Ever wondered what the real difference is between freelancers and in-house staff? Morten Petersen sheds some light

Co-founder and CEO of business-to-consultant matchmaking platform, Worksome, Morten Petersen explores the distinct differences between freelancers and in-house employees, and provides some much-needed clarity for hiring managers who are weighing up their recruitment options

Hiring managers have, at times, been poorly influenced in their recruitment decision-making by blurred information and a lack of transparency around the distinctly different advantages that both in-house employees and freelancers can bring to the table.

Of all the myths related to this, the most common is perhaps the fact that it’s even a dilemma as to whether or not you should hire a freelancer or a full time employee. Navigating through this decision might not always seem straight forward, but don’t be deterred, as the good news is there are some clear guides that can help you through.

Ultimately, full time employees and freelancers each add value in very distinct different scenarios.

Hiring a full time employee makes sense, whenever the role is 1) on-going, and 2) the skills of expertise needed are fairly broad.

On the other hand, a freelancer makes sense whenever the role is 1) time-specific, and 2) the role is very finely scoped.

For example, you would need a CEO to be a full time employee. That person would likely be employed for a longer period of time and would perform a variety of different tasks, such as monitoring economic performance, performing stakeholder management, and speaking at events.

But you might not need a GDPR specialist to be a full time employee. That person is more likely to be hired for a specific time period to go over your company’s documents and data in order to ensure GDPR compliance. That person would do nothing else besides focusing on GDPR. Once compliance is ensured, the job is done. For now at least. Thus, it makes sense to hire a freelancer.

Other common myths associated with the ‘freelancer versus full time employee’ conundrum include:

  1. Freelancers are more expensive
    They’re not. You pay them a higher hourly rate, which can seem deceptive to some. But whenever a company hires a new full time employee other associated costs follow, such as on-boarding, training, insurance, and pension, etc. If you add up all of those costs, full time employees are actually more expensive. Undercover Recruiter shares some interesting insight around this, highlighting the true costs of a new hire in the UK.
  2. Freelancers show less commitment
    They don’t. Remember that a freelancer’s income and reputation is highly dependent upon their performance. If they are lacklustre, they will decrease their chances of getting a job. And so if they are to succeed, they’re more likely to show higher commitment.

    Demonstrating this from our own perspective, the freelancers on Worksome are rated at an average of 4.9/5 and have an average of 15 years of experience. These are very highly skilled people, who have spent years developing their competencies.

    But there’s a host of wider studies that also show how freelancers are just as competent as full time employees. According to Workmarket’s 2017 Workforce Productivity Report, 83 per cent of business leaders believe that freelancers are more, or equally as productive as their full-time counterparts.

3)   Knowledge doesn’t stay within the company
It depends on the type of role that the freelancer has. But knowledge has a tendency to be absorbed in the organisation no matter what. If the freelancers engage in a team effort, their knowledge and competencies are likely to spill over to their team-mates. Companies are never left with less knowledge from hiring a freelancer.

Real freelancer benefits

First of all, freelancers shouldn’t replace full time employees. Ultimately, a blend of full time employees and freelance workers leave companies more cost-efficient and is a very logical approach for a company’s long-term competitive health.

From a strategic point of view, and as mentioned before, freelancers hold the advantage whenever the specific task that needs to be solved is 1) time-specific and 2) very finely scoped.

Picture a company in need of a new app that will take approximately 6 months to develop. It wouldn’t make sense for that company to hire a full time employee for this specific task. Once the app is done, her/his work is pretty much done. And so, this is the type of scenario where it makes sense to hire a freelancer for a six month period, who can help conceptualise, code, and develop the app.

It’s true that from a cost point of view, freelancers are typically more expensive up front, because they have a higher hourly rate. But when you consider all of the hidden costs that come with hiring full time employees, such as recruitment and training, insurance and other benefits, office space and equipment, pay during sickness, etc. the cost issue might not just ‘level out’ but actually swing in favour of a freelancer.

There’s no denying that freelancers – like their full time counterparts – might also require an element of on-boarding, but it’s important to remember that they’re much faster at hitting the ground running, and require little management and oversight.

Once all of these different factors are considered, freelancers are way more cost efficient than regular employees, as indicated in Workmarket’s 2017 Workforce Productivity Report.

Over and above cost efficiency, freelancers can bring additional benefits to the table:  business leaders report that they experience greater efficiencies, are able to deliver specialised skills, and can seize new opportunities faster, by remaining flexible and nimble to changing market trends and conditions.

Integration is key

 

In order to get the most out of the skills freelancers can bring, businesses must focus on not merely making it a transactional relationship, but also on integrating the freelancers into the company.

Freelancers are hired for projects for the short term to fill a specific need. But merely partnering with freelancers won’t build expertise and knowledge. It won’t ensure that the freelancers will choose your company over your competitors in the future.

 

Therefore, it’s important to invest in creating relationships with the freelancers. Companies can do this by creating an employee experience that attracts the right kind of talent and allows them to be part of the company’s community.

This can be done by establishing a great employee experience for the freelancers. Provide the freelancers with sufficient on-boarding, integrate them into the team, and invite them to the Christmas party.

It requires some costs up front, but it’s a long term investment.

Why now?

In today’s climate of competitiveness and change, it’s important for companies to think about safe-guarding their future by opening their eyes to alternative recruitment options and dipping into less traditional pools of talent.

Amidst these changing and uncertain times, freelancers will come to play an even more pivotal role in the British economy than they already do. Since 2009, the freelance economy in the UK has grown by 25 per cent and generates an estimated £109 billion a year, according to IPSE.

There are around 2 million freelance workers in the UK who fulfill a variety of roles in various industries. They represent an amazing pool of talent that can help companies suffering from the skills shortage.

Adding to the recruitment challenge is the fact that fewer workers than ever before want to be ‘retained’ by their employers. Therefore, companies need to futureproof themselves by thinking of talent acquisition in terms of access, not ownership.

As previously mentioned, there are great benefits to reap from employing freelancers, such as greater cost savings and efficiencies, access to specialized skills, faster time-to-market, and greater innovation.

In a time where technological developments are constantly changing skill requirements, it only makes sense for companies to keep themselves open to hiring new skills in order to stay competitive.

 

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