick for leaders and managers is to find a way of managing the transition from the old-style

workforce to the new, identifying the key drivers for each individual and finding a way to satisfy

them within the constraints of the organisational norms — a difficult road to navigate.

Bibliography

Abraham Maslow, A Theory of Human Motivation (1943)

Douglas McGregor, Theory X and Theory Y: Employee Motivation Theories, The Human Side of

Enterprise (1957)

Fred Fielder, Contingency Model of Leaderhip

Frederick Herzberg , The Motivation to Work (1959)

David McClelland, The Achieving Society (1961)

William Ouchi, Theory Z – How American Business Can Meet the Japanese Challenge (1981)

Teresa Amiable and Steven J. Kramer, The Power of Small Wins, Harvard Business School (May

2011)

Dr David Sirota, The Enthusiastic Employee (2005)

Nitin Nohria, Boris Groysberg and Linda-Eling Lee, A Powerful New Model to Employee

Motivation, Harvard Business Review, July 2008

Attract, Retain and Motivate Millennials, www.business.com

Job Motivation

John Stacey Adams, a workplace and behavioural psychologist, put forward his Equity Theory on

job motivation in 1963. There are similarities with Charles Handy's extension and interpretation of

previous simpler theories of Maslow, Herzberg and other pioneers of workplace psychology, in

that the theory acknowledges that subtle and variable factors affect each individual's assessment

and perception of their relationship with their work, and thereby their employer. However,
awareness and cognizance of the wider situation - and crucially comparison - feature more strongly

in Equity Theory than in many other earlier motivational models.

The Adams' Equity Theory model, therefore, extends beyond the individual self and incorporates

influence and comparison of other people's situations - for example, colleagues and friends - in

forming a comparative view and awareness of Equity, which commonly manifests as a sense of

what is fair.

When people feel fairly or advantageously treated they are more likely to be motivated; when they

feel unfairly treated they are highly prone to feelings of disaffection and demotivation. The way

that people measure this sense of fairness is at the heart of Equity Theory.

Equity, and therefore the motivational situation we aim to assess using the model, is not dependent

on the extent to which a person believes reward exceeds effort, nor even necessarily on the belief

that reward exceeds effort at all. Rather, Equity, and the sense of fairness which commonly

underpins motivation is dependent on the comparison a person makes between his or her

reward/investment ratio with the ratio enjoyed (or suffered) by others considered to be in a similar

situation.

Inputs and Outputs

Adams called personal efforts and rewards and other similar 'give and take' issues at work

respectively 'inputs' and 'outputs'.

Inputs are logically what we give or put into our work. Outputs are everything we take out in

return.
These terms help emphasise that what people put into their work includes many factors besides

working hours, and that what people receive from their work includes many things aside from

money.

Adams used the term 'referent' others to describe the reference points or people with whom we

compare our own situation, which is the pivotal part of the theory.

Adams Equity Theory goes beyond - and is quite different from merely assessing effort and reward.

Equity Theory adds a crucial additional perspective of comparison with 'referent' others (people

we consider in a similar situation).

Application

Equity theory thus helps explain why pay and conditions alone do not determine motivation.

In terms of how the theory applies to work and management, we each seek a fair balance between

what we put into our job and what we get out of it. But how do we decide what is a fair balance?

The answer lies in Equity Theory. Importantly we arrive at our measure of fairness - Equity - by

comparing our balance of effort and reward, and other factors of give and take - the ratio of input

and output - with the balance or ratio enjoyed by other people, whom we deem to be relevant

reference points or examples ('referent' others).

Crucially this means that Equity does not depend on our input-to-output ratio alone - it depends

on our comparison between our ratio and the ratio of others.

In practice, this helps to explain why people are so strongly affected by the situations (and views

and gossip) of colleagues, friends, partners etc., in establishing their own personal sense of fairness

or equity in their work situations.

Adams' Equity Theory is, therefore, a far more complex and sophisticated motivational model than

merely assessing effort (inputs) and reward (outputs).

The actual sense of equity or fairness (or inequity or unfairness) within Equity Theory is arrived

at only after incorporating a comparison between our own input and output ratio with the input

and output ratios that we see or believe to be experienced or enjoyed by others in similar situations.

This comparative aspect of Equity Theory provides a far more fluid and dynamic appreciation of

motivation than typically arises in motivational theories and models based on individual

circumstance alone.

For example, Equity Theory explains why people can be happy and motivated by their situation

one day, and yet with no change to their terms and working conditions can be made very unhappy

and demotivated, if they learn for example that a colleague (or worse an entire group) is enjoying

a better reward-to-effort ratio.

It also explains why giving one person a promotion or pay-rise can have a demotivating effect on

others.

Note also, importantly, that what matters is the ratio, not the amount of effort or reward per se.

This explains for example why and how full-time employees will compare their situations and

input-to-output ratios with part-time colleagues, who very probably earn less, however it is the

ratio of input-to-output - reward-to-effort - which counts, and if the part-timer is perceived to enjoy
a more advantageous ratio, then so this will have a negative effect on the full-timer's sense of

Equity, and with it, their personal motivation.

Remember also that words like efforts and rewards, or work and pay, are an over-simplification -

hence Adams' use of the terms inputs and outputs, which more aptly cover all aspects of what a

person gives, sacrifices, tolerates, invests, etc., into their work situation, and all aspects of what a

person receives and benefits from in their work and wider career, as they see it.

Input/Output Equity Examples

Inputs Equity Outputs

(dependent on comparing

own ratio of input/output

with ratios of 'referent'

others)

Inputs are typically: effort, People need to feel that Outputs are typically all financial

loyalty, hard work, there is a fair balance rewards - pay, salary, expenses,

commitment, skill, ability, between inputs and outputs. perks, benefits, pension

adaptability, flexibility, Crucially fairness is arrangements, bonus and

tolerance, determination, heart measured by comparing commission - plus intangibles -

and soul, enthusiasm, trust in one's own balance or ratio recognition, reputation, praise and

our boss and superiors, between inputs and outputs, thanks, interest, responsibility,

support of colleagues and with the ratio enjoyed or stimulus, travel, training,
subordinates, personal endured by relevant development, sense of

sacrifice, etc. ('referent') others. achievement and advancement,

promotion, etc.

If we feel are that inputs are fairly rewarded by outputs (the fairness benchmark being

subjectively perceived from market norms and other comparable references) then generally we are

happier in our work and more motivated to continue inputting at the same level.

If we feel that our ratio of inputs to outputs is less beneficial than the ratio enjoyed by referent

others, then we become demotivated in relation to our job and employer.

People respond to a feeling of inequity in different ways. Generally the extent of demotivation is

proportional to the perceived disparity with other people or inequity, but for some people just the

smallest indication of negative disparity between their situation and other people's is enough to

cause massive disappointment and a feeling of considerable injustice, resulting in demotivation,

or worse, open hostility.

Some people reduce effort and application and become inwardly disgruntled, or outwardly

difficult, or even disruptive. Other people seek to improve the outputs by making claims or

demands for more reward, or seeking an alternative job.

Summary

Understanding Equity Theory - and especially its pivotal comparative aspect - helps managers and

policy-makers to appreciate that while improving one person's terms and conditions can resolve
that individual's demands (for a while), if the change is perceived by other people to upset the

Equity of their own situations then the solution can easily generate far more problems than it

attempted to fix.

Equity Theory reminds us that people see themselves and crucially the way they are treated in

terms of their surrounding environment, team, system, etc - not in isolation - and so they must be

managed and treated accordingly.

A .pdf diagram of Adam's Equity Theory can be found and downloaded here.

Introduction

An intrusive economic downfall otherwise known as a recession hit in 2008, when millennials

were still in college or entering the workforce for the first time. This had a major effect on the

development of careers for millennials who found a secure career path before the recession

developed, the downturn of the economy was not as hard felt for those who have been in the

workforce for quite some time, but for millennials trying to find work after companies instituted

hiring freezes and lowered workers’ salaries, the job market was in a drought.

During this time the gig economy was starting to make its way into the economy making it both

an opportunity and a challenge. This was an opportunity for those were out of a job and needed

immediate work; however, for many employers this posed quite a challenge. For employers, this
caused for them to have many positions that they could not hire for and caused them potential

candidates who were looking for more of a work-home balance (Alton, Larry 2016).

What Is The Gig Economy?

According to TechTarget, a gig economy is an environment in which temporary positions are

common and organizations contract with independent workers for short term assignments (2016).

In a gig economy, businesses save money on what they would have spent on overhead such as a

business space. This type of work allows for workers to be selective in the type of work they want

to perform and allow employers to staff for more specialized roles a lot quicker than before.

This model is geared towards those who want to be entrepreneurs. But for those, such as

millennials who are just now getting into their careers or are already in their careers this type of

work environment can’t be a good and a bag thing according to how they play their cards.

Thriving In The Gig Economy; How Successful Freelancers Mange The Uncertainty.

“Thriving in The Gig Economy How Successful Freelancers Manage the Uncertainty,” By

Gianipiero, Petrigeli, focused on the attributes and patience one must have thrive in the gig

economy. In this study, the writer spoke with several freelancers who have been working in this

type of environmental for over five years and have gained insight on what one needs to thrive. In

a gig economy financial insecurity is a major concern as well as the lack of human interaction.

When you are working gig-based jobs that are platform based you are waiting for notifications to

be sent to your phone, or your waiting to hear back from potential clients regarding your proposals

it becomes harder to build relationships with those who have not already used or heard of your

work. According to one freelancer that was interviewed for this paper, who goes by the name of

Mary. Mary stated that; “Working in this type of structure is like that of being on a trapeze.”
Produce or Parish

Another topic that was mentioned in this article, was Produce or Parish. Produce or parish as

related to this type of work structure Is often regarded as if you don’t obtain clients then you will

parish in the form of not being able to pay your bills or in other words be financially secure. The

writer states that, “The first thing they realized when they began interviewing independent

consultants and artists was that the stakes of independent work are enormously high— not just

financially but also existentially. Unshackled from managers and corporate norms, people can

choose assignments that make the most of their talents and reflect their true interests. They feel

ownership over what they produce and over their entire professional lives.

Sustaining productivity is a constant struggle. Distress and distractions can erode it, and both

impediments abound in people’s working lives. One executive coach gave a poignant description

of an unproductive day: “It’s when there is so much to do that I’m disorganized and can’t get my

act together. [In the evening,] the same e-mails I opened in the morning are still open. The

documents I wanted to get done are not done. I got distracted and feel like I wasted time.” A day

like that, he said, leaves him full of self-doubt (PETRIGLIERI, ASHFORD, AND

WRZESNIEWSKI 2018).
Are There Good Jobs In The Gig Economy?

In this article the writer proposed the question, “Are there any good jobs in this type of economy,

and if so, where are they?” According to recent study the gig economy makes up more than half

of todays workforce, the majority of those being millennials. Millennials are more inclined to be

searching for a work-life balance in which baby-boomers were not accustomed to. Many

millennials are not interested in full-time jobs that in their eyes tie them down to an office but for

gigs that a lot them the opportunity to work as little or as much as they want and not be tied down

into one select field.

There is a multitude of growth that has been hitting the airways with this newly found economy

and it seems to not be stopping anytime soon. Economists estimate that the portion of U.S. workers

earning a living as independent contractors, freelancers, temps, and on-call employees jumped

from 10% in 2005 to nearly 16% in 2015. Workers of these “alternative work credit this type of

work environment to those who are burnout, or hating one’s job for freedom, flexibility, and

financial gains. Whereas, skeptics feel that this is going to end badly for those working in this type

of economy due to lack of having benefits and stability.

Financial insecurity is a big and ever-present concern. So is the lack of human connection: Kessler

writes, “I don’t think Silicon Valley was wrong to attempt to restructure the job. Our current model

wasn’t working, and the startup spirit of experimentation was necessary (Torres, 2018).

The Future of Work is Flexible

Flexibility in the workplace is defined differently amongst individual workers. However; the

common denominator amongst all workers is that when working in a flexible environment one is

allotted the opportunity to make choices on where and how long they spend on work related task.

Recent trends in availability of those working flexible jobs have seen a recent spike in flexibility

in the workplace. Employees in this type of environment may have flexibility regarding the time

in which they start and end their work-related duties and as in where they can complete their work.

In this article two researchers go into detail on how this type of environment has shaped the recent

economy and how this work environment poses its own separate challenges.

According to researchers Kerr, and Nevin, the world of work is transforming: technological,

socioeconomic and demographic shifts are changing the way we think, demanding greater

flexibility in how both individuals and organizations operate. In fact, the concept of employment
itself seems to have passed its sell-by date. This type of online work has made it easier for those

to find jobs/ complete tasks for those who are seeking the help.

This type of environment is more cost-effective for employees due to the nature of them not having

to purchase additional office space for employees and not having to offer many of the benefits that

they would have to offer if their employees were working at the office on a full-time basis. (Kerr,

2017).

Challenges:

According to researcher Jamie Kerr, although this type of environment brings on a good

connotation allowing those workers the work-life balance they are seeking there are still some

drawbacks that many companies and employees are facing. “There is then the debate as to whether

employment regulations and practices are still fit for purpose. The new explosion of small-scale

entrepreneurship might make you wonder whether we’re returning to the kind

of economy espoused in 1776 by Adam Smith in The Wealth of Nations (Kerr,2017).

The rise of this new economy is defining what it really means for one to work for self. One key

problem is that many individuals find it hard to distinguish between employment and self-

employment. There is little clarity in the statutory definitions of employment status, although there

is a body of case law. Statutory sick pay, statutory maternity pay, training support and employer

pension contributions are some of the occupational benefits that an employee will forgo when they

become technically self-employed. As more people do this there is growing pressure for the law

to be simplified (Kerr,2017).
Summary

Full-time employment was once known as job security and stability and is now becoming

increasingly rare. Employers are now creating less full-time positions and are starting to outsource

many of their positions to workers who find work on sites such as Upwork and Flex jobs. For the

growing number of people seeking employment, working a gig is becoming increasingly safer.

Living without those benefits you would receive from a more conventional work environment may

seem reckless, but with proper planning, you can manage a career working gigs/freelancing that

can be just as stable. Working in this environment you have more control over the jobs you would

like to take on as well as have a work-life balance and therefore you are seeing more millennials

then any other age demographic working these types of jobs. It remains a mystery as to whether

the gig economy is a healthy alternative to working a conventional 9-5 for economic development

overall, but for millennials, it’s certainly both.

For young workers who are seeking to make an extra income to help pay for college or to even

move out of their parents’ house, this type of economy can be quite frustrating, but for those who

have built a life around gig work and want to gain a multitude of experience in various industries

the gig economy it a great way to achieve those goals. Regardless of how you feel about it, the gig

economy is likely to stick around for the foreseeable future (and experience even further growth),

so it’s best to learn how to take advantage of it for yourself—and avoid the pitfalls that your peers

are facing (Alton, Larry2018).

References

PETRIGLIERI, G., ASHFORD, S., & WRZESNIEWSKI, A. (2018). THRIVING IN THE GIG

ECONOMY. (cover story). Harvard Business Review, 96(2), 140-143.

TORRES, N. (2018). ARE THERE GOOD JOBS IN THE GIG ECONOMY. Harvard Business

Review, 96(4), 146-147.

Kerr, J. (2017). The future of work is…flexible. Director, 70(10), 60.

The gig economy is the collection of markets that match providers to consumers on a gig (or job)

basis in support of on-demand commerce. In the basic model, gig workers enter into formal

agreements with on-demand companies to provide services to the company’s clients. Prospective

clients request services through an Internet-based technological platform or smartphone

application that allows them to search for providers or to specify jobs. Providers (i.e., gig workers)

engaged by the on-demand company provide the requested services and are compensated for the

jobs.

What motivates freelancers to freelance? This is a question I can relate to personally, since I joined

the gig economy in 2013. As a lifelong student of management, I have challenged myself to

understand my own motivation, both out of curiosity and to find a way to respond when my wife

tells me to get a job.

Clearly this is about the “total” package for a gig worker/freelancer. Yes, the money can be good

(or bad), but the full deal for freelancers includes, well… freedom. This can be compelling, and

now we’re talking about motivation, so let’s revisit the major motivational theories applied to

work.

Herzberg and Maslow Refresher

Frederick Herzberg developed the two factor theory (Motivator-Hygiene

Theory) of motivation which holds that pay and benefits do not motivate, but rather we are

motivated by achievement, recognition and challenging work, I.e. the work itself. Pay and benefits,

according to Herzberg, are hygiene factors, or “de-motivators” which do not motivate when

increased, but rather demotivate workers when they are reduced or not sufficient in some way.

This theory, along with Abraham Maslow’s hierarchy of needs, Adams equity theory and Victor

Vroom’s expectancy theory to well more than 1,000 Human Resources practitioners as well as

about 700 line managers (the ones who actually manage people.) It could be everyone is being

nice, but no one disagrees with these widely-accepted theories. I certainly find that after 33 years

of doing work in the total rewards field, they prove true time and time again, when observing how

people respond to changes in their various rewards and the work they do to earn their rewards.
 Maslow’s Hierarchy of Needs (originally a developmental theory) states

that a person is motivated by their lowest unmet need. Physiological needs are the first and most

basic needs, which must be satisfied before safety and security (level 2) will motivate a person.

Consider, an animal will venture out of its hole to find food, demonstrating in nature that

physiological needs (food) motivate the decision to let go of safety. Once an animal finds food, it

will certainly return to its hole to consume the food, because the physiological need has been met,

so safety and security now motivate the animal. We do this when seeking income. A worker will

work for cash—no employment contract or benefits—if necessary to feed himself and his family.

But once employed for cash, he continues to search for employment where there is a contract

providing job security, benefits and labor law protections.

Maslow’s and Herzberg’s theories are fully consistent. Pay allows us to survive: food, clothing

and shelter (and se… cure wi-fi) all cost money. Benefits are a form of safety and security, since

without them, we must save a large portion of our pay just in case we get ill or injured or retire or

need time off of work. Benefits are a form of income protection. According to Maslow’s theory,

pay and benefits must be sufficient before higher order needs will motivate.

Herzberg’s two-factor theory would support this, since according to his theory, motivators such as

recognition (addressing Maslow’s need for esteem) or achievement/challenge (related to self-

actualization) will not motivate in the presence of demotivators such as insufficient pay or benefits.
According to Herzberg, fix the hygiene factors first, then motivate using intangible rewards such

as job enrichment.

Enter the Gig Economy

So far so good. Except for one thing that has bothered me the last few years. The “gig economy”

is now a legit thing. Massive numbers of people are working on fixed-term contracts without social

security contributions, benefits, corporate bonuses, corporate recognition, company outings and

company-provided training. If Maslow and Herzberg are correct, it would be logical to conclude

contingent workers are mainly motivated by money (meeting physiological needs) as they are

missing out on so many corporate rewards aimed at higher needs. Why are people like me* willing

to forego all these rewards? For many it is because, like the animal, we must eat. But for the rest

of us, I have a theory..

Freedom Opens a Door to Meeting Higher Order Needs

I believe that the freedom and flexibility enjoyed by freelancers is the reason why we are willing

to forego all the higher order rewards offered by the best places to work. While there is no

substitute for working for an employer of choice, there is the option to not be employed by choice.

Therefore a freelancer will succeed only if he or she is willing to forego the safety and security of

a fixed paycheck and benefits, for the sake of much greater chances of being satisfied by doing

what they want to do, achieving better work-life balance, as well as esteem, growth, and even

career opportunity. In short, we are willing to venture out of the cave (safety and security) in return

for nearly total work-life flexibility which enable us to satisfy our higher order needs for:

 Affiliation (time with family, friends);

  Esteem—working at home and being near the people you love most; not being thrown

under the bus and working with insecure people ready to stab you in the back; the

possibility that you gain some respect if you can establish a reputation as an expert in your

field; proving you can do it

 Self-actualization – achieving work-life balance may in fact be your highest ambition;

being your own boss, running a business, being a CEO

While there is no substitute for working for an employer of choice, there is the option to not be

employed by choice

When Herzberg published his theories in his book, The Motivation to Work, in 1959, there was no

gig economy apart from a few trade or service occupations. Fast forward to the current time where

the gig economy includes full-time intentional and branded freelancers and we must re-examine

why it is people are willing to forego benefits—a critical hygiene factor—in return for higher order

needs. In my simple view, it is because work-life balance is the door opener to all the higher order

rewards. In our “job” mindset, these mean corporate intangible rewards such as company-policies

for flexible work arrangements, company recognition practices with nomination committees,

company training and so-on. But when you take away the “corporate” assumption, the freelancer

gets all these, and gets them without limits or corporate policies:

 Freelancers don’t need permission to work at home, work flexible hours or take an

extended leave

 Freelancers can serve at the local soup kitchen or volunteer agency when they wish

 Freelancers don’t need someone to nominate us for recognition—the love of family or

friends may be all we seek

  Freelancers don’t need managers’ permission and a corporate training budget and an

individual development plan in order to attend training, or to use work time to read a good

book or attend a professional event. We just do it, although we miss having a corporate

budget!

Freedom to do the work you want to do is consistent with Herzberg’s prescription of job

enrichment to increase motivation. In lieu of a job description, the freelancer can pick their scope

of products and services. This is a powerful motivator. As a personal example, I was with a large

HR consulting firm where I was in charge of the global mobility practice for the Asia Pacific

region. I was good at it, and my billable consulting exceeded all other consultants in a group of

more than 200 people. But I was an even better consultant in the area of broad based rewards

(compensation) and total rewards (holistic rewards) consulting. But since my job was only global

mobility, I eventually was made redundant (laid off) since there was another senior person in the

practice, and due to a corporate cost-cutting driven from headquarters far away. Looking back at

the last 6 years, roughly 95% of what I have been doing as a freelancer would not have been

permitted at my former firm, since I was in a specific role, global mobility. Others were doing pay

system development, job evaluation, benchmarking, incentive design, salary reveiw support,

training, etc.

The Freelancing Value Proposition

The above rewards—flexibility when and where to work, what work to do, volunteering, time with

loved ones, freedom to read, attend a learning opportunity or write a blog when inspired—can be

compelling, provided hygiene needs are met. This is the Freelancing Value Proposition – do this

and get that. What we must do is take initiative to create and define our products or services, market

ourselves, close sales, perform work, collaborate with clients and associates, send invoices and
collect. Repeat. It’s not for everyone, for sure. But for those who can brand themselves and win

gigs, it’s a good deal.

In light of the Freelancing Value Proposition outlined above, the people who may be most

motivated to be a freelancer are those who:

1. Can meet their physiological and safety/security needs without having a corporate job, I.e.

they can earn enough from freelancing and can secure medical insurance independently,

through a spouse or via self-insurance (rainy day fund); and

2. Are highly motivated by work-life balance for its own sake; and

3. Are willing to exchange corporate affiliation, corporate activities, corporate recognition,

corporate training, etc. for other sources of recognition, affiliation, growth or achievement,

which are made available through much greater work-life flexibility

In my own case, I have found I can meet my needs for affiliation through teaching and meeting

with clients, former clients, students, former corporate colleagues, etc. I have coffee meetups 2 or

3 times a week, in addition to client and associate consultant interactions. As for recognition, it’s

admiring the person in the mirror until you happen to win awards or get invited to speak at

conferences. My reputation in the field of total rewards gave me confidence I could continue to

receive a bit of sunshine once in a while, in the form of website or LinkedIn followers, likes, etc.

As for growth, I have invested in myself in ways an employer would probably not approve:

 ACTA certified in 2013/2014

 Certificate in Business Mandarin Fundamentals this year

  Conducted research to understand global mobility and performance management trends in

Asia

 Presented on Contractualization at the Employers Conference of the Philippines in 2017

 Read books by Daniel Kahneman and David Rock

 I learned how to create Learning Circles in 2017

Herzberg and Maslow were correct, in my view. When applied to today’s gig economy, we need

to recognize not everyone wants corporate employment. Employers in need of contingent workers

must establish a freelancing value proposition consisting of money, in lieu of other rewards,

knowing there are people out there in the gig economy who are happy to take the gig. Smart

employers may even wish to find a way to provide higher-order rewards such as involvement in

company activities, but should keep in mind the person may have other ways to satisfy their higher

order needs without their corporate programs.

My advice to freelancers: don’t just work and get the money. Buy insurance, spend time with

friends, family and colleagues, get recognition and continue learning.

Your thoughts?

*my firm, Freelance Total Rewards is a gig economy alternative to the big product-focused

consulting firms

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 More

Depending on who you are listening to, the gig economy is either the best or the worst thing to

happen to the world of work.

Some see it as a much-needed antidote to a humdrum nine-to-five existence, empowering them to

work with freedom and flexibility. Others focus on the precarious nature of gig work and its

potential for exploitation. So which one is it?

To find answers, let’s take a closer look at what the gig economy is, what it offers, and what it

means for the future of work.

What is the gig economy?

The gig economy describes the growing number of people going their own way through freelance

and contract work – any situation where the individual is paid per job, or ‘gig’, as opposed to

receiving a regular salary or wage from an employer.

While the term ‘gig economy’ is fairly new, there has always been a market for freelance, pay-

per-job work. In fact, prior to the industrial revolution and the rise of the employee-employer

contract, this type of work was the norm. Since then, the security of a steady job and salary has

made full-time employment the preferred approach.

Until fairly recently, most people followed a typical career path: get educated, get a job, stay in

that job and reap the rewards. This was like an escalator taking you automatically upwards to better
positions, more money and a comfortable retirement – all you had to do was get your head down

and play by the rules.

These days, due to the ever-changing nature of work, there is no such thing as a ‘job for life’.

Things are in a constant state of flux – whole industries have been created in the last few decades

alone, with many set to disappear in the coming years. At the same time, attitudes to work are

changing, with younger generations increasingly rejecting the predictability and stability of the

traditional career path in search of a more varied, interesting and flexible one.

The recent resurgence of the gig economy could be seen as an extension of this attitude,

supercharged by modern mobile technology – in particular platforms such as Uber, Handy and

Deliveroo, which connect gig workers with willing customers in exchange for a cut of the

proceeds.

The good…

Full-time employment isn’t for everyone – the lack of freedom, flexibility and ownership can lead

to some feeling disengaged from their work. The rise of the gig economy has made it easier for

people to take their work lives into their own hands, giving them the freedom to work when and

where they want. This can be particularly attractive and lucrative for skilled professionals such as

web developers, who can leverage their skills for maximum advantage.

In full-time employment, the employer essentially owns your skills; they have the right to use them

as they see fit, in line with your employment agreement and job title. This way, the employer buys

the rights to your skills for a monthly fee – your salary. In the gig economy, the individual has full
control of how they use their skills and knowledge. In many cases, this allows skilled professionals

to increase their income, as their earning potential is unlimited.

Unlike traditional employment, gig work focusses on results rather than processes. Gig workers

are judged and paid based on their ability to deliver outcomes, but how they get there is completely

up to them. This allows gig workers to tap into their natural reserves of intuition, creative thinking

and self-reliance.

Gig work also has the potential to be more meaningful. When you decide to cut loose from an

employer and go your own way, your work becomes more personal. There is less separation

between what you do for a living and who you are. And the simple fact that you are building your

own brand rather than someone else’s makes this type of work intrinsically motivating.

Seen this way, you could even argue that the gig economy has the potential to cure the employee

engagement and productivity crisis we are currently seeing, by allowing individuals to take

ownership of their work and its direction.

The bad…

There is, of course, a darker side to the gig economy. In the absence of a steady salary, paid sick

leave and other benefits, the chances of financial insecurity are much higher.

App-driven platforms such as Uber and Deliveroo have completely disrupted the market, opening

up the gig economy to pretty much anyone, regardless of skills or experience. But these companies

are rarely out of the news, due to their perceived exploitation of workers – or ‘independent

contractors’, as they are officially known.

Deliveroo riders are currently paid per delivery, not per hour. So if they manage three drops in an

hour, they make well over minimum wage. But the on-demand nature of this job means that riders

can spend up to an hour waiting to be assigned a delivery – without getting paid. Over the course

of a shift, they can end up make less than the minimum wage. And with no sick pay, what happens

if they fall off their bike and break a leg?

This puts such workers in a precarious position. If you can’t even be guaranteed to make minimum

wage – that is the amount officially designated as the baseline for self-sufficiency – not only is it

a challenge to make ends meet on a day-to-day basis, but the long-term propositions are also

particularly grim. Earning irregular amounts can make it very difficult to rent a property, secure a

loan or get a mortgage, let alone saving for retirement.

How much a gig worker makes depends on the skills they have and the value that they bring. This

is similar to full-time work, but much more direct, and without the safety net of basic employee

rights – there is no minimum wage, just the value of the gig. And this is the problem with working

as a delivery driver or rider – it is unskilled. Anyone with a driving license or bike can do it,

meaning those that do have very little bargaining power.

The gig economy can be a world of opportunity or a world of potential hardship – it all boils down

to what skills you bring to the table. Those that thrive have something that people need but that

not many people can offer.

And the future

The way we work is changing. Younger generations no longer want to be tethered to a desk all

day, working for the same company for years on end. Millennials and Gen Z – the very people set
to dominate the world of work over the next few decades – are more resilient to change and

uncertainty. They also crave meaning and ownership in their work – something that is very difficult

to find in typical full-time employment.

Gen Z in particular have grown up in a world shaped by the internet and mobile technology, with

no connection to a time before it. The chances of this generation embracing a way of working

rooted in the twentieth century are virtually nil.

Organisations will have to adapt, too. In the light of constant change, they will be forced to become

more flexible, agile and streamlined. Having a large workforce of permanent, full-time employees

will make this increasingly difficult.

When you bring all of this together, it’s clear that the gig economy will continue to grow. The next

few decades could even see the end of the full-time position as the prevalent mode of employment.

Instead, organisations may function on a skeleton staff of decision makers and leaders, dipping in

to the global talent pool of gig workers to fill in the gaps. These workers will be drafted in to work

on projects, with short-term contracts lasting days, weeks or months. Organisations and workers

will develop broad networks of contacts along the way, helping both to shape and sell their brand.

While many will greet the changing nature of work with enthusiasm, others will actively resist the

shift away from stability and predictability and towards the relative unknown of gig work. But the

time when full-time jobs were secure is now long gone – almost no full-time employee today can

guarantee they will be in the same position in a year’s time. Add automation into the mix and

you’ve got a job market that is unpredictable and uncertain. For this reason alone, freelance and

project work may well be the future for most people – whether they like it or not.
Success in the gig economy – and in the future of work in general – will all come down to having

the relevant skills. While there is still a big market for unskilled work today, this will be eroded

by automation over time. Jobs like Uber driver will only exist until driverless cars become the

norm. In the future, skilled work may well be the only type there is. This will make continuous,

life-long learning more important than ever.

To find out more about the gig economy, read Andy Davies' guest blog The Gig Economy is Not

Just About Uber!

Author

Nicholas Edwards - http://www.praguecopywriter.com/

Nicholas Edwards is a freelance writer and editor based in Prague, the Czech Republic. When he's

not helping local businesses master the English language, he loves writing about the future of work

for People First.

Ini…no 1

The fundamental premise of employee motivation is grounded in the widely recognised work of

Abraham Maslow (1943) and his Hierarchy of Human Needs. In essence, Maslow established that

grounding needs of safety and shelter must be the foundation of more advanced principles of

human and employee motivation, as without basic needs being satisfied, people cannot direct their

attention towards more sophisticated motivational principles. However, assuming such basic needs

are satisfied, Maslow and later a clutch of other famous scholars such as McGregor (1960), Vroom

(1964), Hertzberg (1968), and Hackman and Oldham (1976) examined various facets of employee

motivation reaching broadly similar conclusions that people are motivated when they are

appropriately rewarded and recognised for the work that they have undertaken. The detail of these

various motivational theories has been carried forward to the present day and the widely

established notions that the most effective way to motivate employees is via ‘intrinsic’
motivational levers (Lazaroiu, 2015). These include amongst others, recognition, personal

autonomy, intellectually stimulating work, and flexibility to manage workload.

On paper, the gig economy offers all of these intrinsic levers, and as explained by Fernet et al.,

(2017), such intrinsic levers are regularly espoused as being one of the main reasons that

employees elect to join the gig economy. The same scholars recognise that organisations benefit

from a flexible labour workforce meaning that they are not carrying one of the most expensive

overheads – employees - on the profit and loss account, but much greater attention is always

directed towards the many perceived ‘benefits’ to employees (Kanfer et al., 2017). Certainly, some

employees within the gig economy do benefit from flexible, autonomy and intellectual stimulating

work. Such employees however, are typically highly skilled, in possession of valuable knowledge

or experience, and also possessed of a network of professional contacts enabling them to find such

work on an ongoing basis (Steinberger, 2017). For employees within the gig economy lacking

these transferable skills, their motivational levers are likely to be very different, much more

towards the lower levels of Maslow’s hierarchy. In plain terms, they work in precarious ‘gig

economy’ employment, because there are no viable alternatives and they have no certainty of any

other form of employment (Manyika et al., 2016). This represents the paradox of the gig economy,

suggesting that much greater nuance and more careful interpretation of motivation within this

context is necessary.

The Paradox of the Gig Economy

The Taylor Review of 2017 sought to better understand the paradox of the gig economy, defining

and examining what is understood to be ‘good’ work, that is to say intellectually and financially

rewarding employment which is stable leading to productive and ultimately ‘healthier and happier

citizens’ (Taylor Review, 2017). There is a wider case for ‘good work’ when looking beyond hard
financial measures, as employees in jobs that they enjoy and in which they feel comfortable and

confident are more productive and creative. Often, according to Milkman and Ott (2014), when

people perceive that there is value and meaning in their work then they are more engaged, and

happy and healthy employees are also less reliant on state support, suffer less ill-health, and

ultimately work more. From a governmental perspective, this also offers the benefit of increased

tax receipts, meaning that from all viewpoints, ‘good’ work is to be actively sought.

The assumed converse ‘bad work’ is the rather one-sided relationship crystallised at the lower end

of the gig economy, with those employees lacking the skills to negotiate longer term contracts, and

instead finding themselves waiting desperately to hear if they will be working that day (Aloisi,

2015). This exploitative dynamic is demoralising and ultimately counter-productive, offering

much greater benefits to the employer than the employee. Whilst UK employment levels may be

at some of the highest levels for decades (Gov.uk, 2018), this topline figure masks a much higher

proportion of precarious or ‘bad work’ with all of the associated disadvantages that this brings. As

prosaically expressed by Behr (2017, p.1), it leaves more than 1.6 million people of working age

in the UK with the choice of “crap job or no job”. As Behr (2017, p.1) goes on to note, “not a very

enticing choice”, but it is a reality of the gig economy for many.

Discussion and Closing Thoughts

The technological advantages which have allowed the gig economy to thrive cannot easily be

undone, nor indeed is anyone advocating that as the solution (Martin, 2016). However, there does

need to be a careful consideration of how to establish a much higher level of ‘good’ work within

the gig economy that protects employee rights, or at the very least rebalances the inherently

unstable employment dynamic in its current form. Managed properly, flexible employment is

shown in empirical research to be one of the most effective motivational levers or workplace
benefits (Kelliher and Anderson, 2010). As far back as 2004, Guest and Conway revealed in a

report commissioned for that CIPD (Chartered Institute of Personnel and Development) that

flexible working is the single most asked for benefit when negotiating employment contracts.

Organisations that have adopted the principles of flexible working have found much greater

productivity and much higher levels of employee engagement (De Menezes and Kelliher, 2017).

As such, this reaffirms the recognition that on paper, flexible working is highly motivational and

can certainly be characterised as one of the main indicators of ‘good’ work. The question therefore

becomes, how can those employees at the lower end of the gig economy spectrum benefit from

the same principles of ‘good’ flexible working as their more skilled counterparts.

Platforms that bring together those with skills for hire, and those needing work completed have

mushroomed over the last decade as technology has accelerated opportunities for flexible working

(Deloitte Insights, 2016). Some research suggests that certain people thrive in this flexible

environment, enjoying meeting a vast range of people and having a huge variety in their working

lives (Brown, 2018). The same research suggests however that these people are inherent with

particular personality traits or a personal outlook meaning that they are more responsive and

comfortable in a flexible environment and, are better able to adapt to the inherent uncertainty

associated with flexible, gig-economy working. This suggests that alongside a tighter framework

for gig working recognising the need for at least some stability in gig-work contracts, mental

attitude and approach is also important. Once again however, the research in this field tentatively

suggests that it is individuals with high-calibre skills and the capacity to reposition their skill set

that marks them out as benefiting from the gig economy (Lemmon et al., 2016). Potentially,

therefore, supporting those less inclined towards such a mindset to understand its value or perhaps

even necessity in this environment could be a partial solution.

Unfortunately, however, the Taylor Review and other leading HRM scholars recognise that there

is no simple fix to the arguably unstoppable growth of the gig economy principle. Unless those

offering such flexible work are in some ways compelled to offer greater security and fairness, or

their HRM strategies move them away from paring down their labour force to the least possible

cost, then the precarious nature of the gig economy will continue. What could well become the

next challenge in HRM literature is the growing dichotomy between, increasing drives for labour

efficiency aligned with organisational strategy, and, recognition in that treating employees as

‘resources’ rather than people, is inherently dehumanising, and is ultimately leading to, in the

words of Deloitte (2016, p.1) “contingent workforce management” even at senior levels. It is

concluded therefore, that there is also a responsibility upon the HRM profession more widely to

decide for itself how good practice ought to look in terms of establishing ‘good work’ and also,

how organisations should embrace this if they wish to have a happy, healthy, and productive but

flexible workforce.

References

Aloisi, A., 2015. Commoditized workers: Case study research on labor law issues arising from a

set of on-demand/gig economy platforms. Comp. Lab. L. & Pol'y J., 37, p.653.

Behr, R., 11th July 2017. The gig economy can be exploitative – but there is no easy path to Good

Work [online] available at https://www.theguardian.com/money/commentisfree/2017/jul/11/gig-

economy-good-work-matthew-taylor-jobs-review accessed 04/06/2018.

Brown, D., 2018. Fairness, flexibility and affordability. [online] available

at https://www.employment-studies.co.uk/system/files/resources/files/op27-
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Institute_for_Employment_Studies.pdf accessed 04/06/2018.

De Menezes, L.M. and Kelliher, C., 2017. Flexible Working, Individual Performance, and

Employee Attitudes: Comparing Formal and Informal Arrangements. Human Resource

Management, 56(6), pp.1051-1070.

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at https://www2.deloitte.com/insights/us/en/focus/human-capital-trends/2016/gig-economy-

freelance-workforce.html accessed 04/06/2018.

Fernet, C., Chanal, J. and Guay, F., 2017. What fuels the fire: Job-or task-specific motivation (or

both)? On the hierarchical and multidimensional nature of teacher motivation in relation to job

burnout. Work & Stress, 31(2), pp.145-163.

Friedman, G., 2014. Workers without employers: shadow corporations and the rise of the gig

economy. Review of Keynesian Economics, 2(2), pp.171-188.

Gov.uk. Feb 2018. The Characteristics of the Gig Economy [online] available

at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/f

ile/687553/The_characteristics_of_those_in_the_gig_economy.pdf accessed 04/06/2018.

Guest, D. and Conway, N., 2004. Employee well-being and the psychological contract: A report

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Hackman, J.R. and Oldham, G.R., 1976. Motivation through the design of work: Test of a

theory. Organizational behavior and human performance, 16(2), pp.250-279.

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Kanfer, R., Frese, M. and Johnson, R.E., 2017. Motivation related to work: A century of

progress. Journal of Applied Psychology, 102(3), p.338.

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intensification of work. Human relations, 63(1), pp.83-106.

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Studies, 23(4), pp.424-439.

Manyika, J., Lund, S., Bughin, J., Robinson, K., Mischke, J. and Mahajan, D., 2016. Independent

work: Choice, necessity, and the gig economy. McKinsey & Company. October.

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the labor movement. Cornell University Press.

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Vroom, V.H., (1964) Work and motivation. San Francisco: Jossey-Bass.

Retaining workers in such a dynamic market is increasingly becoming a challenge for the

organizations. Here are five best practices that can be used for retaining talent in the current gig

economy.

1. Offer Flexibility, and Focus on Work/Life Balance

The major attraction that the gig economy holds for the workforce is the lifestyle flexibility that is

associated with freelance work. Skilled employees such as developers prefer to opt for freelance

gigs as opposed to traditional roles within the organizations. It also makes financial sense to the

organizations looking to hire developers, as their services are more reasonably priced than an in-

house employee or a Web development company.

By offering similar work flexibility to the employees, you can significantly increase the chances

of retaining your talent. Work/life balance is the most important consideration for the current

workforce while evaluating job opportunities. Make remote work a reality for your employees.

Incorporating technology in your everyday processes allows the employees to get off the rigid 9–

5 routine, gives them more autonomy over their work, and provides the organization with access

to global talent rather than being limited to a certain geographic location.

If remote working is not a possibility for your organization, encourage the employees to create

definite boundaries separating their work life and personal life. Empowering the employees with

the ability to switch off the work mode when they are with their friends and family ensures a

healthy work/life balance. This results in greater work satisfaction and decreased chances of

employee turnover to the gig economy.

2. Provide Competitive Benefits

The biggest advantage of having a traditional job on a permanent basis is the benefits that come

along with it. Freelancing, for all the flexibility it gives, cannot match up to full-time work when

it comes to stability, job security, and the additional benefits that come with it. Of all the perks and

benefits that working on a full-time basis offers, health insurance is probably the largest and most

vital.

Individual health insurance costs significantly more than employer health insurance. Not only does

the organization have to pay part of the premium, but the premiums are also deducted on a pretax

basis, which also provides tax benefits. The cost of premiums skyrockets if individual insurance

is taken because individuals must pay the premiums in full. In addition to this, other benefits

include paid sick leave, retirement benefits, and paid vacations. In order to retain the skilled talent
within the organization, make sure you provide the employee benefits that they would sorely miss

if they even consider making a switch to freelancing.

Increase the health insurance options available to the employees as they climb within the

organizational ranks. Provide additional benefits to the employees on a time-to-time basis. The

sweet offerings in the form of perks and benefits to the employees would inhibit them from making

the switch to the gig economy.

3. Invest in Employee Training and Development

Employees with the right skill set are an asset to the company, and the value of these employees

can be further enhanced by equipping the workforce with training and development. Companies

that offer training and development to their employees have a 20% lower turnover rate than those

that don’t.

Offering growth opportunities to the employees facilitates their development while simultaneously

creating a richer workforce at your disposal. It also goes a long way in communicating how

valuable they are and ensures increased engagement at work. It is also more economically feasible

for the organization to invest in developing its existing employees, say through training programs

aimed at honing the technical skills of the developers rather than hiring a developer who has the

same technical skills.

A well-designed worker development program that focuses on not just the technical advancement

but also individual development can result in strategic motivation. Providing employees with an

engaging professional environment full of future opportunities for growth and development is an

effective way to increase employee satisfaction at work.

4. Tailor a Productive Work Environment for Employees

In a gig economy, the employees frequently need to juggle a number of different roles. In a

traditional setup, the employees are seen as valued members of the organization rather than just a

means to an end.

Providing employees with a strong sense of purpose at work adds meaning to the tasks performed

and increases productivity. Optimize the communications channels at work, foster and nurture

healthy work relationships among the employees, and ensure positivity in the work environment,

and you can effectively increase the chances of retaining talent within the company.

The trick of avoiding losing employees to the gig economy is to provide them with all the offerings

that working on a temporary basis can’t. Money is an important motivator, but the feeling of doing

meaningful work with ignited, like-minded professionals in a productive environment is much

more important to the current generation.

5. Provide New Opportunities and Challenges

Change is the only constant in life. Steer clear of stagnation in work life by providing the

employees with unique challenges and novel work opportunities. In this day and time, no employee

wants to get stuck doing mundane, repetitive tasks. The boredom that results from doing work that

is not challenging is a major motivator for employees to get out of traditional job roles and making

the switch to working on freelancing gigs.

The key to retaining talent within your organization is keeping them on their feet constantly.

Provide the employees with new opportunities that give them a chance to move out of their comfort

zone and test their talents. This not only provides them with horizons to grow and excel but also

can help you to tap into previously unknown skills of your existing workforce.

Summing Up
When talking about competing with the gig economy and retaining talent within your organization,

the best plan of action is to provide your employees with everything that freelancing can’t offer.

Employees who are satisfied with the work they do and the benefits they receive in return are

unlikely to make the switch to temporary gigs instead of the rewarding work they get to do on a

full-time basis.

((https://www.fisherphillips.com/gig-employer/the-future-is-freelance)

As the gig economy continues to grow, some employers may become accustomed to creating

external job postings for short-term and freelance projects. However, in doing so employers could

be ignoring a more obvious talent pool: their own employees. By creating an internal gig economy

platform to notify employees of short-term and freelance projects, employers can create the

opportunity for employees to apply for side-projects that they find interesting and that will also

allow the employee to enhance the organization. In doing so, businesses can also avoid the

unknowns of hiring an unfamiliar freelance worker and can quickly meet the staffing demands for

short-term but important projects. Additionally, employees may be able to refer other skilled

freelancers to their employer.

By creating an internal website to notify employees of freelance projects, employers can utilize

the appeal of the gig economy to maximize their own employees’ talents, promote innovation and

assist their own employees with finding work that they find subjectively appealing and significant.

Employers may also benefit from creating a culture that feels more entrepreneurial and allows

employees to perform work outside of their defined role within the organization. By taking on a
freelance project employees will also have the opportunity to recognize their potential in an area

of interest and provide them an interesting alternative their typical day-to-day tasks. Employees

will also have the opportunity to build relationships with different colleagues and customers by

performing work outside of their own department or defined role.

Employers are constantly developing strategies to enhance employee engagement and numerous

studies have demonstrated the importance of maintaining an engaged workforce. It is also likely

that some employees are actively participating in the gig economy and performing skilled freelance

work for other businesses. By allowing their employees to work on freelance projects, employers

can tap into this otherwise unused talent pool and allow their employees to witness the impact of

their own contributions via the completion of short-term projects. Other benefits for the employee

could also include a greater sense of belonging within the organization, and the ability to

demonstrate a versatile skillset to their employer and their peers.

Employers will also assist their employees in developing new talents and gaining experience by

allowing employees to work on short-term projects outside of the scope of their job descriptions.

However, employers should be ever mindful of carefully defining and documenting freelance

projects that are accepted by employees in order to stay in compliance with wage and hour

regulations for all hours the employees are engaged.

In short, the competition for talented and engaged employees continues to increase as technology

allows for the gig economy to grow. By creating an internal gig economy platform, employers can

create more opportunities for their own employees and enhance their workplace culture in an effort

to increase employee engagement.