By Michael Kwan

The rise of the gig economy and flexible employment options have encouraged employees to pursue “slashes” and develop their hobbies or skills into side hustles for self-fulfillment. However, it is essential to consider the impact of the side hustle on both the individual and the company. Should companies step in to manage their employees’ second jobs?

Before jumping into a side hustle, individuals need to weigh the pros and cons by taking factors such as time commitment, income considerations and career development into account. The impact of employees’ side business on their main jobs is not just about the employee’s work ethic, but on how proactive the employer is in managing this multi-role scenario.

Side hustle, as the term suggests, is the practice of investing extra time and energy into another business while still working a day job. It is not a new concept or phenomenon; the gig economy has helped the more commercially minded side hustler. In addition to traditional jobs such as street vendor, tutor, and sales promoter, the internet has also allowed users to work as social media influencers, online store owners, or part-time live streamers. Data from online tech news platform youth36Kr earlier last year showed that among 2,000 surveyed young people, 44.7% were involved with side hustles, and more than 50% had thoughts of doing it. While there are various options for side hustlers, the top three choices are self-employed media, e-commerce, and vending.

When it comes to side hustles, it is easy to first assume that people are simply in it for the money. An old saying goes, “When farming fails, a second job prevails,” highlighting the role of the sideline in topping up income. In fact, some business leaders have also dabbled in side hustles. Before founding Alibaba, Jack Ma opened a translation agency with his friends, but the company was in the red at the beginning and couldn’t even pay wages. Therefore, Ma ended up running a nighttime street cart to tide him over. Though his goal with this second job was to support his main business, most people who engage in side jobs are usually just trying to make ends meet. While money is a big motivator for moonlighting, the choice also involves one’s diverse needs such as personal interest, an entrepreneurial itch, a bid for a safety net, or even a chance to expand one’s social circle. A few of the key motivators for those engaging in side hustles are:

Passion

A number of young people, in their eagerness to jump on the latest trends or play into what society expects, end up studying a major or working a main job that doesn’t quite align with their interests. To make up for the gap, they may engage in side hustles to follow their “true love”.

Entrepreneurship

Young people are no strangers to the high risks of starting a business. Bidding farewell to a satisfying full-time job does not make financial or career sense. To mitigate the risks of a start-up failure, they may favour a more conservative choice - keeping their full-time job as it is and leaving it only when their side hustle takes off.

Sense of security

Having two jobs means an additional way to earn a living. If one loses the main source of income, a side hustle may be the lifesaver that helps them weather the storm. Therefore, having a side job can provide a sense of security that allows individuals to become more comfortable with job changes.

Expand interpersonal relationships 

A second job can be instrumental in expanding one’s social networks across industries and workplaces. Not only does it bring income, knowledge, and experience, it can also foster friendships and emotional support, and perhaps even lead to lifelong companions among these connections.

Amid an unstable global economy and threats posed by artificial intelligence, more and more people may opt for side jobs. In fact, five Chinese government departments issued an official document last year to better support individuals in flexible employment through multiple channels.

This year, Shanghai took the lead in launching the first “gig” market in Minhang District this year. As the gig economy becomes more prevalent, more flexible jobs are being created, leading to a blurring of the line between an individual’s primary and secondary jobs. Balancing multiple jobs may be necessary for individuals; this in turn means that managing side hustlers is a new management challenge for companies.

Are you ready for a side hustle?

Despite the many potential benefits of engaging in a side hustle, there are also challenges lurking in the shadows that must be faced. One must weigh in the factors of time, money, and professional identity before jumping in.

Time

A report released by Chinese online job offering platform 51job indicates that 48% of workers spend one to two hours daily on side jobs, with 20% spending more than two hours a day and 32% using their weekends. Since they’re conducting during spare time, side hustles can put a drain on one’s personal time and energy. If one’s day job is already demanding and the side hustle eats into leisure time, pressure can build up. If the jobs conflict, meanwhile, one may prioritise side hustles at the sacrifice of the main job, which could in turn affect performance and possibly hinder career development. In addition, excessive working hours are not only detrimental to one’s health, but can also affect family harmony, leading to work-life conflicts.

Money

A good side hustle can provide extra income, especially for those whose main work is inconsistent. Having a lucrative side hustle can help pad the family budget and improve risk resilience. However, making a side hustle successful is no walk in the park. According to Youth36kr, 15.4% of side hustles are unprofitable, and 30.6% of them earn less than 1,000 RMB a month. Making significant additional income from a side hustle is not as common as one might think. In addition, if the side business fails, this may pile on more financial stress. It can also have a detrimental effect on one’s emotions, resulting in negative consequences for day job and family life.

Professional identity

In his book One Person/Multiple Careers earlier, New York Times columnist Marci Alboher wrote about a group of “slashes”, who are no longer satisfied with a "single career" lifestyle but prefer to live a diverse life with multiple professional identities. However, switching roles is not an easy task. On the one hand, a day job and a side hustle may be completely different. One is often the boss at the latter but restricting to playing by someone else’s rules at the former. A failure to switch roles while switching jobs may cause an identity crisis and make one feel like a square peg in a round hole in the day job.

Should employers say no to side hustles?

The impact of a side hustle on a day job is not only about employees’ work ethic, but also how the employer handles the situation. There is no clear “yes” or “no” when it comes to whether an employer should interfere in an employee’s business. The company needs to consider the following questions.

Does the employee’s side job compete with the company or create a conflict of interest?

Labor contract law does not prohibit employees from having a side job. However, whether employees are allowed to engage in a side hustle largely depends on the employer, as the law grants them the right to do so. Since a side hustle may compete with the primary job, many employers specify in employment contracts that employees cannot have a second job that may compete with their main work. Some companies even require employees to seek approval in advance if they want to have a side job. If someone uses work time or resources for personal gain, it is considered a conflict of interest. Having a side hustle that competes or conflicts with the company’s interests can harm the employer, which can be avoided by various means such as contracts, policies, and supervision.

Does the side hustle affect employees’ performance at work?

When enterprises weigh whether or not to intervene in an employees' side business, they need to consider whether their employees’ business will have a positive or negative effect on their work performance at their day job. Employees who wear multiple hats usually have a knack for thinking on their feet and expanding their network in multiple directions. If an organisation can harness these abilities, it can be a win-win for both the organisation and the individual. Sometimes, an employee's side hustle can be a hidden treasure for the company, bringing in valuable contacts and online traffic. For example, some employees may be social media influencers after work; if the employer can ride this wave, it could be useful in promoting their products and services.

Does it affect the employee's commitment to his or her day job?

Engagement at work requires mental focus, physical effort, and emotional involvement. According to the Conservation of Resources Theory, employees need to have sufficient reserves of personal resources to invest in their work. A demanding job can already consume a significant portion of these resources. If an employee is burning the midnight oil or filling their weekends with side jobs, they may find it harder to recharge, thus hampering their ability to be engaged in their work the next day, and engagement is a key indicator of employee performance and innovation. However, if an employee can manage their portfolio career and get the job done with a high mental and physical capacity, companies may not need to intervene. Instead, employers can consider tracking employee performance by establishing metrics. For example, customer satisfaction surveys can be a way to measure how engaged front-line service workers are. As for sales roles, how well they meet their sales goals is an easy marker.

Michael Kwan is an Associate Professor of Management at CEIBS. For more on his teaching and research interests, please visit his faculty profile here.