HRM08701: Deliveroo is a UK based start up company which


Company Overview

Deliveroo is a UK based start up company which began as a dream at co-founders Will Shu and Greg Orlowski office desks in 2013. It is a delivery service application (app) that operates with restaurant partners to deliver meals to customers via its riders. The customer orders a meal via the Deliveroo app, that is accepted by the restaurant partner. Riders are able to view incoming order requests by customers in their area, which they can accept or decline, once accepted the driver is responsible for picking up and subsequently delivering the order, all managed via the app.

With the tagline “Order high-quality takeaway online from top Singapore
restaurants, fast delivery straight to your home or office.” (Deliveroo, 2019). Deliveroo pride itself on the flexibility it offers both customers and riders and reiterates the choice on behalf of the rider.

The company has faced a number of issues during its growth period where it has expanded into over 500 cities in 14 countries across the world. Following significant funding from Amazon in 2019 the company intends to continue growing.

HR Trend Deliveroo is one company who work within the ‘gig economy’ (Kalleberg and Dunn, 2016) in that its riders are not classified as ‘employees’ of the company. Rather, Deliveroo treats its employees as ‘contractors’ meaning that they are essentially self-employed. Deliveroo refers to their riders as ‘independent contractors’ as they are paid by the job.

Healy, Nicholson and Pekarek (2017) suggest that although gig economy working is a minor feature of the current labour market, “discussions of the ‘future of work’ – how much work will be available, how it will be arrange and the impacts of technological change – frequently refer to the gig economy” (p.233).

O’Connor (2016) discusses the realities of this working pattern within gig economy organisations by exploring the algorithmic management that it utilises to manage employees via the app. Although the use of algorithms to manage workers seems new it is actually founded in theory from over a century ago when organizations hoped to manage the tasks and time people took to complete these tasks (known as scientific management).

However, as Rosenblat (2016) argues that although the use of algorithms influences perceptions surrounding management “Uber’s model clearly raises new challenges for companies that aim to produce scalable, standardized services for consumers through the automation of worker-employer relationships.”

Many other companies (such as Deliveroo) have followed this example, using a system of contracting instead of hiring workers as employees. In addition, many companies in other industries (such as software development, manufacturing and even education) increasingly use contractors rather than employing people on a permanent basis.

Since inception, the company have faced many issues predominantly surrounding workers’ rights for their freelance riders. However being the first rider and still undertaking deliveries when he can, co-founder and current CEO Shu was able to explore challenges the drivers

would face and firmly stresses the most important element for everyone involved is flexibility. Additionally Shu shares that in his experience the riders will often ‘work’ with a number of delivery services and will fluctuate between them based on demand (i.e. between Uber Eats, JustEat and Deliveroo), therefore flexibility is key for the riders. In November 2017, Deliveroo
won its UK based legal fight and the right to not call it’s riders employees and rather continue to classify them as freelance contractors, unlike rivals Uber. Regardless of this, between May and August 2018, Deliveroo focuses on additional perks surrounding riders welfare by providing accident cover, first aid training and medical insurance across the world.

Using independent contractors is an attractive option for many employers because they are not entitled to the same rights and benefits as fulltime employees (UK Govt., 2017; Torrington, Hall, Taylor and Atkinson, 2014). Key differences between the different types of employees are for example, they do not need to be paid holiday pay or sick pay and they do not need to be provided with the tools to do the job (e.g. a bike in the case of Deliveroo although riders are required to have one). However, this classification of workers has attracted criticism from commentators and politicians throughout the world, including the UK (The Guardian, 2015).

Although Deliveroo stresses the idea of flexibility is core for everyone involved but most importantly for the riders who come from a wide array of backgrounds with Shu arguing that “…riders do the job because it’s flexible” and believes if the job becomes inflexible then fewer people will want to do the job.

This corresponds with evidence of the psychological contract of riders who left reviews on Glassdoor (2019) who commented on the “very healthy attitude towards working from home and flexible working hours”. Further, they commented on the friendly working environment with good communication with the management, with perks such as good pay rates and perks are strongly valued.

However, some reviewers on Glassdoor (2019) did comment aspects of uncertainty could have a negative impact on their experiences. These areas can include if a rider has an injury, if their bike is stolen, if the weather is bad or if there is no demand for deliveries this can negatively impact the riders.

These reviews demonstrate the realities of the gig economy on workers.
In Singapore, you are invited to apply to become a driver with ‘a 5 minute application’ and informed you only need 3 things. These include; 1) Singapore citizenship or permanent resident status; 2) A motorbike (with a valid Class 2/2A/2B license) or bicycle, compliant with legal requirements; 3) A smartphone – iPhone (iOS 10 and above) or Android (5.0 and above)
(Deliveroo, 2019). There are numerous driver testimonials detailing the great work-life balance and a focus on flexibility the expectations of freedom and flexible working are evident from the outset.

Recently Deliveroo has begun to expand in ‘Deliveroo Editions’ which provide an ‘outpost’ of restaurants where the restaurant partners will provide all resources (e.g. staff as well as ingredients).

In Singapore, they are also branching out from just deliveries with ‘food markets’, the largest of which opened [email protected] in one-north in March 2019. This large 40 seater ‘futuristic’ dining experience offers a fully-automated experience with “no need to interact with human servers at all” (Lim, 2019). You order via a kiosk and collect via a ‘cubbie’ which details the name you have inserted upon ordering.

However this requires staff  to be in the kitchen ensuring the food is available and notifying the system when it is ready to collect. This branching out of services is just one way Deliveroo is attempting to keep up with its
competitors. In 2019 they have also received $575 million investment from Amazon and have shared plans to grow it’s tech team, develop new technologies, reach more customers all whilst offering additional support to its restaurant partners and riders.

This plan of additional support for riders stems from a recognition of backlash the ‘gig economy’ has received due to the fact companies such as Deliveroo are treating workers as independent contractors rather than employees which incurs less cost for the company. And after winning their UK legal battle Deliveroo continues to class riders as contractors, however it has invested in perks for its riders by providing them with cost-free insurance and free access to hundreds of online courses. Also, unlike competitor ‘DoorDash’ Deliveroo have confirmed 100% of tips provided by customers go straight to their riders.

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In addition, by utilising this system, employers of independent contractors can more quickly and easily change the size of their workforce in response to changes in demand. This means that using contractors can offer advantages in both cost and flexibility for employers by adapting between numerical, temporal and functional types of flexibility (as Atkinson’s, 1984, model suggests as a comprehensive treatment for organizational flexibility).

It also means that their overarching business strategy and model hugely affects the people management within the organisation and in pursuit of the highest level of flexibility there have been loses for many workers; particularly in terms of their employment security and added benefits from the company (Healy, Nicolson and Pekarek, 2017).

To ensure that Deliveroo are able to respond to the local regions they will be based within they opt to introduce Business Intelligence Units to understand and respond to local demands. For example Klara (2018) comments “The unit, operating out of Deliveroo Singapore’s corporate office in Tanjong Pagar, will be tasked with the following functions; to deepen understanding of the region
local food trends, tastes and restaurant markets; to enhance performance for riders, restaurants and customers; and to look for expansion opportunities in existing countries and new markets.

” Further, Deliveroo will aim to ensure that they can match the riders to the demand of the area, which will help clarify expectations of both the riders and Deliveroo. This level of local consideration demonstrates Deliveroo’s commitment to adapt and respond their business model to the local context they are based within.

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