Sometimes businesses aren’t seeing the results they wanted from on-demand labor. While some things are certainly out of your control, we know that there are best practices that you can follow to be sure you’re doing everything to get the performance you want.
At Veryable, we have studied the way that businesses use our on-demand labor platform to find the most common mistakes that lead to issues with finding the right workers and seeing real business results.
In this article, you’ll learn the six most common mistakes businesses make with on-demand labor so that you can avoid them and see the results you’re after.
The six on-demand labor mistakes businesses make most often
- Augmenting their staff instead of flexing with demand
- Not building and maintaining a labor pool
- Overlooking new, unrated workers
- Offering low pay
- Planning too far ahead at the expense of flexibility
- Inconsistently managing the implementation
1. Augmenting their staff instead of flexing with demand
Many companies augment their staff with on-demand labor, using it the same way they would temp staffing – just adding the same number of workers to their headcount every day. This is not going to help you realize the full value of on-demand labor.
Instead, you should use on-demand labor to flex your headcount up and down just in time to meet demand. Being able to match your capacity to demand in real time is the true power of on-demand labor. You can wait until you find out what the demand for your products are, then quickly find enough workers to accomplish the work on time.
As soon as the work is over, the additional workers are gone. This way, you aren’t stuck with extra workers when you don’t need them. You pay only for the work you need done.
The biggest advantage of on-demand labor is flexibility, so don’t waste money by just bringing in the same number of people every day.
2. Not building and maintaining a labor pool
Another big mistake companies make with on-demand labor is not building and maintaining a labor pool. It’s understandable, because once you find a good worker, you’re content with just having them come every time you need extra help.
But what happens if this worker isn’t available? What happens if all your favorites are unavailable at the same time?
The reality of on-demand labor is that most workers have multiple businesses they like to work at. On top of that, most workers only work about eight times per month.
To account for worker availability in an on-demand environment, companies should build a labor pool that’s about three times larger than the maximum amount of workers they anticipate needing at once. That way, they can send out a work opportunity to a large pool of candidates who are already familiar with their operation and trained on the work they need done.
3. Overlooking new, unrated workers
We’ll start here by saying we get it. It’s not everyone’s favorite idea to take a chance on an unrated worker. But we have some data that might change how you see this.
On Veryable’s platform, nearly 50% of Operators (workers) who work an Op (work opportunity) earn a four or five star rating on their first one. If you just give these unrated Operators a chance, you’re equally as likely to end up with a good (if not great) worker.
By being open to accepting new, unrated workers on your Ops, you also have a much wider pool of workers to choose from. You could also snag a good Operator for your labor pool. Because you gave them their first opportunity to work on the platform, your business might make such a good impression that they prioritize your Ops over those offered by other companies.
4. Offering low pay
On our platform, we’ve seen that offering low wages compared to the market average results in less bids for your Ops overall and less bids from highly skilled Operators. The same often holds true in the overall labor marketplace. Businesses can’t expect to attract great workers for low pay.
You can see information about the market rates in the Veryable business portal. Navigate to the “Performance Tab” and select the “Industry Standards” view.
5. Planning too far ahead at the expense of flexibility
Many companies try to apply the same planning methods they use with their regular staff to on-demand labor. As the name implies, with on-demand labor you can respond in real time to the demand changes you see in your business by adding workers to get additional work done, or to complete your current workload faster.
If you were to wait until the moment you find out how much work needs to be done, you could find just the right amount of workers from the on-demand labor platform to help you finish the work. By trying to plan too far ahead and invite on-demand workers weeks in advance, or by inviting workers to multi-day work opportunities instead of short-term daily work, companies miss out on the flexibility you can achieve with the solution. You risk doing the same thing as you would if you didn’t have access to on-demand labor, and staffing to the average again instead of embracing the mindset of only paying for labor when you’re sure it’s creating value.
Keeping the minimum amount of full-time workers on payroll keeps your labor utilization rate high, and when your demand rises you’re able to meet it confidently while continuing to pay only for the labor needed.
6. Inconsistently managing the implementation
Someone at your company has to own the implementation of on-demand labor. It’s not a heavy lift, but someone has to be in charge of posting work opportunities, accepting workers, rating workers, and making sure that the labor pool is being built and maintained.
If nobody takes ownership of implementation, it will fall through the cracks and your company might not have an adequate labor pool built up when the time comes that you need the extra workers again.
If your company is serious about using on-demand labor and wants to get the most out of this labor sourcing method, you will need to make it part of someone’s routine to evaluate whether on-demand workers are needed and then invite workers when appropriate.
How to use on-demand labor the right way
The best results come when businesses consistently follow best practices with on-demand labor and are intentional about setting goals for their implementation. So if you haven’t already, set some goals for what you want to achieve with on-demand labor, like building your labor pool to a certain size. Then avoid the mistakes above and follow the six best practices we've outlined in another article until you see the results you’re looking for.