Updated: Aug 28, 2019
When we conducted our agile workforce research into capacity we found that freelancers were frequently framed as a ‘problem’ for many organisations. They typically show that your organisation is suffering from the all-too-often-seen effects of capacity constraints and by this stage hiring permanent staff might be too little, too late. This can kick-start a vicious cycle that has a tendency to ignore whether the right skill is entering the business at the right time - hiring can’t keep pace with the problem and therefore the problem is never uncovered or fixed. Therefore freelancers can act as a band-aid to wider internal skill shortages, problematic planning process and high churn rates. But, without freelancers, how else can you cope with the typical peaks and troughs of the business?
IF TO AVOID: THE PROBLEM WITH FREELANCERS
The clear drawback of freelancers is that they cost money, more money than you might be willing to part with than you would for a permanent member of staff. This is likely to be exacerbated by new, off-payroll working rules in certain countries whereby the tax on freelancers will increase, leading either to a 30% more expensive freelancer or they themselves having to charge approx 25% less in order to compete (source: FT).
The benefit of such short-term, increased expense is that quiet and typically seasonal periods of work don’t have an expensive internal resource pool on the books.
Beyond cost, there is also no scientific way of knowing if a freelancer's skill-set is as strong as required, unless you’ve used them before for that exact task, and they won’t have a company-lead mindset. This increased search pressure simply adds to the time constraints that you’re potentially trying to avoid.
This complex see-saw effect leads many people we speak with drawing-up long-term plans that seek the avoidance of freelancers as a goal, they being an unwanted expense yet often a necessary requirement.
WHEN TO AVOID: AGILE RESOURCE MANAGEMENT
It’s all about balance.
You don’t want to knee-jerk hire with either your permanent or your freelance workers (read why here). But many of the soft-skills of future forecast work are in limited supply and if the talent isn’t with you, it'll be with someone else. Adding to the pressure is a further issue; in the US alone due to new trends for the desire of flexible working, freelancers make up 35% of the workforce and this is predicted to reach 43% by next year with similar outlooks in Europe (source: Medium). Avoiding them isn’t going to be easy if that’s where the talent lies.
So if the true desire for leaders is to avoid the cost, rather than the freelancer themselves there are two key activities:
Plan ahead: you don’t want to be hiring freelancers simply because you left things too late when in actuality the resource pool existed internally and was simply mismanaged.
Balance: predict the natural points where peaks and troughs occur in your business. If not seasonal, use data to examine why troughs occur at all. Track which skills you use the most and debate those which are required to be constantly on-tap (and are therefore are part of your internal roster) and which come and go, whereby could you deal with them utilizing a stable freelancer pool. Don’t retroactively hire anyone, freelancer or otherwise.
For all this you’ll require an overview of the workforce which includes your freelancer bench - often even if a company manages resource well, there is a tendency for them to do it for their permanent employees, with freelancers sitting on the outside; bring them into the pool to strengthen and balance planning. All too often they are managed on freelance platforms that are more art than science. This leads to uncertainty of freelancer availability or capabilities and it’s time consuming to work on an individual basis. Managed in a unified system it remains a fine balancing act, but one you can control (ahead of time).
HOW TO AVOID
So avoiding freelancers 100% of the time is unlikely. But refining how they are deployed is a necessity. Should you then decide to avoid, how should you tackle it?
Good wiggle room planning is key - too many service based industries strive for 100% billable or 100% busy employees and this is just going to result in burnout and burnout is a classic cause of over-reliance on freelancers. Other organisations may work to arbitrary utilization numbers (typically 80-85%) but fail to analyze why they are working to said number or if they even enforce it. Typically ad hoc work or over-serving then fills the gaps rather than useful activities that could develop the workforce, boost productivity and increase business.
Wiggle room is that time intentionally left free and is the key to balancing the workforce. Rather than arbitrarily carving out time for anything ad hoc or similar, that takes time away from ‘doing the work’, make sure that wiggle room is instead made-up of time gained from automating tasks that your key employees shouldn’t be wasting their precious (or expensive) time on. Activities like timesheets, expenses, rate cards that all have automation solutions (cough, cough, Precursive). This can gift back hours to the employee and be used to cope with peaks and troughs. When wiggle room is being sidelined due to capacity constraints it is the red-flag required for that hiring process to begin and can also highlight if freelancers are truly needed or if the work can be done in-house.
P.S. Freelancers, don’t hate me (if you’re managed in a better and more productive way, it will mean more meaningful, well-lead work with less headaches for you).