The Freelance Economy: What Does It Mean For HR Professionals?

online recruitment systemA new era of work is arriving: the freelance economy. More than a third of Americans work freelance, according to a joint study by the Freelancers Union and Elance-oDesk.

This is in part due to the changing technological landscape. On one hand, advances in technology are enabling remote freelancing in a way that’s never been possible before. You don’t need to be on-site to earn money, and people are increasingly taking advantage of that.

Equally, there’s been a massive increase in the support and infrastructure available to freelance talent. Co-working spaces are readily available, providing resources and companionship for aspiring freelancers. Although this has a little of a ‘chicken or the egg’ feel to it, the point is this: the soils are fertile for freelance talent.

The freelance economy is snowballing. As increasing numbers of people adopt the lifestyle, it becomes more accepted by the masses. We’re not quite into the realms of mass adoption, but perhaps it won’t be long before only laggards are left.

As we’ll explore in this article, the rise of the freelance economy has both good and bad consequences for HR professionals, and for wider business at large. There are several things companies must do if they hope to navigate the waters of change effectively, and take maximum advantage of the shift. If you’re company needs help with the hiring process, check out our free online recruitment system. Click here to start using Recruiteze today!

Implications of the Freelance Economy

The Good

At its best, the freelance economy is a fantastic thing both for employees and the companies who hire them. Gone are the days of soul sucking 9-5 and non-existent work/life balance. These are the days of work-when-you-want and work/life integration.

According to Gallup, only 29% of Americans are engaged in the workplace. Most of us, apparently, are disillusioned and bored. Only putting in the hours for the sake of the paycheck. The rise of the freelance economy offers a New Way of Doing Things.

It heralds the opportunity to increase engagement, by allowing workers to seek an independently meaningful life. By giving workers the opportunity to choose the life they want to build for themselves, the freelance economy offers hope of redemption in the engagement stakes.

At the same time, a more engaged workforce is more industrious, more conducive to driving results. One of the major benefits of freelancing is that it has been repeatedly shown to increase productivity.

The freelance economy also increases the talent pool, as employers can leverage freelance talent who can’t, or won’t, work full-time hours. 1 in 3 US employers struggled to hire when they needed to in 2015, according to the Annual Manpower survey. In light of this on-going talent shortage, companies who take advantage of a wider talent pool can gain significant competitive advantage.

The rise of the freelance economy also allows business to be nimble. Organisations can hire the skills they need when they need them, without committing to a long-term contract, benefits, wages, and everything else associated.

That’s a good thing for the economy too, allowing us to adapt quickly to innovations and shifts in the marketplace. This has a knock-on effect on every American – a stronger economy is stronger for us all.

The freelance economy is certainly not all good though…

The Bad

online recruitment systemAny significant change brings the fear-mongers out of the woodwork – but their concerns are worth considering. The worst possible consequence of the freelance economy is that the full-time economy will completely break down.

If enough people are drawn to the lifestyle freelancing offers, we could see people flock en-mass from the corporate world as if running from a burning building.

While there are certainly roles that can benefit from freelance talent, there are likewise roles that need a full-time, fully committed employee. At top leadership level, for example, a freelance working scenario is more difficult to imagine. Boards full of part-timers, CEOs job-sharing – they’re not ideas that sit comfortably.

If the freelance economy continues to gather momentum, perhaps we have mass corporate collapse to look forward to.

Which brings us to the big question. How can businesses maximize the advantages of the freelance economy while minimizing the risks?

How Can HR Professionals Take Advantage of the Freelance Economy?

Burying your head in the sand isn’t an option. Well, actually it is – according to the Workforce survey, given that as many as 70% of businesses aren’t planning for the implications of the freelance economy.

As with any major shift though, it represents a huge opportunity if you’re willing to seize it. If you’re not, then you’ll find yourself lagging behind your competitions – left in the dust, so to speak.

There are three areas HR professionals need to turn their attention to if they want to take advantage of the freelance economy.

  1. Talent Hiring

Organizations must consider freelance talent as central to strategic workforce planning, introducing a formal structure to source, attract and hire freelancers.

A lack of prior planning for freelance talent will be a sure-fire way to ensure businesses miss out.

Freelancer Management Systems, FMS, can be one way to introduce this hiring infrastructure. These private platforms support the hiring, management and payment of freelance talent.

If organizations don’t have the internal capacity to effectively attract and hire freelancers, another solution is Managed Service Provision. MSPs can manage the hiring process, providing a bespoke high-touch service that will allow you to build relationships with the freelance workforce. If you don’t have the right online recruitment system, will or resources in-house, this could be an option to consider.

However, the right tools are not by themselves sufficient.

Hiring freelance talent has to be a long-term strategy, based on careful refinement of employer brand. When you’re seeking to hire freelancers, the traditional means of attracting talent are no longer sufficient. Motivations tend to differ for freelancers, and businesses must be willing to create a proposition that appeals to those needs, not just to full-time workers.

  1. Talent Retention

It might seem strange to talk about retention when referring to freelancers, but it’s a critical concept. In the context of the freelance economy, retention refers to the need to build a loyal network of freelancers. Certainly, in some sectors freelance supply does exceed demand, and there’s a tendency to treat freelancers in these areas as expendable.

However, this isn’t the norm. In fact, the major demand for freelance talent overlaps considerably with the major skill shortages – in the tech and creative industries.

Maintaining a solid working relationship with freelance talent is critical to ensure your business can meet the demand for these skill sets on an on-going basis. If you burn bridges, you’ll fail to build a network of freelancers to rely on. You might not feel the implications of that immediately, but you certainly will feel it.

As such, businesses who want to leverage the freelance economy need to move towards treating their freelancers with the same respect and recognition as permanent staff. Companies who operate a ‘them and us’ approach to hiring freelancers will struggle.

  1. Talent Management

online recruitment systemNearly half of businesses cite quality of work as the biggest concern when managing freelance talent, research has shown. Performance control is critical – but how do you manage, motivate and check the consistency of freelance workers and their work? Permanent employees are no doubt subject to particular targets, checks and reviews, but freelance talent doesn’t play by the same rules.

In large part, this requires an attitude shift. Many companies who hire freelancers do so just ‘to get a job done’. The freelancer is left to their own devices, and the work is only checked when collaboration or corroboration is explicitly required.

Instead, companies should look for ways to better integrate freelance talent into existing management and performance feedback processes. This isn’t to suggest micro-management, but to suggest creating a more solid feedback response loop. This will ensure freelancers are held accountable – both positively and negatively – for their work.

Move away from the mercenary approach to freelancers and give tangible recognition for a job well done, and guidance and feedback throughout the process. Increase the information flow between freelancers and established staff, too. The root of the problem is this pervasive mentality of freelancers as somehow ‘other’. Bring them into the fold, and you’ll get better commitment and better performance because of it.

There’s little doubt in my mind that freelancing is a positive step for workers. Work/life integration and increased engagement are huge and undeniable positives, marking an end to the culture of work for work’s sake.

Leveraged effectively, the freelance economy also has the potential to be a really good thing for businesses. Freelance talent can bring increased agility, solve skill shortages, and increase productivity.

However, there is a warning here. While I think it’s probably hyperbole to posit the complete collapse of the corporate world, it is a scenario we should heed. At the moment there persists a polarization: work vs. life, employed vs. freelance. In many ways the explosion of the freelance economy stems from this polarization – if you force people to choose between work and life, not many will choose work.

If we continue to perpetuate this division instead of rooting for integration and inclusion, the freelance economy will thrive at the expense of the corporate world. Instead, we should be seeking ways to harmonize, embracing change and finding ways to prosper within this new structure.

Searching For A Free Online Recruitment System? Try Recruiteze!

If your agency or HR team needs a free online recruitment system, click here to start using Recruiteze today! Our easy-to-use technology makes recruiting easy! Call us today to learn more.