One of the most surprising things to come out of 2020 was the explosive growth in the startup sector.
Funding for startups blew 2019’s numbers out of the water despite a global pandemic, leaving these growth-stage companies in an immensely strong financial position, with global venture funding up four percent year over year to $300 billion.
This resulted in a high-tech employment boom for professionals like software developers, DevOps, IT professionals and digital marketers as industries shift dramatically to online offerings and services.
But with this boom, HR managers are struggling to keep pace with the hiring demands of growth-phase startups. In most cases, they simply don’t have time to wait weeks to fill in-demand positions.
If this sounds like you, it may help to rethink your approach to talent management — and start making the on-demand workforce a larger part of your company’s talent strategy.
With significant demands for a limited supply of talent, engaging with freelancers is no longer optional — it’s critical for your organization’s success. This is why your 2021 talent strategy needs to include the on-demand workforce.
Bigger talent pool
Historically, traditional hiring practices focused on drawing from a talent pool in a specific region. Now, with one in four Americans shifting to remote work models (soon to be one in three by 2025), and a quickly-growing number of people entering the freelance workforce, organizations are poised to cast an even wider net than before the pandemic. Not only that, but the same report revealed that the income of freelancers increased 22% in 2020, making it a highly attractive option for upper-echelon professionals.
The growing influx of young, highly skilled professionals seeking more flexible work arrangements mean your chances of finding qualified talent, especially for hard-to-fill roles, will increase. This is certainly welcome news, especially during a time when the hiring cycle can take as long as 70.5 days for positions like senior data scientists.
Higher profits with engagement
When it comes to what business leaders believe impacts the bottom line, a full 82% of CFOs agree productivity is among the top indicators of whether a company will be financially successful. And the last thing you want is to hire a freelancer you’ve never met only to have them turn in a half-hearted project.
But remember, a freelancer’s reputation and expertise are their ticket to their next meal, mortgage payment, or vacation — and they stand to lose more than full-timers if they don’t meet the standards you set.
Gallup research shows that independent contractors have higher levels of employee engagement than traditional, full-time workers. At its most basic level, this elevated engagement is good for a business simply from a productivity perspective, with organizations that report high levels of engagement reporting 22% higher productivity.
From a bottom-line perspective, employee engagement often makes the difference between a startup that succeeds its growth phases and effectively drives revenue — and one that quickly loses steam. For instance, teams with highly engaged employees demonstrate 21% greater profitability than those with less engaged employees.
Companies — especially growing ones — need the flexibility provided by freelancers during phases of hyper-growth, where there are few constants but many variables.
“To effectively deal with multiple possible futures and unlikely events, organizations need to be able to quickly pivot and set new directions,” points out a recent report from Deloitte.
Leaning into the on-demand workforce allows you to meet your organization’s needs quickly, with qualified professionals.
When you approach temporary problems by hiring temporary workers, you’ll be able to hire the right quality of talent for the right job. For instance, if you need someone to implement complex IT systems for your organization, the on-demand marketplace provides professionals who can quickly handle such one-off projects.
Plus, hiring freelancers can save you thousands of dollars, as their roles don’t require the coverage of employee benefits like health insurance or PTO. Not to mention the money you can save on office space, the reduced risk, and oftentimes the efficiency of complex or specialized work done faster than in-house workers would be able to do it.
While the benefits of leaning on independent contractors are numerous and well-documented, the main point of resistance from organizations is that they feel freelancers can’t be trusted with larger, more important projects.
While that is understandable – security and productivity are among the most critical aspects of the freelance workforce – it should not be a top concern.
A recent report from WorkMarket shows that firms of all sizes that have fully committed to making on-demand talent part of their organizational strategies have not been disappointed, with a jaw-dropping 83% of business leaders saying they feel contractors are equally or more productive than full-timers.
Additionally, HR teams need to remember that building trust has as much to do with how you manage your relationship with your contractors as it does with the results they deliver, and for many freelancers, things like simple communication of expectations, learning opportunities and getting paid on-time will make or break their experience with your company.
Therefore, whether the “juice is worth the squeeze” when it comes to leaning on contract workers all depends on how you manage the relationship with them.
The difference between organizations who are leading in their freelancer talent strategies and those that aren’t is that the former are able to make their freelancers and contractors part of their extended workforce by making strategic changes to improve the way they work with them.
While companies are relying more on freelancers, the process of hiring, managing and paying these contractors is often rife with issues and frustrating to managers.
To truly reap the benefits of using the freelance talent pool, I strongly recommend executives define the freelancer hiring and onboarding practices to ensure contractors sign all needed legal documents, get access to the right systems (so they can be removed once the project is completed), and get set up to be paid correctly and on-time.
The quickest and most compliant way to make this happen? Consider implementing a Freelance Management System (FMS) where hiring managers, finance, legal and HR managers can collaborate and manage their specific pieces of the freelancer management process in one platform.
These platforms can also enable your team to do enhanced vetting processes, background checks and employee classification audits.
If an FMS still feels like too big a leap, get the ball rolling by devoting time to clearly defining your company’s onboarding and payment processes. Late payments are the biggest gripe freelancers have with the organizations they work with, and even a smaller step like putting processes into place can make a huge difference in your company’s talent strategies.
This will empower your hiring managers to use freelancers more extensively, and can help maintain a good relationship with any freelancers you already employ.