By Michelle Rafter
May. 24, 2015
You could say Robin Chase helped invent the sharing economy.
Close to a decade before the arrival of Airbnb Inc. and Uber, Chase co-founded Zipcar Inc., the car-sharing service that lets people pay by the hour to rent a car. In the early days, the choices were limited to a Volkswagen Beetle, Golf or Passat. Today, there are many options.
Chase and a partner launched the Cambridge, Massachusetts-based company in 2000, and she helped build the business for three years before leaving. Since then, she has helped start three other transportation-sharing ventures.
As a result, she has been lauded as a design and sustainabilityinnovator, and served on national and international transportation commissions and boards. In 2009, she landed on Time magazine’s list of the 100 Most Influential People. The online version of her 2012 TED Talk, “Excuse Me, May I Rent Your Car?” has more than 750,000 views.
Through it all, Chase has continued to think, talk and write about the rise of what is also commonly referred to as the collaborative, gig, on-demand or 1099 economy.
Chase prefers the term “Peers Inc.” and uses it for the title of her new book on the subject, which is scheduled to be released this month.
Whatever you call it, the sharing economy is transforming the workforce and, with it, human resources.
“The transition is without question happening,” Chase said in a Workforce interview prior to the book’s launch.
In her vision of the future, more companies and organizations will evolve into online-enabled platforms — the “Inc.” of the book title — that own or control relatively few assets outright and aggregate labor and ideas from the people or businesses using their technology-enabled network. Examples of current platform-based organizations include startups such as Airbnb, Etsy Inc., Instacart, Lyft, TaskRabbit and Uber. They also include giants such as Amazon.com Inc., with its nearly $5 billion cloud-based data storage division.
Chase predicts more employees will switch to working as “peers,” joining the ranks of U.S. freelancers, independent contractors and self-employed workers that a 2014 Freelancers Union survey estimates is already 53 million strong. Members of the peers labor force drive their own cars for Lyft and Uber, rent out rooms in their homes on Airbnb, sell handmade crafts on Etsy, and write software code for clients through Amazon’s Mechanical Turk service.
“The most efficient organizational structure for a company is to be a platform and have as little as possible on it that’s owned and engage as much as possible from outside,” Chase said. “We see that today, 30 percent of the population is already doing freelance work. It’s economically compelling to have everything be that way.”
The more people work on a platform, the greater the diversity, which leads to more ideas and creativity. Companies that rely on their worker networks will innovate faster “than relying on 10 guys in business development,” and be more productive, she said.
The Effect on HR
Whether the workforce evolution plays out exactly as Chase sees it, there’s no question the relationship between enterprise and labor is changing, and has been for some time. That evolution has implications for HR departments and the longstanding policies and practices used to recruit, hire, compensate, train and offer incentives to workers. If the labor force changes to more — or mostly — independent contractors, how does it affect HR?
“I think you need HR more,” Chase said.
She believes some traditional HR functions will remain. For example, in many organizations, a small percentage of superstar employees do the most innovative work or are the most productive. In a peers-based economy, that won’t change, except that star performers will be contractors, she said. HR’s role will be to provide incentives to keep the best drivers, Web designers or sales reps in the fold.
‘There’s been a lot of litigation trying to understand the economic reality of employing people in this way versus calling them employees.’
– Orly Lobel, a University of San Diego law professor
In the platform-centric economy, HR also will be responsible for figuring out how to train the mediocre performers to become more productive — not so different from what happens now. Organizations such as eBay Inc., Etsy, and YouTube already have programs geared “to make their peers do better,” Chase said.
In the peers-based world of work, she argues that labor will naturally gravitate to organizations that offer the best compensation, working conditions, perks and opportunities for members to give input on rules and how things get done.
“If there’s competition, they’ll choose to play with the one who treats them better,” she said.
In one of “Peers Inc.’s” most radical proposals, Chase suggests that when so many people are self-employed, health insurance, worker’s compensation, retirement savings accounts and other safety net benefits that traditionally have been tied to a full-time job should be divorced from employment. Instead, she maintains those benefits should come from the government, in the same way many European countries provide benefits. She points to the health care insurance that freelancers and other self-employed workers can get today through exchanges created under the Affordable Care Act as a start.
Separating benefits from jobs gives people the opportunity to work on five or six different platforms if they choose, and give platforms more leeway to staff up and down as they need, Chase said. In the past, “We pushed security over flexibility. In this new world, flexibility has a huge number of attributes that are positive, but we’ve lost the attribute of security.” Things like government-funded benefits and workforce retaining for the unemployed will be the “social safety nets” that balance out that flexibility, she said.
Chase also believes that some platform-based organizations will offer benefits as a way to get a leg up on the competition. Both Uber and Lyft offer their drivers auto insurance policies. Freelancers Union, an organization that resembles a professional association more than an employer or traditional dues-based union, nonetheless offers medical and dental insurance to its 261,000 members, along with discounts on professional services and other perks.
Labor experts don’t agree with Chase’s mostly positive assessment of the sharing economy’s effect on workers and the workplace. It’s more complex than that, said Orly Lobel, a professor at the University of San Diego’s School of Law who studies labor and the sharing economy.
“Some people talk about this as a utopia, and others say it’s horrible, it’s dystopian for work,” lacking protections for labor and consumers, Lobel said. “It’s much more mixed. All these developments have been happening anyway without the platform. We have had the rise of the contingent labor force, part-time, seasonal, freelancing, day labor work, nonsecure labor force, for a few decades. There’s been a lot of litigation trying to understand the economic reality of employing people in this way versus calling them employees.”
Some of the more high-profile lawsuits Lobel refers to involve Uber and Lyft. The ride-app startups have been named in separate class-action lawsuits brought by drivers who claim they should be classified as employees and as such are entitled to be reimbursed for expenses such as gas and vehicle maintenance. In March, judges in California district court denied the companies’ requests to dismiss respective lawsuits against them, setting the stage for the lawsuits to go to jury trials.
In October 2014, FedEx Corp. lost a similar lawsuit when the Kansas Supreme Court ruled that hundreds of truck drivers who worked for the delivery service in the state between 1998 and 2007 were employees and not independent contractors. Similar lawsuits against FedEx in other states are pending. FedEx changed its business model in 2011 to contract with companies that hire the drivers.
The lawsuits highlight how important it is for HR professionals to stay on top of regulations and legal decisions with the potential to affect their companies’ workforce, said Debra Osnowitz, assistant professor of sociology at Clark University in Worcester, Massachusetts, and author of “Freelancing Expertise: Contract Professionals in the New Economy.” “Our notion of a standard job comes out of laws and regulations, and some of it [from] places you don’t expect, like the tax code,” she said. “The broader question is whether our understanding of what constitutes work and employment needs to change.”
Industry norms also differ. “The experience and the conditions of being an independent contractor for a taxicab driver are very different from life as an independent contractor computer programmer,” Osnowitz said. “There are not clear disadvantages. There are different conditions.”
Not Your Typical Radical
Some of Chase’s ideas might be radical, but she doesn’t look the part. A stately 56-year-old married mother of three, she’s about as far from the stereotypical hoodie-wearing 20-something Silicon Valley tech startup founder as it gets.
Chase grew up one of six children of a U.S. diplomat father whose overseas assignments had the family stationed in faraway places such as Alexandria, Egypt; Damascus, Syria; and Jerusalem where they relied on public transportation to get around. She moved back to the States to attend Wellesley (Massachusetts) College and MIT Sloan School of Management. She married and settled in Cambridge, where she shared a car with her husband, Roy Russell, an engineer who eventually became Zipcar’s founding technology officer.
The impetus for the company came when Chase and a fellow elementary school parent Antje Danielson hatched the idea of copying a car-sharing service Danielson had stumbled upon in Germany.
Unlike recent sharing-economy startups ushered in on clouds of investor cash, the women launched Zipcar on a shoestring. When they started it, the concept of a U.S. service that rented cars by the hour was unheard of. The partners had to build everything from scratch, including a way for customers to access a locked vehicle parked on the street and a back-end system to handle reservations.
Chase left in 2003 — she said to spend more time with her family, though other reports describe it as a possible forced exit. In 2007, Zipcar merged with Flexcar and six years later, Avis Budget Group bought the company for $500 million cash. Zipcar operates a fleet of 10,000 cars, including 30 makes and models; it has 900,000 users and does business in six countries.
Not all of Chase’s post-Zipcar ventures have worked out. A peer-to-peer ride-hailing service called GoLoco was a bust because of an overbuilt website and lack of demand. She’s still active in the French car-sharing service Buzzcar, which merged with rival Drivy in April. She’s also chairman of Veniam, a 3-year-old startup building vehicle-to-vehicle communications networks. In 2014, Veniam launched a vehicle-to-vehicle network in Porto, Portugal, with 600 connected vehicles and 60,000 users, and raised $4.9 million in venture money to fund its work.
Chase still uses Zipcars when she needs to get around. “I hate driving on long trips because that’s where people die in car accidents,” she said. “When I drive, it’s around town; that kind of driving doesn’t frighten me.”
After devoting 15 years to making transportation more sustainable, the other thing that frightens her is the prospect of a world that doesn’t share that interest. It explains why she devotes a healthy portion of “Peers Inc.” to explaining how the productivity that platform-based organizations can generate could be used to address pressing global problems and climate change in particular.
“I don’t see any chance in hell of us escaping a really horrible future unless we apply this paradigm,” she said.
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