Whether it’s the Great Resignation driving workers out of the office or a general awakening amongst employees to follow their bliss, the contingent workforce is growing as freelancing becomes an increasingly attractive option for many. According to recent data by Upwork, 20% of the US population — 10 million people are considering a professional move to freelancing work, and 2 million of those individuals have begun freelancing during the last year.
This shift toward the gig economy (which includes Uber drivers and Etsy sellers but also professional freelancers and fractional executives) was already in play before the global pandemic. However, it has accelerated over the past two years. In the pre-pandemic booming job market, individuals were traditionally attracted to freelancing because of its flexibility and variety. However, over the last year, two million more Americans have entered the contingent workforce out of necessity, as employers shed full-time jobs in response to the COVID-19 crisis. In addition, professionals who are initially forced into remote work have come to appreciate the work-from-home lifestyle. In fact, according to the Upwork survey, 34% of remote workers are not excited about returning to the office. And of the two million who began freelancing this year, 73% cited a reluctance to return to the office as the primary driver.
So what does this mean for businesses who rely on a contingent workforce to get the job done?
On one hand, one would assume more freelancers entering the market would mean supply exceeds demand. But demand is very (VERY) high. Over 90% of companies depend on freelancers and plan to increase their use. According to research conducted by Robert Half and Associates, 38% of surveyed companies said they’re hiring more independent contractors, and 45% said freelancers already make up more than half their workforce. And while the US is still in the lead when it comes to freelancer dependency, other parts of the globe such as India, Latin America and China now have a widening talent gap. Tech talent, such as front-end developers, user-experience and digital marketing experts, and system security managers are in the highest demand, with finance and administrative experts also experiencing strong demand.
It is also true that not everyone who decides to freelance is cut out to be successful as a freelancer. The A-players are still the A-players and they are in heavy demand. A survey of more than 1900 freelancers across 30 countries conducted by the Agile Talent Collaborative in partnership with the University of Toronto found that 60% or more of freelancers have enough or too much work, report satisfying relationships with clients, say they’ll meet their financial goals, and remain committed to freelancing. So it’s not just a matter of employers choosing freelancers and contingent workers. Freelancers — especially those with successful track records, years of experience and unique talent — are choosing YOU.
So how does the employer/contingent worker dynamic have to change to adapt to an economic shift where businesses are more dependent than ever on high-value contractors? It boils down to a few things. First, the employer mindset needs to change from a transactional form of engagement toward a relationship built on mutual value and respect. Second, employers need to adopt a longer-term view and build a contingent workforce talent bench. And finally, in lockstep, the systems and processes for managing non-full-time talent need to evolve to align with this new way of work
It’s about talent, not transactions
While the contingent worker marketplace has undergone swift and dramatic change in the last year or so, the way employers engage and manage freelancers is still built on an old-school, archaic full-time job business model.
Freelancers and their services are either regarded as a transactional commodity by their employers (I need something from you, I get it and you leave), or, freelancers are basically owned body and soul. They are incorporated so completely into the company that they are as close to a full-time employee as it gets.
Right now, it seems to be one or the other. But just as the nature of work has evolved quickly into a hybrid model, the employer/contingent worker relationship also needs to evolve in a more hybrid way.
First and foremost, employers need to recognize, value and manage external contingent workforce talent in the same way they recognize, value and manage internal talent. In short, if you want high-quality external expertise, you’ve got to pay their rates. Now, the prices freelancers demand for their services sometimes give employers sticker shock. However, what people need to understand is that professional freelancers bring knowledge and speed and industry insights to your team that you just don’t have in your full-times. According to a report by Talent Alpha, more than 67% of enterprises believe they are challenged with an acute shortage of qualified applicants with requisite skills. And close to 60% of enterprises state that the existing workforce lacks technical skills, given the pace of technology change. Contributing factors include rising attrition rates, lack of internal project readiness and a fast-changing skills landscape.
But the shift in this mindset has to come top down. Organizations need to budget for it. They need to recognize that their full-time people are doing a full-time job and that if they want them to have fresh insights they need to have a library of talent to turn to. So the perception of the contingent workforce needs to change. A contingent workforce doesn’t exist just to deal with a problem that might be in front of you, but create a lasting support system that is available on-demand and gets better the more you access it. This is where unfortunately a lot of the losses lie for employers. From invoicing disputes and constantly onboarding people and using students because they’re cheaper (but take five times longer to do the job and need constant babysitting), businesses who take a short-sighted transactional approach to their contingent workforce end up losing more than they gain.
Build a contingent workforce talent bench
In my conversations with clients, I’ve asked them “Have you ever thought about building a bench, where if you need one writer, or developer, or finance pro you line up ten? And everyone on the bench is a true pro – very capable, very experienced.
Employers need to come to terms with the fact that great people with experience and talent are hot commodities. And they are not always going to be available. So if you are treating that freelancer as if they are a full-time employee (“I love this person, that’s the only person that I ever want around), you may soon find yourself in a lurch. However this type of bench-strength business model can’t be enabled unless everybody in the company from operations to the people who are getting the job done, to the freelancers themselves, agree on the way they want to engage, value and manage talent that lies outside the four walls of the business. The approach needs to be consistent.
Systems and processes for managing contingent workers need to evolve
If we’re going to create a new model where everybody — talent from inside and outside the organization — is working together with the same goal, then we’re going to need to adapt to new technologies. Because right now, due to the archaic way we manage our contingent workforce (manual methods and cobbled together antiquated tools such as Excel, Jira, Trello, Confluence) your time and resources are being wasted and your money is bleeding out.
I originally started JobBliss because I saw this pain first hand and I wanted to help freelancers. I wanted to remove the recruiter fees from freelancers and help them get more work and just connect them with prospective clients. And that seemed like a great idea at the time. But the more I spoke to the market, the more I realized that the REALLY big problem is that companies don’t know how to work with or manage their contingent workforce. So we have to solve that problem first before we get freelancers connected to more companies. We need to make it easier for people to find the right talent with the right skills at the right time so we eliminate the horsetrading that currently happens. We need to organize that working relationship better so everyone — freelancer included — knows the status of work, where there’s excess capacity and availability and has a sight line into the future. This will allow the business to grow proactively versus reacting and scrambling. It will give contractors more confidence in their client relationship. And we’ll be able to use real metrics to track performance and activity and forecast the future with confidence.
When the ebb and flow on the organization side and the ebb and flow on the contractor side actually meet up and are in sync, that’s where explosive ideas and innovation and shit gets done and done beautifully. I’ve seen it when it works and when it doesn’t. Our ambition at JobBliss is to see that happen as the rule versus the exception.