Previous studies into the gig economy have found that freedom and autonomy are often significant factors for workers. Suffice it to say, not all gig platforms provide this, with some enslaving workers to algorithms that dictate their every move. When it’s done right, however, the gig economy can provide a huge pool of talent for organizations to tap into.

Research from Berkeley Haas explores some of the ways companies can better motivate gig workers. It shows that financial incentives serve as a potent catalyst in boosting the frequency and duration of people’s work.

The research also reveals that individuals tend to work with less intensity after reaching their daily or weekly financial targets. However, it notes that those who initiate work early in the day exhibit a greater likelihood of surpassing their financial objectives and working beyond the necessary time frame.

Under the skin of gig drivers

A team of researchers made use of a vast and all-encompassing dataset provided by a prominent on-demand ride-hailing company operating in the United States. The dataset, which covered a period spanning 358 days from October 2016 to September 2017, furnished intricate details of the driving activities and financial incentives offered to drivers based in New York City.

The data, which comprised thousands of drivers and millions of work shifts, allowed the researchers to scrutinize factors such as the drivers’ level of experience with the platform, their vehicle types, the number of hours they devoted to driving, and the financial incentives tendered and received.

“The key advantage of our data is that we observe the incentives that were offered to every driver regardless of the decision to drive. In other words, even for drivers who decided not to drive for a particular time period, we still know their offered wage and promotions for that period,” the authors explain.

Driver inertia

The research sheds light on the income and work habits of drivers, revealing an unsurprising trend of ‘income-targeting behavior’ amongst those tracked by real-time earnings reports. It found that once drivers meet their income goals, they are less inclined to continue working.

However, what was unexpected was the discovery of an ‘inertia’ towards working hours amongst drivers. The study found that drivers who have previously worked longer shifts are more likely to extend their work hours or begin a new shift compared to their counterparts who have worked shorter hours. This finding contradicts previous research on taxi drivers who exhibited more of a “time-targeting behavior.”

For instance, this could be something that’s driven by the inherent flexibility of gig work, with the apparent inertia actually a strategic behavior deployed by the drivers.

“Inertia is why it is so hard to bring gig workers back after the pandemic—they currently aren’t used to working day after day, so it’s a matter of attempting a cold start,” the researchers explain. “However, there is a flip side. Once these workers go back to working, they are much more likely to continue working.”

Better understanding

The researchers suggest that companies in the gig economy can create more effective incentives by gaining a deeper understanding of their workers. The authors propose that companies should engage with their workers to determine specific goals and then adjust their incentives accordingly. By doing so, companies can better motivate and retain their workers.

The paper emphasizes the importance of personalizing incentives for individual workers to improve operational performance. As the authors state, “Targeting specific workers with different incentives can be beneficial. We examine how the platform can improve its operational performance by offering personalized incentives based on workers’ attributes.”

While adequate compensation and incentives are crucial, the study highlights that they are not the only factors in attracting and retaining gig workers. In today’s competitive environment, where gig workers have numerous options, companies must continuously strive to enhance their appeal to attract and retain workers.

“The recent rise of the gig economy has changed the way people think about employment,” the paper explains. “Unlike traditional employees who work under a fixed schedule, gig economy workers are free to choose their own schedule and platform to provide service. Such flexibility poses a great challenge to gig platforms in terms of planning and committing to a service capacity. It also poses a challenge to policymakers who are concerned about protecting workers.”

Behavioral factors

As part of the process of better understanding those who work in the gig economy, the authors also urge platform managers to consider the various behavioral factors that underpin how workers behave.

“We find that financial incentives have a positive effect on the decision to work and on the work duration, confirming the positive income elasticity from the standard income effect,” the paper concludes. “We also observe the influence of behavioral factors through the accumulated earnings and number of hours previously worked. The dominating effect, inertia, suggests that the longer workers have been working so far, the more likely they will continue working and the longer duration they will work for.”

While there remains a sense that gig platforms don’t particularly care about the motivations of workers, who are instead viewed as almost interchangeable cogs in a machine, the paper reminds us that truly striving to understand the workers and their motivations can prove beneficial for all parties.