Should founders nurture employee side hustles?

According to research by Small Business Britain and eBay, 39 percent of U.K. SMBs were gestated as side hustles.

That’s probably not surprising. Starting a business – or any kind of money-making enterprise – when also working full-time for an employer provides a means to test the market, build a customer base, acquire new skills and establish networks while minimizing the financial risks. In theory at least, when the time comes to leave the nine-to-five and strike out full-time as a business owner, the risk of failure should also be lower.

In that respect, there’s a case for encouraging side hustles. Indeed, ahead of the recent U.K. general election, the Federation of Small Business recommended that the tax-free trading allowance enjoyed by part-time business owners should be doubled to £2,000. As the Federation sees it, this would stimulate entrepreneurial activity.

So as the newly installed Labour government prepares to prioritize growth when it presents its first Budget, it might make sense to offer incentives not only to established business owners but also to those who are testing the entrepreneurial waters while still in full-time employment.

But there is, of course, another side to the story. For every side hustler, there is an employer seeking to get the most out of their teams in an increasingly competitive business environment. Some of those employers will themselves be founders. Should they be encouraging side hustles, discouraging them or simply turning a blind eye?

It was a question that arose when I spoke recently to Ajaz Ahmed, founder of ideas and innovation agency AKQA. Established in 1994 when Ahmed was just 21, the business now employs more than 5,000 people and enjoys annual revenues in the region of $1 billion. Ahmed was keen to talk about the importance of encouraging staff to undertake personal projects.

Reducing Burnout

As he explains, there are sound business reasons for doing so, not least in terms of keeping people engaged and motivated while at work. Working at a design agency – particularly one that serves high-profile clients – is rarely going to be a nine-to-five affair. The work can be intense and although stimulating, individual projects may not fully satisfy the creative ambitions or talents of employees. Side hustles and other personal projects are, therefore, a valuable outlet. That’s a benefit in itself.

“Taking part in side projects reduces the risk of burnout and helps the individual avoid the risk of creative fatigue,” says Ahmed.

There are, he adds, also direct wins for the company itself. When undertaking personal projects staff often develop new skills, which can be applied within AKQA. Equally important, they are meeting new people and building networks. Some of those connections may ultimately become AKQA clients.

“It opens the door to networking opportunities,” adds Ahmed “And the best form of marketing is word of mouth.”

Ahmed’s definition of side hustling covers a lot of ground. The list of employee projects ranges from sculpture, comedy and theater to charitable work. In other words, it’s not all about what we might conventionally see as commercial ventures. However, employees have also gone on to found their own businesses, a case in point being sustainable toothbrush brand, Suri.

AKQA is a sizable company working in the creative sector, so you could argue that it has particular reasons for encouraging employees to acquire skills and fully develop the talents that clients appreciate. However, the personal projects of staff can deliver benefits to companies of all sizes and just about every sector.

Maty Jane Petit is the founder of ethical fashion brand, Pioneer Clothing. Replying to email questions, she cites the benefits of having employees who have developed adjacent skills. “I have one member of my team who has a flower display business and another who is a hairdresser. Our garment technician is a freelancer and there’s a multitude of different activities she can turn her hands to.”

Equally important, running a side business can – according to coach and psychotherapist – Eloise Skinner, help employees acquire not only skills but personal habits and attitudes that will make them more efficient workers. “Having an additional focus can promote more effective and efficient time management, allowing employees to focus fully on their tasks while in the workplace,” she says.

Clear Boundaries

All well and good, but there is perhaps a tension here. Entrepreneurs and small company owners want to get the best out of their staff. How can that be squared with the same employees doing their own thing? Perhaps they are more committed to their side hustles than to their day jobs. Just a thought.

“Employers should be clear with employees about their expectations – for example, whether or not an employee is allowed to work on projects during office hours or use office space to complete personal tasks,” says Skinner.

Charlotte Broadbent agrees. She is the General Manager of Faire, a wholesale marketplace for independent retailers. As she explains, “a lot of people within the business have side hustles,” and many work in the independent retail space. Thus there is a synergy between their main career with Faire and their passion projects.

“The boundaries are clear,” she adds. “Faire is the primary focus and nothing conflicting or competitive is allowed. Side hustles are pursued out of work hours- during weekends and evenings. And I know from feedback that these pursuits contribute to a fuller, more balanced life for our employees who have a passion.”

Formal Arrangements

In some cases, an employer may choose to formalize the side hustle arrangement. For instance, Jessica Morgan runs a PR agency, Carnsight. As she explains, staff work on company business four days a week and on the fifth they can pursue their own projects. “The day is used by staff in different ways, including to write – one is a children’s author- and working on social media for micro businesses that couldn’t otherwise afford to take us on,” she says.

Ultimately, through arrangement must work for everyone. We have to fulfill our duty to the clients and the work must come first,” says Ahmed. “The key is flexibility. Of course employees must give their all to their work but there should be the flexibility to allow them to avoid burnout.

Ultimately, of course, if a side hustle takes off, a talented member of staff may choose to leave. However, in many cases, just having the option to pursue other interests with the blessing of an employer may actually improve the employers ability to engage and retain key team members.