Companies need to develop policies regarding employee side gigs and hustles | Managers at Work

“I recently learned that one of my employees has a side gig that does not exactly compete with our business but utilizes the skills that I pay him to perfect. On one hand, I don’t want to prohibit side gigs and run the risk of alienating this employee but, on the other hand, I want to make sure he knows that there are some limits. Please advise.”

Everybody’s got a side gig these days, right? Whether it’s to make some extra cash, develop a new skill, take a shot at entrepreneurship, or put after-work time into a “passion project,” lots of people are taking on side hustles these days.

In fact, we’re talking about a significant group of people. The percentage of employees who report having side gigs or hustles increased from 34 percent in December 2020 to 40 percent in May 2022. This is according to a survey of more than 2,000 workers conducted by The Harris Poll on behalf of Zapier a workflow automation provider which has a remote workforce. Studies predict that 86.5 million people will be “freelancing” in the US by 2027, making up 50.9 percent of the total US workforce.

All this has been fueled by workers’ desires for flexibility and increases in the number of “digital nomads” as a result of the COVID-19 pandemic, as well as increases in opportunities for freelance work aided by technology.

But side gigs or freelance work don’t always sit well with bosses and managers, particularly those who are worried about potential conflicts of interest, non-compete agreements and whether employees are really devoting enough time and effort to their day jobs — worrying that side gigs are taking all their energy.

One Human Resources representative at the energy products company Enertech complained, for example, about an IT specialist who was missing deadlines and had been seen sleeping at his desk. He was apparently putting all his energy into making and selling barbecue sauce on the side. “In my 20-plus years in HR, I don’t ever remember having to sit down and talk to someone about a side job,” she told Society of Human Resource Management’s HR Magazine. “We need you here 100 percent, dedicated to our business 100 percent.”

That concern prompts some HR experts to propose that companies develop a “side gig policy” that would specifically say that a side hustle should not interfere with an employee’s primary job and that would specify the organizations employees cannot work for, including competitors.

“It may be tempting to create one policy that forbids all employees from accepting any type of off-hours work,” writes Bonnie Monych, a performance specialist for the HR firm Insperity. Before you do, however, check whether your current policies on the handling of confidential information and company equipment already protect your company. Maybe you don’t need to create one.

You might want to establish guidelines that ask employees to be transparent about outside work and clearly define the expectations around potential conflicts of interest, she notes.

But you might want to avoid being too heavy-handed about it. “The more rigid you get, the more people keep [their side gigs) under wraps,” says Chad Sorenson, president of Adaptive HR Solutions in Jacksonville, Fla. in an interview with HR Magazine.

And there are real benefits to hiring and keeping employees who have side gigs. Contrary to some older thinking that said that side gigs would detract from the “commitment” that employees make to their primary jobs, a study of more than 300 employees released in 2021 by researchers at the University of Oregon indicated employees can feel empowered and energized by working side gigs.

“Although scholars have suggested that side hustles conflict with full-time work performance, we assert that psychological empowerment from side hustles enriches full-time work performance,” they wrote in the Academy of Management journal in 2021. “We argue that side-hustle complexity — the  motivating characteristics of side hustles — positively relates to empowerment and that side-hustle motives moderate this relationship.”

“Sometimes when you have more than one role,” it can actually make you better or add to what you bring to the table across all of your roles,” one of the researchers said in an interview.

In her post, Monych notes that a side hustle can encourage more creative thinking at work. “Side gigs allow employees to experiment and can expose your employees to different people, processes, procedures or vendors. This exposure can then spur new approaches and creativity in their day jobs.”

“For instance, in helping a friend develop a marketing plan for their start-up, your marketing director may help your big, mature company consider a new approach to social media.”

Yes, they are using skills that their companies and managers helped them build, along with a lot of other skills as well. So, it’s worth taking the time to conduct a risk analysis and look at your current policies on non-compete agreements and conflicts of interest and thinking about some guidelines going forward. One way or another, be sure to talk to employees openly about it.

“When you hire someone, discuss the policy and take the time to talk about how the side work they do fits in. Discuss specifics and let them know if they have questions, they can come to you anytime. Then, when they feel confident that they’re adhering to your policy, they can get on with it,” writes Alexis Grant in her blog on side gigs.

“As a manager, if you know one of your employees works on the side, this can be a touchpoint during your regular check-ins. A few times each year, ask the employee how those side projects are going. Open the door for a discussion so everyone can stay on the same page.”

Indeed, more companies today are leaning into the popularity of side gigs, encouraging employees publicly to go for it. The Chicago-based marketing automation company ActiveCampaign, for example, encourages all its employees to use its platform for their ventures – whether that’s an event or working on a side business. “HR teams must recognize that there is a real business benefit in supporting employees’ passion projects and side hustles,” Chief People Officer Michael Rico told HR Magazine. “We want people to thrive in both their work lives and their personal lives.”

The company is careful to set employee expectations about their work for ActiveCampaign, he says, and  has an agreement in place that requires employees to protect the company’s proprietary information. It’s understood that side gigs are for after hours and that employees will not neglect their work at ActiveCampaign.

Offering the flexibility to pursue side hustles can produce other benefits to your company as well which might not be obvious, notes Tarra Jackson, a learning and development consultant in a blog post. “It’s an attractive perk for potential hires. It can also help retain talented employees who might otherwise consider leaving to explore other opportunities that offer such flexibility.”

“Companies that support side gigs are often perceived as progressive and employee friendly. This positive employer branding can help attract top talent and boost the company’s reputation.”

Managers at Work is a monthly column exploring the issues and challenges facing managers. Contact Kathleen Driscoll with questions or comments by email at [email protected]